We may never know for sure where the point of no return was passed in bipartisan budget talks this year, but it now seems clear that those talks are all but over and that Democrats have a majority vote plan in place to send to Governor Jerry Brown on Wednesday.
No election in 2011, no immediate extension of hotly debated taxes, and — in the wake of last fall’s Proposition 25 — no need for Republican legislators to be consulted.
The plan, described in detail by Assembly Democratic staffers, proposes to replace Brown’s entire $10.8 billion revenue package with a mix of windfall revenues, additional cuts, and one-time solutions.
The Democratic legislative budget includes no debt repayment; reinstatement of Brown’s original $2.85 billion deferral of money owed to K-12 schools and community colleges; an additional $300 million cut to higher education (shared equally by UC and CSU systems); an assumption that $2.2 billion from the sale of state buildings and from taking tobacco tax money from childhood programs survives court challenges; that the feds hand over $700 million to the state’s Medi-Cal program; and that a complicated tax swap from years gone by is unwound, thus freeing up $900 million while canceling a quarter-cent of the sales tax decrease now scheduled to take effect on July 1.
Those are only some of the highlights, but ones that go a long way towards filling in the hole left by extracting the governor’s revenues — the only portions of the budget plan that were subject to a supermajority vote.
“We’ve worked hard with the governor to engage a handful of Republicans in each house,” said Assembly Speaker John Perez. “It’s essential that we not allow people to drag out the discussion for no real purpose.”
The proposal appears to lay much of Governor Brown’s complicated state/local government realignment plan aside, except for the public safety component that now is linked with the U.S. Supreme Court ruling on prison overcrowding. Democrats say they would propose Brown’s tax package be considered by voters in November 2012 — a general election where voter turnout, thanks in part to the presidential race, should be high among Democrats.
The ‘Plan B Budget’ rejects a plan for $500 million in local law enforcement grants — something sure to draw lots of local fire — and tacks on a $12 vehicle registration fee to replace Motor Vehicle Account dollars that now come from the general fund — a fee that Democratic staffers say doesn’t trigger the Proposition 26 supermajority vote.
Whether the proposal relies on too many assumptions or gimmicks lies in the eye of the beholder. Following news by Controller John Chiang that May revenues were more than $400 million better than expected, the Democratic budget plan tacks on a similar amount in the 2011-12 year for a grand total of $800 million in solutions. The plan also asks the controller to delay a $540 million payment to the UC system for two months, thus counting as a budgetary “savings.”
And as rumored, the Democratic budget appears to resolve the hot button issue of redevelopment with a take-it-or-leave plan: redevelopment agencies (RDAs) can either agree to a $1.7 billion one time raid, with annual payments to help the state’s finances of $400 million… or… the RDAs will be officially scrapped.
No word from Governor Brown’s office on how he feels about the proposal, and whether he’ll sign it… at least nothing beyond his cryptic answer at Monday’s news conference. Speaker Perez described the package as a “multi-year workout plan,” and dismissed the political impact of accusations Wednesday’s vote will be motivated by the budget-or-no-pay provision of Prop 25.
Rather, Democrats will work hard to portray this as an on-time budget that calms Wall Street jitters about lending the state money for cash flow needs this summer.
All of this should make for an interesting day of debate on Wednesday.