Mulish Budget Battle Unique

While deepening budget woes have sparked spirited partisan debate in statehouses across America, California is in a class by itself in the refusal of lawmakers to transcend their partisan differences and solve the state’s financial problems.

Almost six months after Democratic Gov. Gray Davis defined the magnitude of the budget gap, Republicans remain steadfast in their opposition to higher taxes, which they say will hurt the economy. Democrats, meanwhile, have just as stoutly resisted deep cuts to social programs, which they say will hurt the poor. And so the red ink continues to grow.

If the partisan gridlock is not broken soon, the state is headed for another late budget that will be even costlier than last year’s. Controller Steve Westly has warned that the state government could run out of cash and shut down in midsummer if the budget deadlock drags into September, as it did last year.

Observers in both political parties blame several factors for the standoff: The state’s requirement that a budget win two-thirds approval in both houses of the Legislature has given the minority party, currently the Republicans, unusual leverage; term limits have shortened political attention spans; and redistricting has created safe seats in contests between parties but has made some officials fear primary challenges.

The combination, many say, has proved a recipe for deadlock.

By contrast, other states, whether their leadership is dominated by Democrats or Republicans, are moving through a thicket of partisan politics to meet budget deadlines and make the decisions to bring spending and revenue into line.

Some are leaning toward tax increases, others to service cuts. Some are balancing the two. Even in states where party rhetoric seems as hot as California’s, an underlying spirit of bipartisanship appears to be keeping both sides focused on finding an eventual solution.

“We’ll just go back to the table and start negotiating,” said Michelle Sullivan, spokeswoman for Connecticut’s Republican Gov. John G. Rowland, after he vetoed the Democratic-controlled Legislature’s package of tax increases. “It may take a little longer, but we always feel we’ll get there.”

Already in a number of states, Republican-dominated legislatures or GOP governors have acceded to tax increases and Democrats to cuts in social services.

In conservative Idaho, for instance, Republican Gov. Dirk Kempthorne decided that after two years of budget cutting, critical public services could not survive the state’s $154-million shortfall in the coming year without a tax increase.

“It took me a while to come to this conclusion,” Kempthorne told the staunchly anti-tax Republican-controlled Legislature in his January budget message. “It will take you a long time.”

And it did. After a record 118-day session, reluctant lawmakers gave Kempthorne sales tax and cigarette tax increases to protect schools from spending cuts.

In New York, Republican Gov. George E. Pataki vetoed the budget plan passed by lawmakers, because it contained a quarter-cent increase in the sales tax and an income tax surcharge for upper-income residents. (Both income and sales tax hikes are part of Davis’ proposal for closing California’s shortfall as well.)

But New York lawmakers of both parties joined forces to override the governor’s vetoes and impose the taxes. Additional tax increases for New York City also won approval.

Pataki was livid about the Legislature’s “tax-and-spend budget,” but Senate Majority Leader Joseph Bruno, also a Republican, defended the tax hikes as “the least onerous way to provide revenues” to avoid huge cuts in education and health care for the poor.

“There are no easy choices,” Bruno said. “When you are dealing in a bipartisan way, you have to be willing to negotiate in good faith and be willing to really compromise.”

But in California, one of only three states where a two-thirds vote is required to pass a budget, compromise has been difficult to achieve. Instead, members on both sides of the aisle are accusing each other of treachery and stupidity.

Senate President Pro Tem John Burton (D-San Francisco) said there would not be a budget without tax increases, fuming in a stream of vulgarity at Republicans who, in his view, know full well that they can’t close a $38-billion gap on cuts alone.

“There isn’t one Republican who will vote to cut the schools like you would have to,” Burton said. “Their deal doesn’t work. Anybody who can add two and two up to four says it doesn’t work.”

Only moderately less combative, Senate Minority Leader Jim Brulte (R-Rancho Cucamonga) said: “The liberals in Sacramento are in denial” about the nature of the budget problem. “It’s a spending problem.”

Brulte accused the Democrats of dealing in bad faith. Davis, he said, adopted the Republicans’ idea of borrowing to cover the deficit, but then proposed restoring some money to state programs that Republicans want to see cut.

“They take our good-faith effort at a deal and use it to expand state spending,” Brulte said.

Assembly leaders are just as strident. Speaker Herb Wesson (D-Culver City) blames the budget deadlock on the refusal of GOP lawmakers to support higher taxes.

“They are extremists,” Wesson said of the Republican leaders who are playing their minority status to the hilt. The ability to deny Democrats the six GOP votes needed to pass a budget in the Assembly “allows the extremists to hold us hostage,” he added.

“We need some adult supervision here,” responded Assembly Minority Leader Dave Cox (R-Fair Oaks). “You can’t continue to spend more money than you take in.”

Many factors are probably contributing to the bitterness of California’s budget debate.

A threatened recall drive against Davis, for instance, has injected election-year imperatives into the political environment. Some legislators and others say that is pushing Davis to look out for key constituencies -- labor unions and teachers, among others -- as he faces the possibility of having to fend off a recall as early as this fall. In his revised May budget, the Democratic governor backed away from the deep spending cuts he proposed in January.

On their side, Republicans have little incentive to bet their political futures on compromise. Of the four Assembly Republicans who voted for Davis’ 2001 budget, two were later defeated in primary contests for other offices, and two others bowed out of politics. The only Republican senator who voted for Davis’ 2002 budget is now working for the Davis administration.

Although California’s deadlock and vitriol are particularly pronounced, other states are grappling with tax hikes and spending cuts as well.

Since the recession of the early 1990s, many states have backed away from tax increases as the answer to anemic revenues, said Arturo Perez, fiscal analyst for the National Conference of State Legislatures. As the current crisis took off last year, states adopted a modest $9.1 billion in tax increases, only about one-third -- measured in current dollars -- of the tax increases imposed in 1991-92, Perez said.

Broad-based taxes are especially unpopular. Most of the states that have raised taxes looked to cigarettes, gambling and university tuition for increased revenues before raising sales, property and income taxes.

And though most states have resolved their shortfalls with less rancor than California, the debates have not gone smoothly. Of the 24 states where legislatures already have adjourned for the year, four were in special session last week, and several others went through extended sessions over budget disagreements, Perez said.

It isn’t always Republicans demanding to hold the line on taxes and Democrats clamoring to spend. Besides Idaho, Republican governors in Alaska, Nevada, Ohio and Georgia are proposing tax increases. In a handful of other states, Democratic governors or legislatures are committed to avoiding tax increases, even if it means cutting programs that Democrats generally defend.

In Arizona, another of the three states requiring a two-thirds majority to pass a budget, Democratic Gov. Janet Napolitano has outraged the Republican majority in the Legislature by refusing to make the cuts they think necessary to eliminate a $1-billion gap.

An alternative budget crafted by GOP lawmakers failed to win two-thirds approval last month after two Senate Republicans broke ranks and voted against the bill.

Still, even amid that partisan hostility, Arizona party leaders began meeting last week to reach an agreement, in contrast to their California colleagues.

“I think everybody has gotten to a point they’ve given up some stuff and gotten some stuff, and they’re not happy,” said Nick Simonetta, spokesman for Senate Republicans in Arizona.

The contrast to California couldn’t be greater than in Delaware, where lawmakers take palpable pride in their bipartisan tradition.

After a divisive budget crisis in the late 1970s undermined the state’s credit rating, the Delaware Legislature set up an economic forecasting committee and a joint House-Senate finance committee that tackles each year’s budget in a cooperative atmosphere.

More important, legislators say they are determined not to let partisan differences get in their way.

And they’re honoring that pledge this year, even as the Republican-dominated Legislature considers $145 million in tax increases proposed by Democratic Gov. Ruth Ann Minner.

“Even though we might yell and scream, we do recognize we’ve got to come out of this with something that represents a balanced budget that puts us in a position of strength,” said House member Joseph G. Di Pinto, a Republican and co-chairman of the joint finance committee. “So we always end up where we need to be, and we come out being friends.”