Davis Misread GOP Clout in Budget Gaffe

Among state lawmakers there is an unwritten rule: Republicans may be in the minority, but they are the ones most responsible for shaping any tax cuts.

It’s a rule Gov. Gray Davis flouted when he scrapped the GOP’s tax cut plan last week and substituted his own. It came with a price.

The governor has the bulk of the power in annual budget negotiations; he can delete any lawmaker’s pet project. But his power is not absolute. And lawmakers say Davis failed to take into full account the influence of the state’s most powerful Republican officeholder, Sen. Jim Brulte of Rancho Cucamonga.

The upshot was a rare public misstep. Davis held a news conference Thursday afternoon to predict that his $100-billion spending plan for the fiscal year that begins July 1 would pass the Legislature that night. It didn’t; the budget became mired in the Assembly, where Republicans revolted against Davis’ tax cut package.

“The governor didn’t think he needed Brulte,” said a Democrat involved in the budget negotiations. “They don’t understand how influential he is, not just in the Senate, but throughout the building.”

When lawmakers return to the Capitol this morning, they will begin piecing the budget back together. There will probably be a push to scrap Davis’ plan to shave the state income tax rate slightly, and restore a Republican proposal that saves families an extra $125 by raising the credit they can claim for children and other dependents.

That boost, offered by Brulte, leader of the Senate’s Republicans, would raise the credit from the current $230 to about $355 and remove 500,000 Californians from state income tax rolls. It has wide support among Democrats and Republicans, Senate Budget Committee Chairman Steve Peace (D-El Cajon) said in an interview.

As Davis sees it, his actions prove that there are new rules of engagement in the annual budget battle. The moderate Democrat has his own vision of tax cuts. Suggesting that the governor will not easily give up, Phil Trounstine, Davis’ communications director, said that although the governor respects Brulte, Davis’ tax cut proposal is “balanced and equitable.”

“What makes this situation unusual is that we have a Democratic governor who is proposing major tax cuts, and people aren’t used to that,” Trounstine said Sunday.

Brulte says he did not work to derail the budget Thursday. But with his tax cut proposal omitted, he had no incentive to help sway Republicans in the lower house.

“The Democrats are the experts on social spending; they get to dictate that,” Brulte said Sunday. “When it comes to tax cuts, we proposed the reduction. It benefited the middle class,” which is one reason it garnered Democratic support.

The deal began unraveling late on the eve of the budget vote, when Davis imposed on Democrats to kill the Senate Republicans’ $500-million tax cut and exchange it for one more to his liking.

Davis’ two-part plan includes a new child care credit aimed at middle and lower class Californians. Republicans dislike that element, because some low-wage parents would receive annual tax refunds even though they make so little that they pay no state income taxes. Yet people earning more than $100,000 would receive no benefit.

Republicans and Democrats alike panned the second part of Davis’ plan, to shave a half-percent off the state income tax rate. Such a cut would save Californians about $300 million a year.

However, the wealthiest Californians, people making $514,000 or more, stand to save almost $400 a year, while people earning between $42,000 and $70,000 would save an average $7.33, according to an analysis by the California Budget Project, a nonprofit policy analysis organization.

Adding to Davis’ problems, the governor neglected to engage when Assembly Republicans realized that the tax package could gut a graduated “car tax” cut signed in 1998 by his Republican predecessor, Pete Wilson. Because of the complexities of the car tax law, vehicle license fees could rise next year as a result of the tax package Davis wants.

Brulte had raised the car tax issue as early as last December. The problem is easily fixed. Lawmakers need only add a clause to Davis’ tax cut that permits future car tax reductions.

Brulte and Senate President Pro Tem John Burton of San Francisco, the Senate’s top Democrat, had agreed to a compromise on key parts of the car tax issue. But Burton and Brulte left the Capitol early Thursday evening after the Senate completed its budget vote, and as the Assembly was struggling.

At a meeting with Davis earlier, Brulte assured the governor that the budget would garner sufficient votes in the Senate to win passage, despite the Republican’s doubts about Davis’ tax proposal. The spending plan ended up clearing the Senate on a 31-9 vote.

But Brulte said he also warned Davis, “If you didn’t get a majority of the Senate Republicans, including me, you could run into trouble in the Assembly.” Indeed, Brulte voted against it, as did several other influential Republican senators.

Davis may have thought he had lined up enough votes in the Assembly. The budget is filled with hundreds of millions in “pork” projects pushed by individual lawmakers, including Republicans. The pork-laden spending plan was being fattened as late as Thursday night, when lawmakers and the governor added more than $200 million in transportation spending, with road and mass transit projects spread across the state.

“There are all kinds of things the Republicans wanted in this budget. They did quite well,” Trounstine said.

A swimming pool or a new park can help sway lawmakers. But pork wasn’t enough to persuade Assembly Republicans to support the budget. They weren’t about to vote for a spending plan that was seen as disrespectful to the Capitol’s most influential Republican, that dismissed their tax cut plan and that had the side effect of raising car taxes by as much as $850 million next year.

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* BUDGET SHINES ON SOUTHLAND PARKS

Sports fields, beach projects and wildlife habitat are among the many plans to be funded. B1