Posted on 07/08/2004 8:32:04 AM PDT by NormsRevenge
SACRAMENTO (AP) - Negotiators said they would resume talks Thursday on California's stalled budget as tensions mounted over the last remaining stumbling block - reforming how the state pays for the operations of local governments. The question of local government financing has stymied a budget settlement for nearly a week, pitting city mayors and county supervisors against the Legislature's Democratic majority and increasingly, Republican Gov. Arnold Schwarzenegger.
Negotiations ended Wednesday without resolution, and there was a growing sense three weeks past the constitutional deadline for adopting a budget that local officials may not be able to reach agreement with lawmakers over the reform package. The impasse puts $2.6 billion in savings to the state in jeopardy.
"What happens when you get this close, people have a tendency to hold their ground," said Assembly Speaker Fabian Nunez, D-Los Angeles. "Pretty soon here people are going to lose their patience."
After watching the Legislature exercise its authority to redirect billions in local property tax dollars in the past, local officials said they would fight the cuts unless they receive a guarantee their money will be protected from future state raids.
Los Angeles Mayor Jim Hahn, who is serving as one of the primary negotiators for local governments, said Wednesday that he was not ready to concede a stalemate and still believes a deal can be worked out.
"We want as much protection as we can get," Hahn said. "We want to be the bankers and be in control of the process, (where) we're setting the loan terms."
Although Schwarzenegger had made getting an on-time budget a priority for his new administration, the state is now a full week into the new fiscal year without a spending plan. Ironically, the thorny issue of local government financing is partly the result of the Republican governor trying to get early agreement on his budget.
Facing an estimated $17 billion shortfall, Schwarzenegger proposed in January cutting cities, counties and special districts $1.3 billion in the 2004-2005 fiscal year. In response, local officials qualified a ballot measure aimed at preventing not only Schwarzenegger's transfer, but any future state raids without voter approval.
In May, the governor and local officials agreed on a compromise: cities and counties would accept $2.6 billion in cuts over the next two years in exchange for Schwarzenegger's backing of a new constitutional amendment that would protect local money.
Democratic leaders, however, objected to the accord, saying the deal made permanent a flawed financial relationship and left the state with no options for tapping local funds for help in an emergency.
The talks are now focused on how much of a guarantee local governments need while still giving the state some flexibility.
Officials close to the talks said counties and special districts have indicated support for the latest compromise from lawmakers. City leaders, however, have held out for stronger guarantees.
While the task of forging an agreement on local government moved ahead Wednesday, legislative aides and school officials noted that there are outstanding issues that could still derail the budget talks .
One is a proposal to eliminate an income tax break worth $125 million for school teachers. Another would close a tax loophole for buyers of luxury yachts. A third issue involves repealing a state law that prohibits schools from using outside contractors for non-teaching work.
Of the three, eliminating the teacher's tax credit will likely spark the most opposition. Already the California Teachers Association, the state's largest teachers' union, has said it will fight any plan to eliminate the tax break, said the union's president, Barbara Kerr.
"We keep hearing about no new taxes, and to tax the teachers of California without warning is an outrage," she said.
Superintendent of Public Instruction Jack O'Connell agreed, saying that eliminating the tax incentive "would send the wrong signals about our priorities as a state."
Republicans, meanwhile, want a proposal to impose $200 million in fees on businesses and rural property owners eliminated from the governor's plan. Also, Schwarzenegger's goal of securing $750 million in concessions from state labor unions has fallen well short.
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On the Net
Gov.'s home page: http://www.governor.ca.gov/state/govsite/gov-homepage.jsp
http://www.sen.ca.gov/
California Senate
http://www.assembly.ca.gov/acs/defaulttext.asp
California Assembly
That is the tax that irks me the most. It is completely unConstitutional. Don't pay property taxes, guess who really owns the property. Plus, most of it is suppose to be designated for public schooling, and what of those who don't have children or are grown? Talk about being taxed for a service you can't use.
People pay attention when they have to come up with the payment due in April. They tend not to notice when the withholding amount slowly, but surely, creeps up year after year.
That's another reason sales taxes are the way to go.
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