California Democrats pass budget with taxes, cuts and tricks

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Reporting from Sacramento -- Democratic lawmakers passed a rare on-time state budget Wednesday over Republican objections, but the plan — balanced with a blend of taxes, cuts and clever accounting — faces an uncertain fate at the hands of Gov. Jerry Brown.

After warning for months that devastating cutbacks to schools and public safety would occur without the renewed taxes that Brown has sought but has been unable to sell to Republicans, Democrats averted the most severe reductions.

But they did so by returning to old strategies that have papered over California’s deficits for years: delaying the payment of billions in bills, skipping debt repayments and penciling in money that may not materialize.


Using their new authority to pass a budget on a majority vote — and under threat of lost pay if a spending plan was not approved by Wednesday — the Democrats pushed through provisions to hike car registration fees and local sales tax rates and force online retailers, such as, to collect sales tax.

The plan would also cut more deeply into higher education, the courts and local law enforcement.

“It is not perfect. It is Plan B,” said Senate President Pro Tem Darrell Steinberg (D-Sacramento), who nonetheless called the package “worthy of the governor’s signature.”

Democrats said they hoped Brown would continue to negotiate with Republicans for the taxes he wants, to make some of their cutbacks unnecessary. But their blueprint puts Brown in a political pickle. It asks him to break two pledges central to his campaign for governor: no new taxes without voter approval and no more smoke-and-mirrors budgeting.

Brown has not said whether he will sign the document; he has 12 days to decide.

The budget was the first that Democrats have approved without the minority party since voters last fall empowered them to do so, and they seemed to relish the opportunity.

“Californians won’t get caught in another Republican hostage crisis,” Assembly Budget Committee Chairman Bob Blumenfield (D-Woodland Hills) said during a floor speech, blaming the GOP for the long budget standoffs of recent years.


A case of celebratory Hefeweizen beer was carted into the Assembly speaker’s office for lawmakers shortly after the voting concluded.

Republicans washed their hands of the spending plan, calling it unbalanced, gimmick-ridden and poor policy. Assemblyman Tim Donnelly (R-San Bernardino) ridiculed it as “the legislative paycheck protection program.”

“You vote for this budget, you own it,” said Sen. Tony Strickland (R-Moorpark).

The plan would push off payment of $2.8 billion owed to schools and community colleges until the following fiscal year, along with $540 million in University of California funds. A controversial sale of state buildings worth $1.2 billion, abandoned months ago as not cost effective, would return in a slightly different form.

The slim hope of $700 million in Medi-Cal money to be handed over by federal government was also etched into the plan.

At times during Wednesday’s debate, tensions ran high. A skirmish broke out briefly on the Assembly floor after Don Wagner (R-Irvine) likened a portion of the Democrats’ budget to a “Tony Soprano” insurance scheme and subsequently offered a half-hearted apology “to any Italian Americans who are not in the Mafia and engaged in insurance scams.” Colleagues rushed to separate angry lawmakers from one another.

The fiercest policy debates came over the Democratic effort to phase out redevelopment agencies, which use tax dollars to improve blighted areas, by forcing them to join a new program and pay the state $1.7 billion for the privilege.


Sen. Rod Wright (D-Inglewood) said that “in South Central L.A., we call that extortion.... Give me money, or I shoot you in the head.”

The proposal, part of the budget package, passed as redevelopment lobbyists patrolled Capitol hallways in a fruitless attempt to halt the legislation.

Also included in lawmakers’ calculations is $200 million netted by enforcing sales tax collections from Internet retailers who have no physical presence in California. “It puts our bricks-and-mortar businesses on a level playing field,” said Sen. Loni Hancock (D-Berkeley).

Republicans questioned the plan’s legality and said it would put a chill on small in-state businesses that are affiliates of the big online sites.

Car registration fees would rise by $12 in the Democrats’ budget, and local sales taxes would increase by a quarter of a cent on July 1. Because a 1-cent temporary sales tax hike and a larger, different vehicle fee hike will expire the day before, consumers and most drivers will still pay lower sales taxes beginning next month and their car fees will still be lower overall, Democrats noted.

Residents in fire-prone rural areas in which the state is responsible for firefighting would have to pay a new fee — roughly $150 per occupied building, according to legislative budget staffers.


Among the new cutbacks is $150 million slashed from the state’s courts. California Supreme Court Chief Justice Tani Cantil-Sakauye said the “crippling” cut, atop a $200 million reduction approved three months ago, would deliver “a blow against justice.”

The governor’s office previously estimated that the new reduction could result in two days of court closures statewide per month.

“These cuts threaten access to justice for all,” Cantil-Sakauye said in a statement.

The plan also relies on $300 million taken from higher education, half from the University of California system and half from the California State University system.

Top UC officials promised to marshal a public campaign to restore the money and said that if the reduction survives, a double-digit tuition increase would be on the horizon. An 8% fee hike has already been approved by university authorities.

Brown has sought GOP approval for a fall election on taxes and asked them to first extend vehicle and sales tax increases that expire this month. Republicans oppose such an extension. And in exchange for any election, they have pursued an overhaul of pension, regulatory and spending policies — all of which Brown said he is willing to provide.

Those talks, however, have halted. Republican legislators involved in the negotiations have not spoken with the governor since last week, their aides said, and Wednesday’s budget action appeared to drive the GOP and governor even farther apart.


Four GOP state senators issued a joint statement Wednesday blaming unions and trial lawyers — big Democratic donors — as “the real stumbling block” to any potential accord.

Los Angeles Times staff writer Michael J. Mishak contributed to this report.