What Does Jerry Brown's Threat About an "All-Cuts Budget" Mean? John Myers Explains

Last week, at an extraordinary appearance before the Budget Conference Committee in Sacramento, Jerry Brown, speaking to Republicans, said something that at first I didn't understand.

I want to make one thing clear, and that's another reason I came here. If we don't get the tax extensions, I am not going to sign a budget that is not an all-cuts budget. And it's going to be turbulent... It's either the tax extensions and the 12 billion or its 25 billion or as close to that as we're gonna get. And then if we can't do that, then maybe we don't get a budget and we just sit here and wrangle....

Brown: I'll enact a budget that's all cuts

I didn't understand how Brown's promise to only sign an "all-cuts budget" would be a threat to Republicans. After all, isn't what they want? No tax extensions, more spending cuts...

So I asked our Sacramento Bureau Chief and inveterate budget-watcher John Myers what Brown was getting at.
His analysis:

1. Brown insists that he's willing to pursue only two options for erasing the projected $26 billion budget deficit: a blend of cuts, transfers, and taxes... or... a budget of only cuts and transfers with most of the deficit being erased by cuts. (That second option is what's commonly being called an "all-cuts" budget. It's close, but actually not $26 billion in literal cuts to programs.)

The governor says he won't agree to the well-known third option used at the Capitol in recent years: budget gimmicks.

The governor hasn't said exactly what additional cuts he'll propose if either the special election isn't called or if voters reject about $13 billion in extended taxes. But the nonpartisan Legislative Analyst's Office has offered a list of likely targets, a list requested by state Sen. Mark Leno (D-SF). That list includes deep cuts in K-12 education as well as additional deep cuts to the UC and CSU systems, social services, bond projects, and state worker salaries.

2. Republicans in the Legislature haven't put forward a comprehensive alternative plan to either the Brown budget or to the Democratic legislative budget (which is similar to Brown's in most respects). They have insisted the budget be balanced through less spending, but have yet to endorse any specific additional cuts.

Democrats say they don't think GOP legislators would actually vote for an "all- cuts" budget plan, but that remains to be seen. Suffice it to say, a large number of Democratic legislators wouldn't vote for it, either.

3. Bottom line: For weeks, Governor Brown has been challenging opponents of his budget plan to produce a comprehensive alternative. To be fair, there are some parts of his plan that Democrats have rejected but haven't fully filled with an alternative. But the biggest hurdle to both the plan... and Brown's goal of a June 7 statewide election on the tax extensions... remains GOP legislators.

And there's only about two weeks left to schedule a June election.

So, to boil it down even further:

• Brown wants an election on tax extensions, Republicans don't
• If he gets his tax extensions, "only" 12 billion in cuts will be enacted. If he doesn't, then roughly double those cuts to get to a balanced budget.
• His threat: He will only agree to whatever combination of cuts and taxes will make the numbers balance. He won't agree to finagle the books via much-maligned "gimmicks."

  What kind of gimmicks? Well, read this from a 2009 L.A. Times article on the Democrats' budget proposal that year:

  The Democrat-driven plan, which on paper reduces the state deficit by $23.2 billion, contains $7.2 billion in bookkeeping maneuvers, an analysis of the proposal shows. Moves to account for billions more are one-time fixes, are sure to be challenged in court or are grounded in rosy assumptions that the Legislature's own fiscal advisors say are unlikely to materialize...

  One of the Democrats' ideas is to issue state employees' June 2010 paychecks at 12:01 a.m. on July 1 -- one minute into a new fiscal year -- instead of June 30. By producing 11 months' paychecks instead of 12, the state would spend $1.2 billion less next year but would have to repeat the ploy yearly.

  Another short-term patch is a Schwarzenegger proposal, approved by the joint committee, to defer $1.7 billion in school funding until the next fiscal year. School districts would still have to run state-mandated programs in the coming year, but they wouldn't get paid until the next. The nonpartisan Legislative Analyst's Office likened that idea to racking up credit card debt.

  Such gambits would ease California's immediate cash crunch even though they would do little to reconcile its long-term fiscal problems.

Yeah, those do sound like "gimmicks." Remove the quotes.

So no more of those, Brown says. "We've got to meet the moment of truth now," he opined in the hearing. He sounded like he meant it, too.

But would he (and for that matter fellow Democrats) really sign a budget that doubles the already onerous cuts he's calling for assuming a tax extension?

Here's a Sacramento Bee article on the additional cuts proposed by the LAO in lieu of taxes. As John Myers mentions, they include hundreds of millions more each sliced from K-12, higher ed, public safety, and health programs.

Just imagine the collective howl sent out from the state if and when the Guv puts his pen to that one...