State Budget Talks Collapse, Negotiations Halted

Not looking good on the budget front.

The LA Times PolitiCal blog posted an update around 4 p.m. that says one of the original GOP 5 negotiating with Jerry Brown on a budget deal, Sen. Bill Emmerson (R-Hemet), has characterized the talks as "done."

Soon after, the governor followed suit with this press release, stating that, "Yesterday, I stopped the discussions that I had been conducting with various members of the Republican party regarding our state’s massive deficit."

The situation in a nutshell: Brown and the Democrats want to hold a special election to extend taxes in order to make up what remains of the enormous state budget deficit, but they need some Republican votes to get the super-majority required to put it on the ballot.

Negotiations have focused on five Republican senators who have been willing to deal, while the rest of the GOP caucus, pushed by anti-tax activists, have held fast to the notion that even putting the tax matter on the ballot for voters to decide was a place they didn't want to go.

Americans for Prosperity Anti-Tax Ad

A couple of days ago, I asked KQED's Sacramento Bureau Chief John Myers some fundamental questions about the ongoing battle:

Question
Why was Governor Brown so set on a June election? Why not hold it later if negotiations didn't move along fast enough?

John Myers
Brown's main goal was a budget in place by start of the new fiscal year, July 1. June was the earliest he thought he could get an election.

Question
It's been reported that Brown wanted to hold the election before teachers went on vacation. Is that true?

John Myers
The "summer vacation" thing is, at best, secondary; an on-time budget was what drove the timeline.

Question
We've heard that in the face of Republican recalcitrance on the election, one potential Plan B is to go to voters directly with a ballot initiative. Why didn’t Brown do that in the first place?

John Myers
We may never know. It seems as though Brown was confident he could rally enough backers to his plan to effectively "smoke out" a few moderate-leaning Republicans. I think that's why we saw him court business and law enforcement groups so much. But Brown has never figured out a way to remove anti-tax crusaders from a position of power while also getting Democrats to accept GOP demands. We should remember that were Democrats to concede pension, budget, and regulatory changes, this could have been over tomorrow, because those were the original demands of the GOP 5.

Question
If this gets pushed to a November ballot, via signatures, what happens in the interim? Doesn’t there have to be a budget in the meantime? How do they do that – “all cuts” as Brown has said, or using some sort of gimmickry that he has publicly eschewed.

John Myers
My reporting has found that the November initiative idea is almost undoable, and I think the story was put out there to coax GOP members to get on the train before it leaves town.

The state treasurer's office tells me that a budget "balanced" with hoped-for-but-not-enacted taxes would fail the smell test on Wall Street. And the state has both short and long term cash needs from investors before November. That means Democrats would have to ratify a $26 billion package of spending reductions in hopes the voters would roll some of them back. As one top Dem staffer said to me this week, "That's not gonna happen."

Question
How difficult would it be to meet GOP requirements on pension reform for a deal – isn’t pension reform such a big topic that there’s no way they can do it in time?

John Myers
Yes, plus "reform" is in the eye of the beholder. Would small tweaks, like a cap on annual pensions, be enough? Or are Republicans demanding the end to "defined benefit" plans and installation of 401(k) type "defined contribution" plans? That's a deal breaker for many Dems, even though a recent poll shows it's popular.