Calif. Budget Fix Stalls With Too Few GOP Votes

By: Judy Lin AP
By: Judy Lin AP

SACRAMENTO (AP) - Gov. Arnold Schwarzenegger on Sunday was
trying to salvage a proposal to close California's $42 billion deficit after an all-night legislative session failed to produce a new budget.

Blame for the inaction was fixed on the state Senate, where Republicans were refusing to put up the three votes necessary to reach the required two-thirds majority. The Assembly appeared ready
to pass the mix of deep spending cuts and tax increases but was
awaiting signals that the Senate would do the same.

After meeting all night and into midmorning, the Assembly called a three-hour recess at 10 a.m. but members were ordered not to leave the building. A half hour later the Senate also recessed until 1 p.m., with its members also ordered to stay in the building.

The stalemate stretched from Saturday evening, when the chambers
were called into session, into Sunday morning, when Assembly
members found themselves in lockdown and Schwarzenegger was trying to persuade members of his own party to support the plan.

The governor and legislative leaders from both parties warned that California faces insolvency unless the Legislature enacts a midyear budget fix.

The state controller already has delayed refund checks owed
taxpayers and payments to state vendors. Some 2,000 public works
projects have been stopped because the state has no money to pay
for them.

Schwarzenegger, meanwhile, has ordered furloughs for state
government workers and has threatened layoffs for as many as

Meanwhile, California's credit rating is so bad the state can't get loans.

"The only alternative now is to literally go insolvent and over the cliff, and many of us believe that is irresponsible and giving up our constitutional responsibilities," said Assembly Minority Leader Mike Villines, R-Clovis.

The Assembly and Senate approved the relatively non-controversial bills in the package late Saturday night, but action came to a halt early Sunday morning with the tax votes still to come.

The hang-up came in trying to reach the required two-thirds majority in each house, where three Republican votes are needed. The Assembly appeared to have sufficient votes lined up, but the Senate was falling one short.

Debate halted after Sen. Dave Cox, R-Fair Oaks, told reporters he was against tax increases and would not support the two-year budget fix. Before the Legislature convened on Saturday, it was thought that Cox might have supported the plan.

"You can't help the economy of the state of California by raising taxes. Yes, there's a big deficit. But in the final analysis, you're going to have to find another way to do it," Cox said. "My answer is no, and I'm not looking for additional information. I've made my decision."

Cox said he received a call from Gov. Arnold Schwarzenegger, who
remained in the Capitol trying to secure the necessary votes.

"My guess is everybody's arm is getting twisted," Cox said.

The broad outlines of the latest budget proposal have not changed for several days: $15.1 billion in cuts, $14.4 billion in temporary tax increases and $11.4 billion in borrowing. The package also would send five ballot measures to voters in a special election to be held May 19.

The lack of GOP votes in the Senate prompted the Assembly to halt action on its set of bills. Assembly Speaker Karen Bass, D-Los Angeles, locked down her chamber about 3:30 a.m. Sunday, forcing
lawmakers to remain inside.

Most Republicans opposed the budget plan, unwilling to raise taxes to deal with the state's historic deficit.

The proposed tax hikes include an increase of 1 cent on the dollar in the state sales tax, a 12-cent-a-gallon hike in the gasoline tax and boosting the vehicle licensing fee.

Taxpayers who owe money to the state at the end of 2009 would pay a one-time, 5 percent income tax surcharge, although it would drop to 2.5 percent if California gets its expected share of money from the federal stimulus bill.

Many of the tax hikes would remain in effect through the 2013-14
fiscal year if voters approve a cap on state spending. That deal is designed to limit opposition to the spending cap, which was sought
by Republicans, who also favored even steeper spending cuts.
The all-night legislative session was threatening to drag well into
Sunday, with no end to the stalemate in sight.

Schwarzenegger was meeting with legislative leaders, but the prospects for success were uncertain. A moderate GOP senator who,
like Cox, was thought to be a swing vote announced his opposition,
leaving Schwarzenegger with few options to raise the necessary
votes in the Senate.

"Obviously at this point, I'm not supporting the state budget that was put forward, and we're at an impasse," said Abel
Maldonado, R-Santa Maria. Maldonado said he was concerned with the size of the tax increases.

"Barack Obama is giving a tax break to 95 percent of Californians. We're trying to give a tax increase to 95 percent of Californians," he said. "That's a problem with me."

Schwarzenegger's spokesman, Aaron McLear, said the governor was
continuing to prod lawmakers toward a final vote. "We know we're close, and the governor's not going to give up until we pass a budget that Californians deserve," he said.

The budget package was contained in a series of some 26 bills and constitutional amendments.

It's designed to fill California's budget gap through June 2010 if voters also approve a number of related measures at the ballot. Those include a state spending cap, a plan to sell bonds based on future lottery proceeds and approval to shift money from accounts for mental health and child-development programs.

Shortly before midnight Saturday, both houses had approved bills
dealing with the spending cuts, ballot measures and some of the steps intended to stimulate the economy. They were leaving the tax increases for the end.

The weekend session came at the end of a frenetic week of closed-door negotiations, and disrupted Valentine's Day and holiday weekend plans for lawmakers, their staffs and others.

California's deficit has exploded in the face of a worsening recession that has seen the state's unemployment rate rise to 9.3 percent, a 15-year high. Sales, property, capital gains and income taxes have plunged in recent months.

Lawmakers have been deadlocked over finding a compromise for months in large part because of the legislative hurdle they must overcome to pass a budget. California is just one of three states, along with Arkansas and Rhode Island, to require a two-thirds majority vote, a threshold that requires at least three Republicans in each house to side with majority Democrats.

Even in the face of financial calamity, it has been challenging to find those votes.

Sen. George Runner, R-Lancaster, said voting for tax increases carries inherent risks, especially for lawmakers running in conservative districts.

"Voting for raising taxes is, in my view, a career-ending move," said Runner, the Senate Republicans' caucus chair.

Associated Press Writer Don Thompson contributed to this report.

(Copyright 2009 by The Associated Press. All Rights Reserved.)

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