Revised budget doesn’t revise vote count

The revised budget Gov. Jerry Brown released Monday does not seem any more likely to win Republican votes than the governor’s original plan, which stalled in the Legislature over the question of whether to extend billions of dollars in expiring taxes.

Brown is still pushing to extend the taxes, except now he wants the Legislature to do the job directly rather than simply scheduling an election to ask the voters to decide the issue.

The election would come later, and voters would be asked to ratify the Legislature’s decision.

This change pleases Democrats in the Legislature and their allies in the public employee unions, who have said all along that a plebiscite on the issue would be a dangerous tactic. They fear the voters will reject the taxes, forcing Brown and Democratic lawmakers to pass a budget balanced on cuts alone.

Senate Leader Darrell Steinberg, D-Sacramento, has said he does not think an election on taxes, if it is needed at all, should come before 2012.

But if Republicans wouldn’t vote for an election on taxes, why would they vote to impose the taxes without an election? To do so would risk the wrath of state and national anti-tax groups that have collected signed pledges from nearly every one of them saying they would not do such a thing. The governor needs at least two Republican senators and two in the Assembly to support his plan, if every Democrat is on board.

Making Brown’s sales job even tougher, ironically, is a $6.6 billion increase in the state’s revenue projection for this year and next. A stronger than expected economy and a rising stock market have resulted in higher incomes, and more tax revenue for the state.

Republicans say they want much of that new money to go the schools. If they prevail, the payments would rob Brown of the issue he had hoped to use to win voter approval for extending the temporary taxes on income, cars and sales that are expiring this year. If the schools get at least the minimum amount required by the state constitution, it will be more difficult for Democrats to argue that they need a tax increase to keep them afloat.

In a preview of how such a campaign might sound, Senate Republican Leader Bob Dutton said Monday that Brown’s revised budget still spends more than the state can afford.

“With $6.6 billion in new revenues…we don’t need, and it’s ridiculous to ask voters for five years of new taxes,” Dutton said.

But Brown signaled Monday that his revised budget will not be his final offer. He said he is willing to negotiate on some of the issues Republicans say would be key to scheduling a special election on taxes, if not passing the taxes in the Legislature.

Brown, for instance, said bluntly that the state needs a new spending limit, which has been a top Republican priority. But the governor has not said what kind of spending limit he would favor. In the past, talks over a spending cap have broken down over how strict such a limit should be.

On another issue Republicans have put front and center – public employee pension reform – Brown already has offered a plan of his own, which Republicans say does not go far enough. The governor said Monday that he assumes pension reform will be on the 2012 ballot via citizen initiative even if it is not part of a budget deal.

But Brown insists that extending the temporary taxes is still necessary, despite the $6.6 billion revenue surge. His revised proposal would use most of that new money to retire budget debt or avoid gimmicks that would put the state further in the hole. That may be sound budgeting, but its political value is questionable because it makes the new money disappear without reducing the need much for new taxes or deeper cuts.

Brown proposes to use about half the new money for education, although much of it would simply go to replace an accounting gimmick the state has been using to manipulate its budget numbers. That state has been pushing its payments to the schools from one fiscal year to the next, which takes the money off the books in the first year, making state spending appear smaller than it is.

Overall spending on schools is not affected by the deferrals, although they do force school districts to borrow money to even out their cash flow. Now Brown is proposing to give them the money on time again, which won’t ultimately bring any more funds to the classroom.

Brown wants to use another chunk of money to replace another move he had proposed in January, a shift of about $1 billion to the general fund from the reserves of a special program that provides services to children from birth to age 5.

And some of the money would go toward replacing revenue from the temporary, .25 percent increase in the income tax that expired Dec. 31. Brown still wants to reimpose that tax next year, but taxpayers would get a break in the current year.

“This is a program that’s honest, it’s all laid out there and I think it makes sense for California,” Brown told reporters.

He said a competing Republican plan that would not extend the temporary taxes would leave the state with a worse deficit than it has today.

If the taxes are not extended, Brown said, the cuts required to balance the budget would set off a “war of all against all” by interest groups seeking to avoid the pain.

“If this thing falls apart, there will be all manner of untoward outcomes and animosities and division,” Brown said. “I think it will be very divisive for California. I think we will flounder.”

So far, there is little in his new plan to suggest that California will avoid the outcome he describes.

Daniel Weintraub is editor of the California Health Report at

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