Democrats Pose New Threat to Davis Budget

Though he says he doesn’t feel the need to negotiate with Republican leaders to win passage of a new state budget, Gov. Gray Davis may find himself forced to talk taxes with another group of unhappy lawmakers: members of his own party.

As the Assembly struggles to pass a budget and a related tax plan to help fund it, not only is it unclear whether there are enough Republicans to approve the package, but Democratic support is now in doubt too.

Assemblywoman Helen Thomson (D-Davis) indicated that her vote in favor of the spending plan over the weekend could be the only aye vote she casts for the document because it contains too few new taxes.

Thomson said it is an unfair burden on Californians that lawmakers have not considered other tax proposals before settling on a one-year hike in vehicle license fees to help close the state’s $23.6-billion budget gap. And she is not alone.

“My personal feeling is what we’re doing now in terms of the budget is obviously totally inadequate,” said Assemblyman John Dutra (D-Fremont). “It’s not looking at the long-term problem at all.”

The Senate approved the spending package for fiscal 2002-03 over the weekend and sent it to the Assembly, where Republicans blocked its passage Sunday because it contains about $4 billion in new taxes and other revenue. The result was that California missed a July 1 deadline to have a new budget in place. The plan requires a two-thirds majority approval, which means in the Assembly that four Republicans must join the Democratic majority to pass a budget, assuming that all 50 Democrats vote in favor.

Assembly Democratic leaders, however, did not call for a vote Sunday on a key budget-related bill that contains the tax plan. Dutra predicted that if lawmakers were asked to vote on the plan, it would fall 14 to 16 votes short of passage in the Democratic caucus.

He said many of his counterparts believe that the vehicle license fee proposal should run for two years, it should exempt cars valued at $10,000 or less, and the full license fee should be restored for vehicles worth more than $10,000, to generate $3.3 billion.

Those provisions, he said, would make the tax less regressive, because vehicles valued at $10,000 or less generate only 12.5% of the revenue from the fees but cover 50% of the people who pay them.

Nineteen Assembly Democrats, including Dutra, Thomson and Wilma Chan (D-Alameda), held a news conference a week ago to support taxing top earners more to help balance the budget. “I don’t think the [personal income tax proposal] is dead yet, but I also think it’s important that we have a budget by this summer,” Chan said.

Thomson and Dutra said the state needs to take a long-term approach to budgeting as a result of ongoing imbalances between revenue and spending.

Responding to a request by Senate Republican Leader Jim Brulte of Rancho Cucamonga, the state’s independent legislative analyst, Elizabeth Hill, predicted in a letter Tuesday that the budget shortfall for fiscal 2003-04 would hit $9.8 billion. Hill had previously predicted an $8-billion gap, but attributed the new, higher figure to restorations made by lawmakers of ongoing spending cuts that had been sought by Davis.

Many of the programs that lawmakers restored are in health, social services and local government. “We remain firm in our belief that we ought to solve the budget problem and just not paper it over until after the election,” Brulte said. “This budget is worse than the one Gov. Davis submitted in May, and his wasn’t very good to begin with.”

During a tour of the UC Davis Cancer Center on Tuesday, the governor reiterated his plans to peel off the minimum number of Assembly Republicans rather than negotiate with their leaders. A Davis aide later said the administration is very confident that Assembly Democrats will support the spending plan and that gaining its passage is the task at hand.

“We’re working very hard to convince four or five Republicans to step up and do the right thing,” Davis said.

Budget watcher Kevin Gordon, executive director of the California Assn. of School Business Officials, summed up the dilemma facing Davis and Democratic leaders this way: “If they lean too far to the right to get some Republicans, they risk losing Democrats on the other side.”

The Senate, which approved the budget and a series of related bills Saturday, had voted previously to tax the wealthy to raise money, but came up a vote short.

Senate Democrats subsequently found the one GOP vote they needed to approve the spending package in Sen. Maurice Johannessen (R-Redding), but only after Democratic leaders ditched the income tax plan and replaced it with Davis’ original one-year, license-fee proposal. Both Johannessen and Davis oppose the income-tax hike, which would raise between $2.7 billion and $3.3 billion.

In another budget-related development, Senate Republicans have voted to boot Johannessen from their caucus, triggering this response from him Tuesday: “Nah-nah, nah-nah, nah.”

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Times staff writer Jon Ortiz contributed to this report.