State Budget Just 1 Roadblock Away From Governor

The standoff over California’s budget ended early Sunday morning in the Senate after Democrats struck a deal with a GOP lawmaker and secured passage of the long overdue spending blueprint.

The vote, in which two Republicans joined with all 26 Senate Democrats, sent the debate back to the state Assembly. There, the budget already has been approved, but Republicans are blocking its implementation by voting against a series of measures needed for it to take effect.

The Senate deal increased spending on seniors, police and schools, and it broke open a political gridlock that had paralyzed passage of the $101-billion spending plan in the upper house for more than three weeks. The Senate vote ended that group’s work for the summer; it is in recess until Aug. 20.

Still, it is unlikely that Gov. Gray Davis will sign California’s 2001-02 budget, which is 23 days late, until the legislation that accompanies it clears the Assembly, said Davis spokeswoman Hilary McLean. Once the package lands on his desk, Davis is expected to make about $600 million in yet-to-be-disclosed cuts to reach his goal of establishing a $2.6-billion reserve.

Assembly GOP leaders predicted Sunday that the Senate deal will ensure that most of the budget-related measures opposed by their members will be approved by the lower house this week. They hinted, however, that legislation that maps out state spending on welfare could still face a bumpy road.

Also unclear Sunday was whether Assembly Democrats will back a concession granted by their Senate counterparts over the weekend to allow voters to decide whether state sales taxes paid on gasoline should be permanently dedicated to transportation beginning in the 2003-04 fiscal year.

The Republican request on the gas sales tax issue was granted to help win GOP support for a controversial proposal by Davis to use $1.3 billion in funding earmarked for transportation to help balance the budget in the current fiscal year.

The GOP’s gas tax request emerged as a major sticking point last week in failed talks between lower house Democrats and Republicans, so its inclusion in the Senate-approved budget is sure to annoy some Assembly Democrats who opposed it.

“That’s not something we’re pleased about,” said Paul Hefner, a spokesman for Assembly Speaker Bob Hertzberg (D-Sherman Oaks). “The concern is it will lock in funding for transportation regardless of what the state’s other needs and priorities are.”

The big breakthrough in the Senate materialized Saturday night after Sen. Maurice Johannessen began negotiating with Democratic leaders, who gave into a host of requests made by the Redding Republican. With Democrats voting as a bloc in the Senate, only one Republican vote was needed to approve the budget and many of the bills that go with it.

Interestingly, one of the concessions given to secure Johannessen’s support was restoration of money that some Democrats also were eager to have in the budget.

Some Differences Settled Early

Early in the process of forming the state plan, Democrats had agreed to forgo some spending to build up the government reserve. Among other things, they had deferred an increase in the housing tax credit to poor seniors, a decision that was expected to save the state $265 million. As a result, a qualifying senior who received a property tax credit of $816 during the last fiscal year would have seen the amount drop to $326 in the current one.

Johannessen insisted on restoring some of that money, and Democratic leaders agreed to put $75 million back into the fund, lessening the impact on poor elderly beneficiaries of the credit.

“A big part of what Johannessen wanted was that $75 million, which for me made my mouth water because that’s something I’ve fought for for years,” said Senate leader John Burton (D-San Francisco).

Democrats also agreed to add $5.4 million in high-technology grants so that law enforcement agencies throughout the state can buy the latest crime-fighting equipment. The amount that each agency receives, including small rural ones that are often represented by Republicans, rose to at least $30,000--a pittance for agencies such as the Los Angeles County Sheriff’s Department or the LAPD, but more significant for a smaller police department.

Democrats addressed another key GOP issue by including $40 million to make funding for rural and urban schools more equal.

The deal paved the way for the spending plan to be sent Sunday to Davis on a vote of 28 to 11.

“This budget continues an unparalleled investment in our schools, equips local law enforcement with tools they need to protect public safety and makes a historic, ongoing commitment to transportation,” Davis said through a spokeswoman.

Senate leaders described Johannessen as the “icebreaker” who made the budget deal possible, but in the final vote Sen. Dick Monteith, a Modesto Republican, also joined with Democrats voting in favor of the document. Both Republicans cited gains made for agriculture as factors that fueled their decisions.

About $80 million in tax breaks for farming communities, grants for law enforcement and an array of other perks were previously added to the budget and its accompanying legislation in the Assembly.

The more than $120-million package of incentives tacked on in the upper house, however, failed to win the backing of Senate Republican leader Jim Brulte of Rancho Cucamonga for the larger spending plan.

“This budget raises taxes,” said a disappointed Brulte. “This is one of the largest tax increases in California history and no amount of spin can change that.”

Battle Over Sales Tax

Brulte and Assembly Republican leader Dave Cox of Fair Oaks had led their party’s effort for repeal of a quarter cent of the state sales tax. A cut of that size is in place but is expected to disappear in January barring intervention from Davis and the Legislature.

The quarter-of-a-penny tax is controlled by a trigger that kicks into effect when the state’s budget reserve tops 4% of the general fund for two consecutive years. Senate Democrats agreed to lower the reserve amount to 3%, which should in theory make it easier for the trigger to kick in and the tax to disappear.

“I have absolutely no doubt in my mind that that trigger will never be pulled,” said a skeptical Brulte. “Come back 10 years from now, and I think I’ll be right.”

The deal struck in the Senate drew mixed reviews from Assembly Republicans, who voiced disappointment that Johannessen and Monteith broke party ranks.

“Was it a win? Not exactly,” Cox said. “This represents a large tax increase for the residents of the state of California, but it was better than the offer being put out by Mr. Hertzberg.”

Countered Hertzberg spokesman Hefner: “The whining you’re hearing from Republican leadership is because in both houses they proved themselves to be irrelevant to the budget.”

Hefner alluded to the fact that the Democrats who control the Legislature won passage for the budget by negotiating with individual GOP lawmakers, as opposed to party leaders.

The technique contributed to the logjam in the Assembly, where four Republicans voted for the budget, but have since balked at signing off on legislation that maps out how the money in the plan is spent. They have cited reasons, ranging from an increase in abortion funding in one bill to a rise in welfare spending in another, for withholding their support.

After Johannessen voted for the budget, he too held off on voting for the accompanying bills.

It took more than an hour of coaxing by anxious Senate Democrats, who were scheduled to begin a monthlong break Friday, before Johannessen finally agreed to support the measures. Burton described the situation Sunday as “goofy.”

Assemblyman George Runner, the Lancaster Republican who tackles budget issues for his caucus, suggested that the four GOP lawmakers who voted for the budget in the Assembly will follow Johannessen’s lead.

“The four who went up on the budget are going to have to complete their deed,” Runner said.