State Senate Republicans Reject Tax Hikes, Propose Deeper Cuts

Pressed to offer their own vision of a California budget, Senate Republicans on Thursday presented a package that proposed to close the state’s shortfall by using a combination of borrowing and spending cuts and pointedly rejecting tax hikes.

“A vast majority of our caucus will support most of these amendments,” said state Sen. Richard Ackerman (R-Irvine). “This is a response to [Democrats] who said, ‘Give us an idea of where to cut.’ ”

The Republican proposal offered a stark counterpoint to the approach favored by Sacramento Democrats, whose plan for closing the state’s $38-billion budget shortfall has blended borrowing, cuts and tax hikes -- specifically, new taxes on tobacco and upper-income Californians, as well as a half-cent sales tax increase intended to pay for a bond issue that would close the last fiscal year’s $10.7-billion deficit.

To make up for the revenue that the Democrats have proposed to raise with the new taxes, Republicans countered with far deeper spending cuts. The cuts unveiled in the Senate Thursday include scores of proposed reductions in areas such as environmental enforcement, education and health care.

At a brief news conference, Gov. Gray Davis urged lawmakers to move quickly to get a budget passed, warning that “there are real consequences to delay.” Work on some state roads and highways could stop as early as July 20, the governor said, because the Department of Transportation cannot legally pay its contractors without a budget.

“We now have the specter of highway maintenance and repair work coming to screeching halt,” Davis said.

Bolstering that point, the state transportation agency released a letter to contractors warning them that their money could soon be cut off.

“The prospect of shutting down hundreds of projects ... may be inevitable without the Legislature approving a budget,” said the letter from Caltrans Director Jeff Morales. It warned that 200,000 private-sector jobs supported by state highway funds would be put at risk.

Republicans countered by accusing the Davis administration of using scare tactics.

Faced with Republican solidarity against tax hikes, Davis predicted that one house of the Legislature would pass a budget within two weeks, but he conceded that it probably would not include the new half-cent sales tax and the income tax increase for high earners that he has been pushing.

Despite Davis’ prodding for negotiations to continue, the Legislature adjourned after the unveiling of the Republican package. The lawmakers went home for the weekend, leaving behind a budget impasse that experts say is costing the state as much as $20 million a day.

The list of 131 Republican amendments -- which range from abolishing the Coastal Commission to reducing payments to schools -- will be debated and put to a vote in the Senate on Tuesday.

Although Democrats immediately called the list of proposals a nonstarter, the cuts could play an important role in budget negotiations, as most involved in the budget process said they believed a final deal would be brokered in the Senate.

Even so, Senate President Pro Tem John Burton (D-San Francisco) said good ideas were limited to “dribs and drabs” in the 12-page list of cuts.

“It is impossible to balance the budget without taxes unless you totally dismantle the government,” he said.

In fact, some groups advocating tax hikes welcomed the introduction of the Republican proposals, saying they would help frame the choices facing California.

“They have inadvertently given us new hope” for raising taxes, said Kevin Gordon, executive director of the California Assn. of School Business Officials. “By putting out budget proposals that show the public just how deep the cuts have to be, I think they have shot themselves in the foot. I think this message will resonate more than their no-new-taxes message.”

The Republican plan would cut K-12 education by $615 million on top of the $291 million Senate Democrats have already proposed cutting for the fiscal year that began July 1. The California State University system would be cut by a total of $238 million, more than double the amount proposed by Democrats. And though the Democrats have proposed cutting funds to community colleges by $454 million, Republicans recommended cuts totaling $782 million.

Republicans defended the cuts by saying that the programs that would be affected are superfluous anyway. They used a $50-million outreach effort in the Cal State system as an example, saying more students already apply to the universities than can be accommodated.

Although the Senate Republican proposal would not reduce such benefits as money to feed the seeing-eye dogs of poor people -- as the Assembly Republican bill would -- the latest Republican amendments would cut hundreds of millions of dollars to welfare recipients and disabled people.

In the area of health care, Senate Republicans said they would cut $694 million in “optional benefits” for Medi-Cal recipients, which could include such things as hospice care, optometry, physical therapy and hearing aids. Artificial limbs are also an optional benefit, but Republicans did not propose reducing payments there.

“Instead of giving care to people, we have been giving them Cadillac care,” Ackerman said.

The proposal put forward by Democrats does not include any reductions in optional Medi-Cal benefits.

“It is a reasonable plan if you care more about developers than you do about protecting the coast,” Burton said of the Republican blueprint. “It is reasonable if you want to take money away from a million blind, aged and disabled people. It is reasonable if you want to make it tougher for a single mother to get off [welfare] and into a job.”

Ackerman stressed that the Republican amendments were not an official plan, and that closing the state’s huge budget gap without taxes would take even more reductions than those proposed on Thursday.

Meanwhile, he defended the proposal to abolish the Coastal Commission, which regulates development along the California shore.

“Many people have concerns about the Coastal Commission,” Ackerman said. “It puts an additional layer of bureaucracy on things. It costs people money. And generally they have been anti-growth.”

*

Times staff writer Rhashad Pittman contributed to this report.