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California Assembly Passes State Budget with Republicans Getting $1.2 Billion Taken From Transit, 4 Month Delay in COLA for Disabled and Seniors, Cut in Prop 36 Drug Treatment Funds

Tax Giveaways to Large Businesses Also Pass Assembly in Separate Bill Not Tied to Budget Bill

Perata Blasts Tax Credits; Senate Republicans May Have "Unit Rule" to Oppose Unless Majority of Them Agree to Support

By Frank D. Russo

The California Assembly finished its work a couple of hours before the sun rose this morning and passed a revised budget bill by a vote of 56 to 23. Assembly Republicans got about $1.4 billion of the $2 billion in cuts they demanded, and it is fair to say that this budget passed largely on the backs of public transit and with a four month delay of cost of living increases for the aged, blind, and disabled. Assembly Democrats did manage to save kindergarten to 12th grade education from cuts Assembly Republicans had demanded.

A separate bill containing a package of 5 tax credits, some of them directed to large businesses, not tied specifically to the state budget, also passed on a 51-19 vote and was apparently a sweetener to the deal required to get Republicans to vote for the budget. There also are changes to the way that national corporations' tax obligations are computed. It is expected to cost $600 million a year, and unless there is sunset language which has not been discussed, this will continue indefinitely unless a two-thirds majority backfills this amount at some point in the future. This is not likely.

All of this faces an uncertain fate in the State Senate where a two-thirds vote is needed for passage. Senate President pro Tem Don Perata blasted the tax giveaways, noting that a tax credit for teachers that had been a feature of past budgets was removed.

Although Democrats have 25 of the 40 Senate seats, only two short of the 27 needed to pass a budget and therefore only two Senate Republicans are needed to accomplish this, Republican Senators apparently have made a pact with each other that unless a majority of them (8 out of 15) are willing to vote for a budget, they will withhold their votes. So much for post partisanship and any individual judgment.

The budget plan passed by the Assembly is approximately $103 billion, about a billion less than that proposed by Governor Schwarzenegger in his May revision. It creates a $3.4 billion dollar reserve, 62% larger than the Governor's proposed May Revision, and the largest in state history.

Although it is relatively negligible "budget dust," the Assembly budget takes a swipe at drug treatment required by Propositon 36 and takes away $40 million of that funding.

Marty Omoto, Director of the California Disability Community Action Network, described the Supplemental Security Income/State Supplemental Payment (SSI/SSP) cost of living increase delay as follows:

Democrats reversed themselves from their previous action in April that fully funded the cost of living increase scheduled for January 1, 2008 for the State funded portion of the grant (SSP) as proposed originally by the Governor, and now will support a suspending that cost of living increase for four months, (January through April 2008). The four month suspension will mean a reduction of $123 million and shifting that funding instead to the state general fund. Disability, senior and mental health advocates and others expressed dismay, calling it a major reduction against a vulnerable population. The combined suspension of the cost of living increases mean a reduction of $247 million (or savings to the State General Fund

The Senate will take up the budget bill and trailer bills some time today. Late yesterday afternoon, a 6 p.m. floor session was scheduled; however, the Senate Daily File indicates the Senate will convene at 9 a.m. or upon the call of the President pro Tem.

Senator Perata sent a letter to Speaker of the Assembly Fabian Nunez, expressing his dismay about the spending cuts and the tax reductions to businesses:

Dear Mr. Speaker:

I am alarmed and dismayed by rumors that you are considering a half a billion dollars in tax breaks for special interests.

As you and I well know, Democrats have sacrificed funding for education, have postponed a meager cost-of-living increase for the state’s most vulnerable disabled residents – the aged, blind and disabled, and have barely thwarted deeper cuts to education and higher education. Even the increases we proposed to the state’s Prop 36 program – aimed at keeping non-violent drug offenders out of prison and putting them into treatment programs – has fallen victim to concerns about the state’s long-term deficit.

But most ironic, we have surrendered $185m in teacher tax credits to balance the budget!!! How could you now throw them over for Hollywood movie moguls and multi-national corporations???

Our out-year budget problem is already $5.5 billion dollars. We cannot continue to fund education, higher education and crucial human services issues, such as the in-home supportive services program, childcare, or funding for the aged, blind and disabled by providing tax giveaways.

I am deeply disappointed and saddened by your actions – and hope you will reconsider.

Where do we go from here?

Gov. Schwarzenegger issued a statement early today regarding the passage of the budget by the Assembly: "I applaud the legislature for tonight's hard work in moving the budget forward. Assembly leaders resolved their differences in passing this fiscally responsible budget and I look forward to continue working with the Senate."

Perata said he thinks the Governor may need to get involved to get recalcitrant Republican Senators on board.

Assembly Speaker Nunez said, “This is a bipartisan budget that is fair and fiscally responsible. What happened here tonight was the coming together of two different ideologies. We showed the people of California that Democrats and Republicans in the Legislature can work through our differences in a civil and thoughtful manner.” His office noted, in addition to the large reserve, the budget passed by the Assembly does the following:

• Repays $2.5 billion in bond obligations, $1 billion more than required
• Preserves the Williamson Act
• Rejects cuts to CalWORKS proposed by the Governor
• Fully funds aid to Medi-Cal and the homeless mentally ill
• Fully funds K-12 education

The Assembly has adjounred for their summer recess. This puts a lot of pressure on the Senate to act and get the budget to the Governor to sign it after making any reductions or eliminations of line items he desires as allowed by the California Constitution.

We'll keep you posted on developments in the Senate and more of the details of the Assembly debate and the budget which may be passed today.

Posted on July 20, 2007

Comments

Rather than the title, "...Republicans Getting $1.2 Billion Taken From Transit...", could you have also said, "...Democrats allowed $1.2 Billion To Be Taken From Transit..."? Look, the democrats run the legislature as the majority party. They set the agenda and calendar on legislative issues. We have a full time legislature while many states have a part time one. Yet California is once again late in it's own legislature getting a budget out on time. There is no reason for this logically. Blaming it on the minority/republicans does not released the majority party from their management responsibilities. When was the budget first addressed this legislative year? What "benchmarks" to get it done on time were set up by the majority party? There was time to talk about spanking and pet neutering however...

There should be concerns about long term deficits. We don't want our children saddled with the bill because todays legislature cannot do the math and spend only what they can afford. Isn't there already a small defict? Fix it now. Betting on a "dot-com" type economy already bit us once, ask Gray Davis.

The state is taking money away from residents who leave estates and the like "unattended" for a few years, defacto robbing it's own people to further bloat the general fund. This is a warning sign for the budget as well as simple decency.

Giving businesses tax credits? Don't democrats (and Arnold) want some type of universal health care and have businesses pay for a large chunk of it? Don't bite the hand that feeds you: They already pay taxes and pay employees who also pay taxes. To chase them out of the state (again) would poison your own pond/initiatives.

Democrat Speaker Nunez appears happy with this budget. Is that good enough for other democrats or will they still beat up the minority party for this too?

Posted by: Words are words... at July 20, 2007 09:58 AM

Dear Words are Words:

You really gloss over the facts that the Democrats had no choice here because of the 2/3 vote requirement. It's a red herring to talk about all these other issues. Even if there was no other legislation for the last six months--take away any bills you don't like such as the pet spay and neutering bill--you would have had exactly the same result. Why, because Republican votes are needed to pass the budget and they were not going to do so until they had these cuts made--and it may not be enough for the Senate Republicans. We will have to see.

The Assembly Democrats had a budget prepared earlier--but the blame (and if you think credit should be given) for these latest changes should go to the Republicans--plain and simple.

Unless you don't want to have a state budget at all.

Posted by: Frank D. Russo at July 20, 2007 11:42 AM

Simply put, taking care of businesses, oil, money,as long as the republicans are more than democrats to pass bills by majority to keep their interest on top democracy in california is still as dissipated and treated as an invisible entity. Homeless, economy, affordable housing should be top priority, fixing roads, stopping calworks, what about those hershey employees in oakdale. how much longer are we going to allow our 66% barely above poverety to continue living?

Posted by: Lydia Pawlak at July 25, 2007 07:52 PM

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