Budget Stalemate Faces Fresh Complications

As California’s budget stalemate drags into a second week, the delay is causing state officials to confront a new complication: interest groups trying to fiddle with the spending package.

A coalition of health advocates launched a radio campaign Tuesday that takes issue with Gov. Gray Davis and the Legislature for slashing tobacco-prevention funding, raiding future tobacco-related money and trying to pass a licensing bill that opponents contend will benefit the tobacco industry.

While temperatures were expected to hit 105 degrees here Tuesday, Senate Budget Committee Chairman Steve Peace (D-El Cajon) experienced a meltdown with the mercury hovering only in the 90s. He showed up at the group’s news conference and accused one of its organizers of lying about the tobacco-licensing bill.

“You’re so dumb,” Peace later told a woman from the American Heart Assn. “You can’t fix dumb.”

The exchange came as the new fiscal year entered its ninth day without a budget, with Assembly Republicans and Democrats at odds over $4 billion in new taxes and revenue to help close a $23.6-billion shortfall.

Party leaders met Tuesday without reaching agreement on the package, which could be considered again Thursday.

Earlier Tuesday, another health-care group released survey results contending that Californians favor tax hikes to avoid deep cuts to medical services for the poor or disabled. It also found that the public favors taxing the rich over a plan sought by Davis to hike vehicle-license fees to raise money, the group said.

The spending package has already cleared the Senate, so any changes would need to be approved by its members, most of whom have left for a monthlong break and are not expected back at the Capitol until Aug. 5.

Nonetheless, advocates said Tuesday that they believe it’s important to inject the voters’ views into the ongoing budget debate.

“I do still hope our survey can influence the process,” said Dr. Mark Smith, president of the California HealthCare Foundation, which commissioned the budget survey. “But even if it doesn’t affect this budget, we hope it will influence thinking when these questions come up again next year.”

More fallout from the delay will materialize Friday when several hundred legislative employees will miss their first paycheck if a new budget is not in place, said state Controller Kathleen Connell.

Lawmakers and the rest of the state’s 250,000 employees won’t be at risk until the end of the month, when their next paychecks are due. A California Supreme Court decision on a budget-related lawsuit could force Connell to pay most state employees only the federal minimum wage.

So far, Connell said, she has received few complaints from vendors who do business with the state, but she suggested that is because the Davis administration has instructed state agencies to wait until the budget is signed before forwarding the bills to her office. Because the state recently borrowed $7.5 billion, Connell said she does not expect any cash-flow problems through September.

With a cash crisis averted, state officials turned their attention to fending off an image crisis. The American Cancer Society joined the American Heart and American Lung associations in airing a radio spot in Sacramento that warned Californians they can either choose to lead the nation in saving lives from tobacco or fall behind and allow their children to pay the price.

The groups want Davis and lawmakers to earmark 15 cents of a proposed 63-cent hike in state excise taxes on each pack of cigarettes to prevention programs. The Davis administration contends the tax hike would reduce smoking by making it more expensive.

The proposed budget relies on $650 million from the cigarette tax hike and borrows $4.5 billion against the state’s future share of the national tobacco settlement, meaning that the state would rely on tobacco-related money to solve more than one-fifth of its $23.6-billion shortfall.