Speaker Bass Addresses Governor’s Proposal and Budget Crisis Issue in Wednesday Press Conference

I have not had a chance to look at the details; my staff has briefed me in general. I do believe our $18 billion worth of solutions is somewhat addressed in the governor’s proposal. Unless we actually have the two-thirds vote to move forward immediately with his proposal, I am hopeful that we will at least address the immediate crisis at hand.

In response to a question regarding Governor’s proposal—what supports, what opposes

I don’t think I could be that specific. Let me say though that the proposal cuts for very very deep cuts to education and I am hoping that we don’t have to go that far. I’m also hoping as you know that once President Obama takes office that there will be economic stimulus for states. I don’t believe that I would suggest that the federal government should bail out the state of California. But, what I do believe is that California for the dollars that we send to Washington that we do not receive a return on that money and I am hoping where we are in the categories where we are underfunded that we will get increased funding from the federal government to allow the deficit to be closed and the cuts not to be as deep as the governor is suggesting.

Whether the Governor will change mind on $18 billion passed by legislature

I have not talked with him over the last couple of days. I’m hoping to talk with him before the day is over and maybe get an indication on that. I will tell you that we certainly felt that we were very close in terms of the economic stimulus that we were negotiating on. As I mentioned, I do believe we have all year long to stimulate the economy. What we need to do now is to stop the bleeding which is running out of cash.

Let me also say that in terms of one part of the budget, that I am aware of, where he’s saying that we do the revenue anticipation warrant, which is borrowing but it’s extremely expensive borrowing. I’m not sure the amount he’s proposing, but for example, if we borrowed $4 billion in RAW (revenue anticipation warrants), we would pay back hundreds of millions of dollars in interest. So it does concern me that he is proposing additional borrowing when borrowing was certainly one of those things that got us into the situation we are in now.

Practical way to avoid putting out IOUs

I absolutely believe that the state does not have to put out IOUs. The $18 billion in solutions that we put forward and that we are currently discussing with the governor, if he signs those proposals that will prevent the IOUs from being issued. Now it won’t prevent them from being issued forever, but at least it gives us another several months for us to come up with the votes that are needed for us to pass a more comprehensive solution.

Democrats willingness to do things that constituency disagrees with
In the $18 billion of solutions that we put forward, and the economic stimulus that we agreed to, offends every one of our constituencies. All of the constituencies that work on behalf of public employees that fight against the cuts that we put forward. The education coalition—the cuts that we put forward to education. The environmental community—the relaxing of CEQA. Every single one of our constituencies have been offended by what we have done so far. And we were even willing and are willing to go further. But at some point in time, you have to say, if we have met you 75% of the way, if the economic stimulus proposals that you are putting forward will not address the crisis that Mr. Chiang references yesterday, then we have all year long to debate the 25% that are remaining of your proposals. He should at least take an affirmative step and adopt the solutions that we’ve put forward at this point in time.

Worker Compensation Part—Furloughs and Reduction of State Holidays

Let me just say that in my conversations with the public employee unions, they have told me that they absolutely understand the crisis that we’re in. They understand that they are probably going to have to give up a couple of holidays. That they’re not going to get raises and all of that. What they object to is the Governor going around the collective bargaining process. What they pointed out is historically when the legislature has attempted to do that, even putting bills on the governor’s desk, going around the collective bargaining process, the governor has consistently vetoed those bills and said that they should be dealt with in collective bargaining.

My recommendation to the governor’s office was for him to sit down with the unions, for them to come to some resolution and then the legislature could put in statute what they had arrived to in the collective bargaining process. It’s not just a matter of giving away the holidays in this contract, the governor would like to take them away permanently by statute. If that’s the case, then bargain it first and then bring it to us.

Earlier Assembly Speaker Karen Bass made the following statement after Governor Schwarzenegger released his budget proposal:

“The governor's proposal released today has one positive message: he may finally be coming around and realizing he needs to approve the responsible package of budget solutions the legislature passed December 18.

“That package includes $18 billion in real cuts and new revenues to head off the cash crisis and take a big swipe at the deficit. It includes $3 billion in new funds for transportation projects and $3 billion in expedited projects voters have already approved. That means we'd be creating 367,000 new jobs at a time California needs all the new jobs we can get.

“So far, legislative leaders have compromised, but the governor has been holding up these budget solutions and these new jobs. We've compromised by easing environmental restrictions for transportation projects. We've compromised by expanding public private partnerships. We've compromised by putting half a billion dollars in state employee compensation on the table.

“The governor's latest proposal assumes the cuts and revenues from the legislative budget solution package. That's progress. So let's get agreement on that package, keep California from going over the financial cliff, and then tackle the next round of hard challenges to find solutions to the rest of the deficit.

“There are significant questions about what revenue the lottery can really bring in...there are concerns about whether California can manage the additional borrowing the governor is proposing...and there are problems with cuts that seriously harm the students in our schools.

“All those issues can be addressed as we move through the rest of the budget process. Right now the most important step is for the governor to recognize that all his demands aren't nearly important as the jobs we want created.

“I appreciate the governor acknowledging today the necessity of the cuts and revenues the legislature approved and I hope the governor's first act of the new year will be to sign the responsible package we are putting before him.”

Senate President pro Tem Darrell Steinberg (D-Sacramento) issued the following statement in reaction to the $41 billion budget plan the Governor put out Wednesday.

“If the administration’s point today is to try to impress upon us the urgency of the situation, it is not necessary. We have been working diligently throughout the holiday to try and meet the administration more than half way on their economic stimulus package.

We are committed to doing everything we reasonably can to gain the Governor’s signature for the $18 billion revenue and cut solution we put forward on December 19th. It remains the only viable solution on the table. You don’t get to a $41 billion solution without solving the first $18 billion. That solution is ready to be signed and then we can get on with solving the total problem.

The fundamental problem with what they laid out today is that they don’t bring a single Republican vote to pass the revenue element of their proposal. That has been the long standing reality here. We are certainly willing to be proven wrong, but until then we intend to govern and do everything we can to try and solve the problem with the Governor. They also rely on a massive borrowing strategy.

I spoke with the Governor today and I told him we can get to a fair and reasonable solution. I never give up and I believe there is a solution to these challenges. If the administration is willing to stay at the table and work though some of their issues, we can still get this done in a way that speeds up transportation projects, protects the environment, and creates much needed high wage jobs. The days are passing. There is too much at stake.”