Dems’ gambit targets GOP clog
“I’ve got some breaking news for ya,” state Senate leader Darrell Steinberg exclaimed as he sat down at a popular breakfast spot near the Capitol on Wednesday.
Not another budget scheme, I thought. This is getting tiresome and boring.
Then he said the magic words: “Majority vote.”
Steinberg (D-Sacramento) and Assembly Speaker Karen Bass (D-Los Angeles) had devised a deficit reduction plan that could be passed by a simple majority of the Legislature, rather than requiring a two-thirds vote.
They’d wrapped up the package overnight -- after yet another futile, depressing budget debate in the Assembly -- and were preparing to deliver it to both legislative houses. Votes are scheduled for today.
If recent months -- years, really -- have proven anything, it’s that California’s two-thirds supermajority vote requirement to pass a budget or raise taxes has made this complex state practically ungovernable. Few other states erect such hurdles to governing.
Modern-era Republicans adamantly refuse to vote for any tax increase. They took a campaign pledge not to and seem to regard it as some cult-like blood oath.
“I don’t know why we don’t believe Republicans after they’ve been saying it for years, but they’re not voting for taxes,” Steinberg told me, referring to other Democrats and Gov. Arnold Schwarzenegger.
“Everybody was getting mad at each other and I finally concluded, can we just agree on one basic fact here: Republicans aren’t voting for taxes.
“We needed to take control ourselves. We’re not letting this thing go off a cliff. Period.”
Indeed, Republicans are supposed to be the party of sound business practices and entrepreneurship. Would a business owner agree to sell a building but delay settling on the price until after the property had changed hands? Politicians don’t operate that way either.
But it’s precisely what Republicans have been demanding of Democrats and the governor: Cut spending and reform budgeting first -- then they’ll talk about taxes. Maybe.
“You know,” the new Senate leader said, “I’m a nice guy, but not that nice. What are we, fools, for crying out loud?”
Steinberg ordered a bowl of fruit and outlined his majority-vote tax plan.
“This is Plan B,” he said. “It’s fairly groundbreaking. It could be a precedent for the future.”
The state’s tax structure can be retooled on a majority vote if the result isn’t a net revenue increase. It’s a little-known fact that he learned years ago, the senator said.
So the Steinberg-Bass plan involves raising some taxes: sales ( 3/4 cent on the dollar), income (2.5% surtax on the amount owed) and oil severance. Two gasoline levies would be eliminated: the 18-cents-per-gallon excise tax and the state’s 5-cent share of the sales tax. Those tax increases and reductions would amount to a revenue wash.
But the state would replace the gas taxes -- and then some -- with a new 39-cents-per-gallon “fee” costing motorists 13 cents more than they currently pay. Fees always can be imposed by a majority vote of the Legislature if they’re tied to a specific service. Call this “a highway user fee,” Steinberg said. It will all be spent on transportation -- “a legal and logical nexus.”
The state also would hit independent contractors with 3% income tax withholding when they’re paid for work. That’s another majority vote item.
There’d be $9.3 billion in tax hikes over the next 18 months, and $7.3 billion in spending cuts to education, prisons, healthcare, welfare and the elderly poor and disabled. Add in another $1.5 billion in funding shifts and it totals roughly $18 billion.
But the governor is projecting a $41-billion deficit through June 30, 2010. Steinberg said $5 billion could be raised by borrowing against future lottery revenues, if voters agree, and California should be in line for $4 billion in federal bailout money.
“We’re still $14 billion short,” he acknowledged. “Now I must end this interview.”
He laughed loudly, startling restaurant customers at nearby tables.
“We live to fight another day,” Steinberg continued. “This is a jolt of confidence that we can actually get something done around this place. It gets us into January with a fighting chance to solve the state’s fiscal crisis.
“We’ve got to get right back at it. We’re going to have to cut some more. Look at more revenue. We haven’t even talked about carbon fees.”
Drastic stuff. But it came on a day when the state investment board voted to close down $3.8 billion in financing for public works projects because every dollar is needed just to pay bills. The state can’t sell bonds, Treasurer Bill Lockyer said, because its “fiscal house is burning down.”
Schwarzenegger was not sold on the Democratic plan by late afternoon. He insisted on an “economic stimulus” package, including more public-private partnerships in public works construction. Steinberg and Bass were negotiating with the governor while fending off public employee unions.
As Steinberg left the restaurant, an acquaintance walked up and urged him to finally staunch the state bleeding. “Today we’re going to get it done,” the senator responded. The other guy seemed to roll his eyes, reflecting my initial reaction.
I’m now more optimistic. Somebody had to start thinking outside the box. Steinberg and Bass did.