Preview of Tomorrow's Budget Battle: Ackerman Reveals that Global Warming Regulations, California's Environmental Laws, and Tying the Hands of Attorney General Jerry Brown Are Part of What Senate Republicans Are After

Perata started out by saying that to totally eliminate an operating budget deficit for the year, as Ackerman has stated the Republican caucus in the Senate has wanted, would necessitate an additional cut of $700 million or more from the budget. He said it could be as high as $2.2 billion.

Perata said: "There's been a challenge that the Governor's assumptions in this budget were inflated, particularly on the sale of the Ed Fund, which he scored at a billion dollars, and the unclaimed property, which some Republicans believe is a much lower number than the Governor put in his budget. So, we're somewhere between $700 million and $2.2 billion is what needs to be cut and that's why I suggested that the Republicans come back tomorrow and see specifically how they would go about that."

When asked if he still sticks to his earlier accusation that the Senate Republicans were guilty of "bad faith bargaining," Perata said it was an accurate quote and then sidestepped the issue and talked about what the Assembly had done outside of the negotiations of the "Big Four" (the Democratic and Republican heads of the two houses). He said:

"When you sit down in negotiations, there are two members of the Assembly and two members of the Senate, and when the bill came over from the Assembly, it included a huge tax cut package as part of the deal from there. That was never part of anything that Dick and I were party to, so we were a little bit miffed or angry that they would do something to us that we really fle twas well beyond the scope of our discussions. And that's been a hang up right now because I think Dick and some others in his caucus want to send something back to the Assembly which would require them to come back into session.

"…It was silly. First of all, there had been no open discussion of this kind of stuff. It had been put together by some of the lawyers for the interests it would benefit. That's a literal fact. And so when it finally saw the light of day, what they thought was a n R&D tax credit, turned out to be a tax increase. They were going to put a cap on sales tax on airline fuel, unfortunately they didn't say "scheduled" airlines, so people from Arnold Schwarzenegger to the guy from Oracle would have received a tax cut there. It was sloppy and it was a perfect exhibit of something complicated being done by too few people at the last minute."

The Assembly tax credits are not--seemingly--part of what is before the Senate as they struggle to reach an agreement of two-thirds of their ranks on a budget so it can pass. But who knows at this point what is on the table?

Ackerman was asked if they had come up with their own spending plan, which is due tomorrow. He said "Yes, we've been working on that almost day and night since Saturday. A lot of the ideas which were formulated all together, we have put together. We've offered to Don and the Democrats the last two or three months. But I think Don sort of hit it on the head. Normally, negotiations go on and you get agreement from the four leaders and then we put out a budget and then it goes to the Governor. That's the way it's been done the last number of years. I think it's worked very successfully. This time the Assembly went off and decided to go off and do their own thing and we hadn't completed negotiations yet, so it makes it a little more difficult.

Krasny: "What would you be eliminating? Some say you can't get away from avoiding elimination of education cuts. [sic]

Ackerman: The proposal that we will put out tomorrow will not touch K through 12 and will not touch law enforcement. So we think there are things that can be looked at. There are things in Cal Work and some of the things that the Governor had in his May Revise--we had some other ideas. A lot of it is small stuff. A lot of times during the larger negotiations there's just not time to look at all the small things and we had our staff, I said, sometime look at the small things, give me everything. You get a few million here and a few million there and sometimes it adds up to real dollars.

Krasny: In the Everett Dirksen sense [A Republican Senate leader who made a similar comment in the 1960's]. But there's a growing debt of about $12 or $13 billion in just General Obligation Funds. That's deficit spending, isn't it?

Ackerman: Well I thought all of us realized, you know, my goal was to make this budget balanced for this year and bring down the out year deficit. After looking at the out year deficit, a lot of which is paying down on the recovery bond, some of that we can't eliminate, but I think as opposed where we were going a few months ago, I think we have made progress and we are starting to bring that out year deficit down and I'd like to bring it down as much as I can.

Krasny: So you're optimistic not only about that, but about getting past this impasse?

Ackerman: Yeah, I think, you know, part of this is just negotiation and when we had all four folks working together, I think we were making some progress, and that slowed us down a little bit. Now, I think, after tomorrow, I think we'll be back on track.

Krasny: Agreed Senator Perata that this is going to be back on track?

Perata: Well, I'm highly skeptical that what the Republicans present is going to be something that my caucus can accept.

You know what we're really talking about here--they may be small numbers, but they are programs like funding prostate and breast cancer research and programs that reach into the community to help young minorities get to college. They may not be seen as essential by some, but for us, you know, the offer of higher education as the promise and possibility only is as good as their ability to have the help that the state should give.

So we have looked at what our core mission is. And we've cut pretty much everything we can. Now Dick talked about cutting Cal Works. We're simply not going to go where the Governor wanted to go. He wanted to put sanctions on families and children who did not comply after 5 years. Well, that blanket assumption that people if they haven’t gotten a job in five years, should be somehow punished for that, particularly if there are kids, is just wrong. We won't accept that.

The other thing that has come up is--the Republicans--in California you have to have two-thirds, so this is an opportunity for the minority to have their voice heard. And one of the issues that we've been stuck on is something that deals with global warming and whether or not we're going to allow the Air Board and the Governor's office to adjust CEQA and set the standards for applying global warming to projects. None of us want to have that happen retroactively, so that--we want to start spending the bond money that voters gave us approval for. But now we're being asked by the building industry association to basically exempt projects from any kind of CEQA review--and we won't go there.

And so, we have to decide tomorrow what's extraneous to the budget, what's appropriate to the budget. As far as I'm concerned, if there's stop talking about dollars in a budget, it's not a discussion that we should undertake right now. And the fact of the matter is, we have worked pretty well together for the last two years. And I've told Dick and his caucus, you know, when have I refused an accommodation, to quote a movie. I mean, as far as I'm concerned, if there are problems with some of this stuff that we discover later, we will fix that. But to hold up the entire budget over a couple of things that, you know, certain members believe has to be changed, I think is wrong.

Krasny: Senator Ackerman

Ackerman: Well an important part of this budget--and some things are related to money and part of this goes to the disposition of the bond proceeds. Last year, we passed out by a two-thirds vote a bond package and the people of California voted to approve that. Our guarantee to the people of the state of California was that that money was going to be used appropriately and not spent on extraneous matters. And everybody has that as a priority, putting in some bond implementation language that actually makes that bond money go into actually bricks and mortar and not going into other things.

Krasny: Assuming that by extraneous matters and various other things that you are talking about things having to do with global warming and averting global warming.

Ackerman: Yes. And Jerry Brown has been very active in the last two to three months. He's filed suit against the County of San Bernardino. He's trying to stop the expansions of the refineries in Northern California where we need more gasoline. And he's already been out saying that he's going to do everything he can to ensure that AB 32 regulations--which there are no AB 32 regulations now, they're going to be promulgated by the Air Resources Board sometime in the future--so there's nothing to comply with--but he's already threatening existing projects. And I think it's very important. We've already had letters from people all over the state, in the business, related to this thing, saying if you don't do something about Jerry now, he's going to stop you from spending those bond proceeds.

Perata: Well, those of us that have found Jerry Brown over the years realize that he's far better brought in and made part of the discussion than to threaten to him that we're going to create laws that will--what he sees will impinge upon his ability to do his job. And I've said that and I still say that. Jerry's not unreasonable. He's made a departure from his previous moves. Jerry's always been considered a liberal, but as the Mayor of Oakland we've watched his moves. He's certainly no more than a centrist right now.

One other thing, Michael before we leave. We cut $5 or $6 billion out of the budget of California a few years back when we got rid of the vehicle license fee, the so-called car tax. That is the same amount of our structural deficit right now. We are out of balance by about $5 billion because we gave back--we refused to admit any longer levy a fee on drivers, which in retrospect is the dumbest damn thing that I have ever done. But in state in the union that we should somehow exempt cars from their rightful role as financial supporters of the budget is just lunacy. Until we reconcile that, we've lost that money.

Now, if the argument is that we have to get by with $ 5 billion less in services, I reject that out of hand. If it's that we need to adjust our tax system so it's more fair and equitable, I'll sign up for that. But you can't have it both ways, and there's no way in the world that any right thinking Democrat--I shouldn't say right thinking, should I--any Democrat will sit down and say, we're going to score down $5 billion dollars permanently; you simply can't provide the services in California this state needs. We'll become a third world nation if we keep that up.

Krasny: Dumbest thing I've ever done, I think you once said was the Raiders. So you've exceeded…

Perata: Second dumbest thing I've ever done. Senator…

Ackerman: Michael, just to respond to that.

Krasny: yeah, Senator…

Ackerman: $5 billion I not the whole story. Our state in the last three years has increased income --that's just new income into the state--with no new taxes, no new fees--of $20 billion--that's in three years. So the state is taking in lots and lots of money. It's just a matter of how we spend it."

Previews of coming attractions. Get the popcorn and tune in tomorrow.