Budget standoff: Plan fails again in Senate
California senators failed in another attempt to approve a state budget Wednesday despite a pledge by Gov. Arnold Schwarzenegger to use his line-item veto to bring the spending plan into balance.
One GOP lawmaker broke ranks with his caucus to vote for the long-delayed budget, but the remainder of Republicans were unswayed by Schwarzenegger's appeal, and the house adjourned without striking a deal.
Senate President Pro Tem Don Perata, D-Oakland said he was frustrated by Republicans' unwillingness to put up the votes for a budget that Democrats have only reluctantly agreed to support. He accused Republicans of negotiating in a "dishonest" fashion after the governor agreed to address the operating deficit and other GOP concerns.
The Democratic leader sent members back to their districts and said "it's very likely" the Senate will not reconvene until the Assembly returns from summer recess on Aug. 20.
After a standoff of more than a month, state Sen. Abel Maldonado, R-Santa Maria, said he was convinced to support the budget by a Tuesday meeting with Schwarzenegger, who he said promised to use his blue-pencil veto to reduce the operating deficit in the budget from $700 million to zero.
"The governor looked at 14 members of the Senate caucus and said, 'Yes, I will work hard to get to zero,'" Maldonado said before casting his vote. "It's been stated that a vote for this budget could cost me my re-election. ... If I lost my election because I voted for a balanced budget that doesn't raise taxes ... that's a price I'm willing to pay."
The budget failed to draw the necessary two-thirds support in a Wednesday evening session, however, and Republican leader Dick Ackerman of Irvine said leaders would have to return to the negotiating table.
"We have come a long way from where we started in May and June, but we're not there yet," he said.
Schwarzenegger, in a statement, said he was disappointed in the outcome.
"Despite my frustration, I want to assure the people of California that I will do everything in my power to make sure the daily operations of state government are not disrupted," he said.
He noted that state vendors and contractors can't be paid, and said financial markets may lose confidence in the state's ability to conduct business.
"If our credit rating drops, taxpayers pay more to finance capital projects," he said. "My job now is to make sure this does not shut down state government."
While most state employees have continued to receive paychecks since the July 1 start of the new fiscal year and state services have been virtually uninterrupted, nursing homes, regional centers, adult day care centers, child care agencies and others who rely on state payments say they have had to seek loans to stay afloat.
State Controller John Chiang said Tuesday that he was unable to make about $1.1 billion in payments through July.
Because of California's requirement that two-thirds of the Assembly and Senate must agree on the annual budget bill, Republicans in each Democratic-controlled house must provide votes.
The Assembly -- with nine Republicans on board -- on July 20 approved its version of the spending plan and then departed on a scheduled monthlong legislative recess.
But GOP votes have been hard to come by in the Senate, where at least two are needed to satisfy the two-thirds rule. The spending plan stalled in the upper house July 21 with Republicans demanding at least $700 million in further cuts to bring the state's expenditures for the fiscal year in line with the amount of revenues they expect to take in.
They also demanded a law forbidding Attorney General Jerry Brown from using the California Environmental Quality Act to force developers to account for potential adverse impacts their projects would have on global warming.
Schwarzenegger embraced the Assembly version of the budget and sought GOP votes. He said Wednesday he shares the GOP's concerns over the global warming issue but that "I don't think it is appropriate to hold up the budget over a non-budget issue."
The Assembly version assumes the state will spend about $700 million more than it takes in during current fiscal year.
It cuts about $1.1 billion in public transit funds, delays until July 2008 cost-of-living increases for low-income elderly, blind and disabled. It also assumes no tax hikes but increases student fees at California State University and the University of California.
Other Republican senators said they wanted more than a promise from the governor that the operating deficit would be eliminated.
Ackerman said Republicans still wanted changes in welfare provisions, among other items, and Sen. Tom McClintock, R-Thousand Oaks, said he would leave it to others to judge the "reliability of the governor's assurances."
The governor's legal authority to reduce spending in the budget bill through line-item vetoes is limited.
He cannot, for instance, unilaterally make the $300 million cuts he and Senate Republicans have sought to eliminate welfare payments to families in which parents have not met work or schooling requirements. That cut would require a change in law with the Legislature's consent.
He also can't significantly reduce spending to K-12 schools because the pending budget merely meets the Proposition 98 funding guarantee. Suspending that requires a two-thirds vote of the Legislature, a politically perilous step neither he nor lawmakers appear ready to take.
Some of the most unprotected spending areas include higher education and the estimated $500 million or so in the budget to be sent to local governments for a variety of public safety programs. Either move would be politically unpopular. Higher education cuts could result in additional fee increases or service reductions at public campuses.
The governor also could reduce the Medi--Cal budget -- a significant area of spending -- if he produced new estimates that showed caseloads for those programs will drop below what was projected when the budget was drafted.
But that may work on paper only. If caseloads come in higher, lawmakers and the governor will have to approve a deficiency bill later in the year. If they indeed come in lower than projected, the state would get the savings anyway, no matter what the budget says.
Cutting the state's core bureaucracy may also be problematic. The budget already includes a $125 million unallocated cut that departments will have to deal with. Other big-ticket items -- prison spending and 24-hour health facilities, such as state hospitals -- are difficult to reduce because of court-ordered obligations.
Source: By Judy Lin - Bee Capitol Bureau
Date: 8/2/2007
California senators failed in another attempt to approve a state budget Wednesday despite a pledge by Gov. Arnold Schwarzenegger to use his line-item veto to bring the spending plan into balance.
One GOP lawmaker broke ranks with his caucus to vote for the long-delayed budget, but the remainder of Republicans were unswayed by Schwarzenegger's appeal, and the house adjourned without striking a deal.
Senate President Pro Tem Don Perata, D-Oakland said he was frustrated by Republicans' unwillingness to put up the votes for a budget that Democrats have only reluctantly agreed to support. He accused Republicans of negotiating in a "dishonest" fashion after the governor agreed to address the operating deficit and other GOP concerns.
The Democratic leader sent members back to their districts and said "it's very likely" the Senate will not reconvene until the Assembly returns from summer recess on Aug. 20.
After a standoff of more than a month, state Sen. Abel Maldonado, R-Santa Maria, said he was convinced to support the budget by a Tuesday meeting with Schwarzenegger, who he said promised to use his blue-pencil veto to reduce the operating deficit in the budget from $700 million to zero.
"The governor looked at 14 members of the Senate caucus and said, 'Yes, I will work hard to get to zero,'" Maldonado said before casting his vote. "It's been stated that a vote for this budget could cost me my re-election. ... If I lost my election because I voted for a balanced budget that doesn't raise taxes ... that's a price I'm willing to pay."
The budget failed to draw the necessary two-thirds support in a Wednesday evening session, however, and Republican leader Dick Ackerman of Irvine said leaders would have to return to the negotiating table.
"We have come a long way from where we started in May and June, but we're not there yet," he said.
Schwarzenegger, in a statement, said he was disappointed in the outcome.
"Despite my frustration, I want to assure the people of California that I will do everything in my power to make sure the daily operations of state government are not disrupted," he said.
He noted that state vendors and contractors can't be paid, and said financial markets may lose confidence in the state's ability to conduct business.
"If our credit rating drops, taxpayers pay more to finance capital projects," he said. "My job now is to make sure this does not shut down state government."
While most state employees have continued to receive paychecks since the July 1 start of the new fiscal year and state services have been virtually uninterrupted, nursing homes, regional centers, adult day care centers, child care agencies and others who rely on state payments say they have had to seek loans to stay afloat.
State Controller John Chiang said Tuesday that he was unable to make about $1.1 billion in payments through July.
Because of California's requirement that two-thirds of the Assembly and Senate must agree on the annual budget bill, Republicans in each Democratic-controlled house must provide votes.
The Assembly -- with nine Republicans on board -- on July 20 approved its version of the spending plan and then departed on a scheduled monthlong legislative recess.
But GOP votes have been hard to come by in the Senate, where at least two are needed to satisfy the two-thirds rule. The spending plan stalled in the upper house July 21 with Republicans demanding at least $700 million in further cuts to bring the state's expenditures for the fiscal year in line with the amount of revenues they expect to take in.
They also demanded a law forbidding Attorney General Jerry Brown from using the California Environmental Quality Act to force developers to account for potential adverse impacts their projects would have on global warming.
Schwarzenegger embraced the Assembly version of the budget and sought GOP votes. He said Wednesday he shares the GOP's concerns over the global warming issue but that "I don't think it is appropriate to hold up the budget over a non-budget issue."
The Assembly version assumes the state will spend about $700 million more than it takes in during current fiscal year.
It cuts about $1.1 billion in public transit funds, delays until July 2008 cost-of-living increases for low-income elderly, blind and disabled. It also assumes no tax hikes but increases student fees at California State University and the University of California.
Other Republican senators said they wanted more than a promise from the governor that the operating deficit would be eliminated.
Ackerman said Republicans still wanted changes in welfare provisions, among other items, and Sen. Tom McClintock, R-Thousand Oaks, said he would leave it to others to judge the "reliability of the governor's assurances."
The governor's legal authority to reduce spending in the budget bill through line-item vetoes is limited.
He cannot, for instance, unilaterally make the $300 million cuts he and Senate Republicans have sought to eliminate welfare payments to families in which parents have not met work or schooling requirements. That cut would require a change in law with the Legislature's consent.
He also can't significantly reduce spending to K-12 schools because the pending budget merely meets the Proposition 98 funding guarantee. Suspending that requires a two-thirds vote of the Legislature, a politically perilous step neither he nor lawmakers appear ready to take.
Some of the most unprotected spending areas include higher education and the estimated $500 million or so in the budget to be sent to local governments for a variety of public safety programs. Either move would be politically unpopular. Higher education cuts could result in additional fee increases or service reductions at public campuses.
The governor also could reduce the Medi--Cal budget -- a significant area of spending -- if he produced new estimates that showed caseloads for those programs will drop below what was projected when the budget was drafted.
But that may work on paper only. If caseloads come in higher, lawmakers and the governor will have to approve a deficiency bill later in the year. If they indeed come in lower than projected, the state would get the savings anyway, no matter what the budget says.
Cutting the state's core bureaucracy may also be problematic. The budget already includes a $125 million unallocated cut that departments will have to deal with. Other big-ticket items -- prison spending and 24-hour health facilities, such as state hospitals -- are difficult to reduce because of court-ordered obligations.
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