Davis Threatens to Call Special Session

With state lawmakers set to adjourn for the year this weekend, Gov. Gray Davis warned Thursday that he would call a special session of the Legislature if they failed to approve a budget by Saturday.

Senate Democrats, hoping to avoid an extended session, floated a proposal that would permit the Davis administration to raise the car tax on its own, without a vote of the full Legislature.

The legislation would authorize the finance director to raise the car tax by making “a finding that insufficient moneys are available” to keep the tax at the reduced rate in place since 1999.

If the car tax were rolled back to 1998 levels, the state would gain--and motorists would pay--more than $7 billion over a two-year period.

Assemblyman John Campbell (R-Irvine) said it would be unconstitutional to raise taxes without a two-thirds vote of the Legislature. He warned that such an action would lead to litigation, unlike winning Republican support on a larger spending package.

“We’d file for an injunction before the ink from the governor’s pen was dry,” Campbell said.

Finance Director Tim Gage declined to comment on the proposal. The Davis administration has not taken a position.

Negotiations on a new state spending plan continued Thursday, with Democrats appearing to be closer to securing at least three of the four Republican votes needed to approve the budget in the Assembly.

The Senate approved a spending package on June 29.

Lower-house Democrats and Republicans have been divided for more than two months over a $4.2-billion tax plan, part of the Democratic leadership’s plan to close a $23.6-billion shortfall.

Republicans want additional spending cuts to diminish the need for new taxes, but indicated for the first time this week that they were willing to consider several proposals that would raise revenues without increasing taxes.

Davis indicated that Democrats were working to secure the crucial fourth Republican vote.

“I believe there’s a good chance it will happen by Saturday night,” Davis said. “But if it doesn’t, I will call them back into special session for Tuesday.

“The most important thing we do in Sacramento is pass the budget,” he said. “We’ll stay at it until we get it done.”

Finding sufficient Republican support could prove elusive, however, unless Democrats are willing to drop their plans to increase any taxes, including a hike in the state excise tax on cigarettes to $3 per pack.

In another possible threat to state coffers, a federal welfare reform plan in the House could cost California $2.2 billion over the next five years, according to a new report by the state’s nonpartisan legislative analyst’s office.

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Times staff writer Jon Ortiz contributed to this report.