Political Landscape: Deficit fixes are delayed

The state’s projected budget deficit remains at about $5.6 billion, but lawmakers are awaiting a set of proposed revisions from Gov. Arnold Schwarzenegger in May before tackling substantial spending reductions, they said.

Area legislators have in the interim turned their focus to government reforms that could also produce savings.

But part of the reason for the delay in taking major action could be a result of upcoming election primaries in June, Sen. Bob Huff (R-Diamond Bar) said.

“It’s an election year, and the Democrats don’t want to deal with the tough decisions until after they get past their primary,” he said.

Assemblyman Anthony Portantino (D-La Cañada Flintridge) argued that legislators are making significant efforts to reduce the deficit.

“I’m not putting anything on hold,” Portantino said. “I’m moving forward with my reform agenda and efforts to rein in state spending.”

The governor and the state’s legislative analyst said early this year that substantial deficit-reduction steps needed to be taken before the end of March in order to avoid more difficult decisions later in the year.

But legislators and the governor have so far agreed to only about $1 billion in savings out of a projected deficit of $6.6 billion in the current year.

The Schwarzenegger administration has projected a deficit of about $19 billion by mid-2011.

The Legislature approved a series of spending adjustments to the state’s prison system, but Schwarzenegger vetoed it because he said it included unrealistic assumptions. The Legislature had assumed that deporting undocumented felons would save $182 million, while Schwarzenegger had pegged the savings at $19 million.

Although Democrats criticized the veto, lawmakers have not yet taken up other proposals for taking chunks out of the deficit.

“At this point, everyone’s going to kind of hold fire and wait to see what the income tax returns show, and then that’ll kind of set the governor up for the May revise,” Assemblyman Cameron Smyth (R-Santa Clarita) said.

While significant actions from the Legislature have been seemingly delayed, Smyth was confident that income taxes would bring in stronger revenues than initially anticipated, he said.

“We’re not out of the woods by any stretch, but it seems we’ve been able to kind of get a handle on really where we are, and the estimates and actuals are starting to line up,” Smyth said.

The state still has an opportunity to take a variety of steps to create savings, he said.

“There are still areas of reform and fraud and mismanagement that I would like to see cleaned up before we proceed to discuss further cuts to education or developmentally disabled Californians,” Smyth said.

Some Californians have exploited the state’s In-Home Support Services program by enrolling through multiple counties or registering dependents that have died, he said.

The California Department of Transportation has also been the target of discussions regarding wasteful spending, having bought hundreds of vehicles that have not been used, he said.

Portantino on Wednesday succeeded in pushing forward a plan that would freeze salaries for government workers making more than $150,000, including California State University system employees.

The bill was approved by the Assembly Public Employees, Retirement and Social Security Committee.

The legislation would freeze the salaries for two years, beginning Jan. 1, 2011, and save the state about $17 million, according to a legislative analysis.

“To me, at a time when we’re raising student fees and making it harder for kids to go to college, you would think that the highest paid state workers would be willing to share in the burden to solve our state’s fiscal crisis,” Portantino said.

The lawmaker is also pushing for creation of a new state office for an inspector general that could scour the budget and help eliminate wasteful spending and inefficiency, as occurs in other states, he said.

“There are some reports that that’s in the billions, and so we’re trying to create an office of independent oversight, and right now the state auditor does not have the ability to have oversight over the state Legislature,” he said.

Other government reforms could also help the state avoid similar budget problems in the long term, including adopting a series of proposals put forth by California Forward, area lawmakers said.

That organization had proposed a constitutional convention to improve the state operations, but announced this year it was suspending its campaign because of a funding shortfall.

The group had proposed the elimination of the Legislature’s two-thirds majority vote requirement for approving a budget. But the Legislature has since created a committee to analyze the proposals anyway.

Although a two-thirds majority vote for approving the state’s budget is “the only play the Republicans have right now” in arguing against Democratic proposals, it may be advantageous for the Legislature to consider a two-thirds vote only for tax or fee increases, said Huff, one of three Republicans on the committee.

“I haven’t totally made up my mind, but I could see a scenario where I might be able to support a lowering of the threshold as long as fees are treated the same way as taxes and it took two-thirds for that, and then you’d get a majority vote for the budget,” Huff said.

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— Zain Shauk