Lower House Passes State Budget

The California Assembly approved a $105.3-billion state budget Wednesday, reluctantly accepting Gov. Arnold Schwarzenegger’s spending plan even though it would borrow billions to balance the books.

The main bill passed overwhelmingly with bipartisan support despite a stern warning from GOP legislative staff that the budget would “inevitably lead to higher taxes” and would fail “to make any meaningful reforms.”

Republicans did, however, balk at supporting new environmental protections opposed by building industry and agricultural groups and a repeal of tax breaks for owners of yachts valued at $400,000 or more. A dispute over closing a loophole that allows the yacht owners to avoid paying sales tax delayed passage of the final package well into the night.

GOP lawmakers would not support the budget package until the environmental restrictions were removed and the yacht provision modified. Currently, Californians who keep such vessels out of state for three months after purchase avoid paying sales tax on them. The budget had proposed extending that period to one year, but Republicans would not approve that until the provision was changed to allow the owners to bring the vessels back to California for maintenance during that year.

The budget bill is scheduled to go to the Senate for a vote today. Schwarzenegger is hoping to sign it by Saturday, concluding his first budget process as governor and the most frustrating negotiations of his eight-month tenure.

The Assembly’s approval comes with the budget already four weeks late.

“Is there something in this budget for all of us to hate? Yes,” said Assembly Republican Leader Kevin McCarthy during Wednesday’s debate. “Anybody in this room can find a reason to say no. But a little more important is finding a little leadership to say yes.”

In a scene reminiscent of the bitter budget debates of years past, the flare-up over the yacht tax caused what was expected to be a relatively short session to drag on until 9:30 p.m. It ended only after the governor got involved personally, having private discussions with Republican lawmakers.

Last year, lawmakers had to be locked in the chamber for 30 hours before the six Republican votes needed to pass a spending plan could be found to round out the Democratic majority. This year’s budget bill, SB 1113, was approved 69 to 11, with 26 Republicans supporting it.

For Republicans facing the first budget under a GOP governor in six years, it was not an easy vote to cast. The spending plan was distasteful to them, even if Schwarzenegger wrote it.

A bill analysis provided by the GOP’s legislative staff said members might want to support the measure because it contained no significant tax increase.

But staff analysts also warned of its consequences. “This budget will inevitably lead to higher taxes, as it actually worsens the fiscal problem,” said the paper, which was distributed Wednesday morning to all Republicans in the Assembly. “This budget will not remain in balance for long, as several of its assumptions are likely to begin unraveling almost as soon as the ink dries on the governor’s signature.”

The one-page analysis also said the budget made “almost no permanent reductions in spending, instead relying upon massive borrowing, gimmicks and deferrals.”

Still, Republican lawmakers defended the plan. They said that although it would allow shortfalls of as much as $10 billion to re-emerge over each of the next two years, it would begin to solve a problem that had built up over several years.

“There are some great strides forward in this budget,” said Assembly Budget Committee Vice Chairman Rick Keene (R-Chico). “Make no mistake: This is just a beginning.”

Keene and others in the GOP say the state could avoid tax increases in the coming years by implementing a number of cost-cutting measures that the Schwarzenegger administration was expected to begin unveiling next month.

Among them is an ambitious plan to restructure state healthcare programs for the poor and a proposal to overhaul the state bureaucracy. Hit hardest in the budget approved by the Assembly were local governments and schools. Cities and counties would accept $2.3 billion in cuts over the next two years.

In return, the Legislature would put a constitutional amendment on the November ballot asking voters to protect local governments from ever being cut again by Sacramento.

Chris McKenzie, executive director of the League of California Cities, praised the compromise, saying that in the long term it “ensures local governments will never again be used as the state’s ATM machine.”

Schools agreed to a similar arrangement. Under it, they would give up $2 billion in increases scheduled to be received over the next two years. In exchange, the state would guarantee that all their funding would be restored by 2007.

“We will survive this,” said Barbara Kerr, president of the California Teachers Assn. “It is a survival budget. It’s not a budget that is going to enhance anything. The reality is we are going to have to do something else if we want our good public schools to get better. We are going to have to put money into them.”

The budget would increase tuition at state universities and fees at community colleges. It would also cut money for research programs at universities and colleges.

It would provide a major boost to transportation projects by directing $1.4 billion in new payments to them. That money would come from an agreement with Indian casinos that in turn allows them to expand gaming operations.

The 11 Republicans and Democrats who voted against the bill cited a number of reasons, including opposition to abortion funding and concern about the amount of borrowing.

Among those voting no was moderate Assemblyman Joe Canciamilla (D-Pittsburg). He warned that the spending plan reflected “how we avoid wrestling with the difficult choices that ultimately have to be made if we are going to deal with the fiscal instability that this state is facing.

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How members of the Assembly voted

Gov. Arnold Schwarzenegger’s $105.3-billion state budget passed the Assembly 69 to 11. The bill is expected to go to the Senate today.

Democrats for (43):

Berg, Patty -- Eureka

Bermudez, Rudy -- Norwalk

Calderon, Ronald S. -- Montebello

Chan, Wilma -- Alameda

Chavez, Edward “Ed” -- La Puente

Chu, Judy -- Monterey Park

Cohn, Rebecca -- Saratoga

Corbett, Ellen -- San Leandro

Correa, Lou -- Anaheim

Diaz, Manny -- San Jose

Dymally, Mervyn -- Compton

Firebaugh, Marco -- Los Angeles

Frommer, Dario -- Los Angeles

Goldberg, Jackie -- Los Angeles

Hancock, Loni -- Berkeley

Horton, Jerome -- Inglewood

Kehoe, Christine -- San Diego

Koretz, Paul -- West Hollywood

Laird, John -- Santa Cruz

Leno, Mark -- San Francisco

Levine, Lloyd -- Van Nuys

Lieber, Sally -- Mountain View

Liu, Carol -- La Canada Flintridge

Longville, John -- Rialto

Lowenthal, Alan -- Long Beach

Matthews, Barbara -- Tracy

Montanez, Cindy -- San Fernando

Mullin, Gene -- San Mateo

Nakano, George -- Torrance

Negrete Mcleod, Gloria -- Chino

Nunez, Fabian -- Los Angeles

Oropeza, Jenny -- Long Beach

Parra, Nicole -- Hanford

Pavley, Fran -- Agoura Hills

Reyes, Sarah -- Fresno

Ridley-Thomas, Mark -- Los Angeles

Salinas, Simon -- Salinas

Steinberg, Darrell -- Sacramento

Vargas, Juan -- San Diego

Wesson, Herb -- Culver City

Wiggins, Patricia -- Santa Rosa

Wolk, Lois -- Davis

Yee, Leland -- San Francisco

Democrats against (4):

Canciamilla, Joe -- Pittsburg

Jackson, Hannah-Beth -- Santa Barbara

Nation, Joe -- San Rafael

Simitian, Joe -- Palo Alto

Republicans for (26):

Aghazarian, Greg -- Stockton

Bates, Patricia -- Laguna Niguel

Benoit, John -- Palm Desert

Bogh, Russ -- Cherry Valley

Campbell, John -- Irvine

Cox, Dave -- Fair Oaks

Daucher, Lynn -- Brea

Dutton, Robert -- Rancho Cucamonga

Garcia, Bonnie -- Cathedral City

Harman, Tom -- Huntington Beach

Haynes, Ray -- Murrieta

Horton, Shirley -- Chula Vista

Houston, Guy -- Livermore

Keene, Rick -- Chico

La Malfa, Doug -- Richvale

Leslie, Tim -- Tahoe City

Maddox, Ken -- Garden Grove

Maldonado, Abel -- Santa Maria

McCarthy, Kevin -- Bakersfield

Nakanishi, Alan -- Lodi

Pacheco, Robert -- Walnut

Plescia, George -- San Diego

Runner, Sharon -- Lancaster

Samuelian, Steve -- Clovis

Spitzer, Todd -- Orange

Wyland, Mark -- Escondido

Republicans against (7):

Cogdill, David -- Modesto

Dutra, John -- Fremont

La Suer, Jay -- La Mesa

Maze, Bill -- Visalia

Mountjoy, Dennis -- Monrovia

Richman, Keith -- Northridge

Strickland, Tony -- Moorpark

Source: California Assembly

Los Angeles Times