Skip to comments.CA: Democrats warn governor of spending line they will not cross
Posted on 05/06/2004 7:13:49 PM PDT by NormsRevenge
SACRAMENTO (AP) - Even as administration officials continued work to finish Gov. Arnold Schwarzenegger's revised budget due out next week, Assembly Speaker Fabian Nunez warned the Republican governor Thursday not to cut too deep.
"Make no mistake, we are going to fight very hard for the things that we believe in," said Nunez, D-Los Angeles, at a noontime press conference. "We will tell the governor of those things that we really want in this budget, what we think is important and socially responsible. And the governor can tell us how he plans to see that the revenues are there to fund those programs."
The warning came on the same day that state Controller Steve Westly announced tax income during April came in $2.1 billion more than the governor's estimates - much of that driven by a tax amnesty program.
While news of the extra income was welcomed at the Capitol, it remains only a small fraction of what is needed to close a 2004-2005 shortfall estimated in January at $17 billion. The higher income offsets the loss of a like amount in state money from several court cases, including a ruling that struck down a business tax and one that invalidated a plan to borrow money to pay a pension obligation.
Schwarzenegger is expected to unveil next week a revised budget plan that includes billions of dollars in borrowing and one-time savings but also billions more in service cuts - but no new taxes. His January budget plan proposed to close the most of the gap with $5.3 billion in one-time savings and another $9 billion in savings from spending cuts and program shifts.
Democrats have said they want to consider tax increases as part of the solution.
"It's not an issue of taxes, it's an issue of what we want in terms of quality public services and how we pay for what we want," said Assemblyman Darrell Steinberg, D-Sacramento. "When we look at the potential cuts to higher education, to health and human services, there's a line to be drawn in terms of what we won't go below."
Westly said it's critical that both the Legislature and the governor keep an eye on the end of the state's fiscal year, June 30, as a critical deadline for the budget.
"Wall Street is looking for signs that California government is becoming more functional," he said, noting that investment rating firms have already upgraded their outlook for the state since the passage of Propositions 57 and 58 - which authorized a $15 billion bond sale and a prohibition on future borrowing. "The next piece is to get a budget on time and balanced."
Westly also noted that personal income also grew during April, $1.2 billion more than expected, while corporate taxes were $485 million higher.
On the Net:
State Controller's office
A complete lie. It is an issue of taxes.
The real issue is that the RATs want to redistribute money in order to buy votes. Taking it from people who earn it and giving it to those who don't earn it. Some of the money lines the pockets of the politicians in the process of being redistributed.
What we really need is an ammendment allowing only taxpayers and military to vote. if you aren't contributing to your country you should not have a voice in what your country does.
Well ... Duh!
Arnold bought these clowns six months by supporting a $15 billion bond issue. Without it we would be deep into priority setting already. I wonder what Arnold's plan is for when the Democrats fail to approve a budget and the deficit producing spending rate continues?
Will he submit a measure to the voters detailing a budget? That will take until November. What additional deficit will have been incurred by then? Will there be another bond issue to cover it?
Stay tuned for another exciting episode of "The Governator".
The political dynamics have changed. For the past four years it was the Republicans who were blamed for obstructing the passage of a budget. Democrats in the Legislature controlled the content of the budget (especially spending), and Gray Davis was willing to sign anything that they passed. Only the requirement of a 2/3 vote to raise taxes gave the Republicans any leverage at all.
Now that Schwarzenegger is the Governor, he can line-item veto the crap out of whatever budget is sent to him. California has a fairly strong line-item veto provision. So the Democrats will be the ones refusing to vote for a budget, because they know that the Governor can eviscerate their heavy spending (if he chooses to).
That gives Schwarzenegger enormous bargaining power. If Democrats refuse to pass a budget, they become the obstructionists and they get blamed when the state of California stops paying bills and stops funding all the Democratic special interests (e.g., schools). If Schwarzenegger can convince the Dems that he really means it about spending cuts and no tax hikes, they will want to have a say in the spending cuts rather than leaving it up to his veto pen. And the sooner they can make a deal, so it doesn't look too obvious they were strong-armed again, the better it will look for them politically.
I'm not saying it has to happen this way. Schwarzenegger could cave in and agree to tax hikes, and maybe twist enough Republican legislative arms (or at least provide political cover) to get the needed 2/3 majorities. But Schwarzenegger is in the driver's seat, despite the Democratic rhetoric quoted in this article, and he does have the power to ram through the budget he wants if he's willing to fight for it.
I need to learn more about the line-item veto capability of the Governor. I recall hearing that some 40% of the budget must be allocated to education. I don't know what other limitations might apply.
I disagree with your statement above. I believe that the Demoncrats will leave the entire mess on Arnold's desk and count on the "dis-entitled" to go after Arnold in November. This will be the way that they send the message that taxes must be raised. To vote for spending cuts would undermine that message.
How can they go after Arnold in November? He isn't up for re-election until 2006. Nor does it affect him that much if more or fewer Republicans are elected to the state legislature (and anyway the state is so gerrymandered that virtually all Assembly and State Senate districts are either safe Democratic or safe Republican seats).
The more Arnold wins, the more his power increases and the more his popularity rises. So he has an extremely strong political incentive to negotiate "deals" with the Democrats which everyone recognizes are really defeats for the Democrats with a bit of face-saving fluff thrown in.
I predict that Arnold will work out a deal to pass a state budget which has significant spending cuts (although not as much as he is initially demanding), no major tax hikes (although a few fee increases, so the Dems aren't left totally empty-handed), and a lot of one-time savings and revenue enhancements (like a deal with the Indian tribes for a bigger percentage of gambling receipts plus a one-time lump-sum payment to the state). This will get California through the next fiscal year, with Arnold hoping that an improving economy and rising tax revenues will close the structural deficit in 2005.
And here I thought that it was only the lack of a two-thirds super-majority which prevents new taxes. If the Demoncrats achieve a veto-proof super-majority which is able to raise taxes, then they will do that. They will then turn to the brainless masses who have empowered them to demand that the revenue be spent.
As for the distinction between "fees" and "taxes", there really is none, as far as I am concerned.
Well, that's true, but that's a huge "if". The Republicans and Democrats cut a deal on reapportionment which can best be described as the "incumbent protection plan". Virtually no districts in California are competitive; they are all heavily gerrymandered. Whoever wins the primary of the dominant party in that district will win the general election. So despite the Democrats' present heavy majorities in both houses of the legislature, it would be almost impossible for them to switch enough seats in November to achieve 2/3 majorities in both houses. If anything, the political tea-readers think that Republicans might be able to achieve a surprise pick-up of a couple of seats in the Assembly.
As for the distinction between "fees" and "taxes", there really is none, as far as I am concerned.
There is sometimes a distinction. For example, California's state-run university and community college systems impose a variety of user fees and heavily-subsidized tuition fees on students. Increasing a user fee (especially a below-market-rate fee as compared to private providers) is different than imposing a general hike in the sales tax or income tax. In other instances there is very little distinction, such as when the legislature tried to label the Vehicle License Fee a "fee" rather than a "tax" to avoid the 2/3 majority requirement to increase it. The courts would probably have shot that interpretation down, which is why the legislature eventually dropped that approach.
I expect Arnold to throw the Dems a bone in the form of several hundred million dollars worth of scattered fee increases. That way everyone will be able to say they compromised, and the Dems will claim they forced Arnold to repudiate his "no tax hike" mantra, and Arnold and the Republicans will claim that it's a piddling amount compared to the billions and billions in extra taxes which the Democrats were originally demanding.
If the above scenario is correct, it will be a 90% defeat for the Democrats, and everyone will know it. Arnold's popularity will continue to climb, and his bargaining leverage will continue to increase.
I am curious to know what the budgetted amount will be in your scenario.
The present "budget" is about $100 billion in spending versus $87 billion in revenue. Do you use different numbers and what are you predicting for next year?
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