Signs Hint at Budget Deal

Even after a $6-billion state budget deal seemed to go up in smoke last week and a top GOP lawmaker suggested that it might take a government shutdown to break the gridlock, there are signs that the Legislature is close to making significant progress toward resolving the state’s financial crisis.

With only a week left before legislative inaction costs taxpayers $656 million in potential revenue, Senate leaders said they would try to revive the budget plan drawn up by Assembly Speaker Herb Wesson (D-Culver City).

In a major concession, Wesson’s Democratic caucus had reluctantly embraced what they considered a significant compromise, because it included cuts to health and education programs that they hold dear. But only two hours after the proposal was unveiled, Republicans rejected it, saying the cuts were still not deep enough.

By late in the week, however, many Republicans were admitting privately that they would probably vote for some variation of the proposal this week.

“I’m hopeful we are able to reach some kind of agreement that makes sense to the overwhelming majority of the Senate,” Republican leader Jim Brulte of Rancho Cucamonga said Friday. “I’m not into predictions, but it is not inconceivable we could have votes on the Senate floor next week.”

Budget agreements in Sacramento historically involve the kind of give-and-take that is occurring with the Wesson proposal. It is not uncommon for such a compromise plan to appear to collapse under a mountain of rhetoric, only to reappear days or weeks later with broad support. It is part of the political reality that keeps the Legislature from getting down to serious work on the budget until late in May or June -- even in years past when the state was deep in the red.

Especially given the size of California’s $35-billion shortfall over the next 15 months -- the largest budget gap in the nation -- Wesson likes to remind fellow lawmakers that the Legislature has never in history made so much progress on a budget so early. About $3.3 billion in midyear reductions were approved in March, and an agreement that will probably result in a tripling of the state’s vehicle license fee for car owners could produce another $4 billion per year. Add the proposed $6 billion from Wesson’s deal, and a significant financial patch will have been applied.

Wesson’s proposal called on Democrats to accept $2.5 billion in cuts in government services so that Republicans would agree to a $2.2-billion bond issue that would make the state’s annual contribution to its employees’ pension plan. (It also included about $1.2 billion in fund shifts, fees and transfers.)

Republican lawmakers said they had decided to continue hedging on the pension bonds because Wesson’s proposal offered them a rare opportunity to get leverage over Democrats, who control both houses of the Legislature. The state treasurer has warned that, if the bonds are not approved by May 5, however, they cannot be sold in time to help the state make the pension contribution. That means the state would lose out on $656 million in budget savings.

Republicans said that, while they are ready to come to the table on the pension bonds, they too are concerned about deadlines -- other deadlines. They point to a letter from Department of Finance Director Steve Peace warning that $300 million in potential budget savings will be lost if lawmakers don’t approve by May 15 Gov. Gray Davis’ call for deep cuts in aid to the poor.

Some Republicans may still hold a hard line. Before Wesson’s plan was announced, Assembly Budget Committee Vice Chairman John Campbell of Irvine said in a television interview that it might take extreme measures to get an acceptable budget deal by the June 15 constitutional deadline.

“A lot of state activity would shut down if there is no budget,” Campbell said. “Whereas that would be a very bad effect, maybe it’s something that we need to make the deadline real.”

It isn’t just more cuts that Republicans are looking for. They also seek to drive home the point that they expect better treatment from their Democratic colleagues. They complain that their minority status has resulted in their getting slighted repeatedly. They offer a laundry list of complaints, from seeing their bills left to languish in committee to watching budget deals being brokered without them.

For example, Wesson unveiled his proposal to the Capitol press corps and described it as a compromise that Republicans were likely to be “comfortable” with -- before he had shared it with Republicans.

“We found out what the Democratic side of the aisle was proposing from the press and lobbyists,” said Assemblyman Keith Richman (R-Northridge), a leader of a bipartisan group working on a budget resolution. “Part of the solution is the recognition that people need to work together. There was no communication from their side of the aisle.”

A Republican staff member put it more directly. “A point needed to be made, and it was made,” the staffer said. “Now we are ready to move on.”

Wesson said that he had kept Republicans informed that he was putting something together and had their blessing. But he couldn’t take it to them until his caucus signed off on it, Wesson said, and he was boxed into sharing it with the press because parts of the proposal had become public.

“We are trying to do what we can to bring the Republicans along,” he said. Lost in the partisan dispute is how far along Democrats had moved since only a few weeks ago. The Wesson plan includes cuts that many Democrats had vowed they would resist.

“A lot of thought went into this round of cuts,” said Assemblyman Dario Frommer (D-Los Feliz), who has been adamant about preserving many social service programs.

“They won’t devastate programs we believe in, but they’ll move us along,” he said. “I think a lot of these cuts are thoughtful, and there’s potential for Republican cooperation.”