Legislature plan falls short of closing entire deficit
Matthew Yi, Carla Marinucci,Richard Procter, Chronicle Political Writers
San Francisco Chronicle
07/24/2009
The Legislature passed a plan today that fell short of closing the state's gaping $26.3 billion deficit in part because lawmakers did not approve two controversial bills - one for new oil drilling off the Santa Barbara coast and the other a plan to take gas-tax funds away from counties.
Gov. Arnold Schwarzenegger indicated he would sign the deal, despite the fact that lawmakers did not include a $920 million reserve he had demanded. The governor said he intends to use his line-item veto power to reinstate the reserve.
Exhausted legislative leaders in both houses - who stayed up all night voting on the deal - pronounced the plan flawed, but also said they desperately needed to save the state from continuing to issue millions of dollars in embarrassing IOUs and from potential insolvency.
"This particular budget will be very, very difficult for a lot of people," said Senate President Pro Tem Darrell Steinberg, D-Sacramento, referring to deep spending cuts that will certainly result in larger class sizes, higher college tuitions, and loss of health and welfare benefits to the poor, the elderly and the disabled.
Earlier today, the Senate passed all 30-plus bills in the package. The Assembly, however, did not approve two the following two bills:
A bill tabled by the Assembly would have allowed the state to take about $900 million in gas-tax revenue away from counties that rely on those funds to repair local roads.
A bill rejected by the Assembly would have raised $100 million in the current fiscal year from new oil drilling off the Santa Barbara coast.
The package approved by the Legislature included $15.6 billion in spending cuts and nearly $9 billion in borrowing and accounting revisions.
Voting in both houses of the Legislature occurred during a grueling marathon session that began Thursday night and didn't end until this afternoon when the Assembly wrapped up its session.
Speaker Karen Bass, D-Baldwin Vista (Los Angeles County), said that "we were worried there for a while, but we got through it. We made our deal."
During the oil-drilling debate, Assemblyman Chuck DeVore, R-Irvine, running for U.S. Senate against incumbent Democrat Barbara Boxer, urged passage because he said it could bring $1.4 billion to the state coffers over the next two decades as well as hundreds of jobs to the state. He was countered by a passionate Assemblyman Pedro Nava, the Democrat whose district represents Santa Barbara, who reminded legislators of devastating oil spills in the region 40 years ago, and urged opposition.
In the end, the Senate approved that proposal, but it was rejected by the Assembly on a 43-28 vote.
Members in both houses also felt the heat from big city mayors who loudly denounced the proposal to grab billions in combined gas tax revenues, redevelopment funding and Prop. 1A monies from local governments - a move they said was unfair and unconstitutional. In the end, the compromise deal allows the state to use funding - about $200 million a year - as a loan that will be repaid over 10 years starting in 2011.
As their 24-hour session wore on, the growing pressure on Assembly legislators especially became evident. With the session dragging and legislators exhausted, Bass - facing recalcitrant lawmakers holding out on some measures - became increasingly impatient. At one point, making the traditional roll call for votes - a usually staid announcement of "all those vote who desire to vote" - she added pointedly to the holdouts, "Even those who don't desire to vote - vote."
Even after approving the stack of bills, legislative leaders said there was little to celebrate at the close with a plan that guarantees pain around California with slashing cuts to education, health and welfare programs, while grabbing needed funding from local governments.
"The only good news," said Steinberg, exhausted by the close of the Senate's grueling all-nighter which began Thursday afternoon, was "may it be the last."
In February, the Legislature pulled a similar all-night session to close a $42 billion deficit. That action relied on tax hikes, cuts and borrowing.
Steinberg said that legislators on both sides of the aisle deserved congratulations "for hanging in there and finding a way, in some ways against the odds, to get this done."
"We're a bit of a beleaguered institution," Steinberg said, but said legislators could "take pride in the fact that...we have now resolved a $60 billion plus deficit - and California is still standing."
Still, he warned that while Democrats who hold the majority in both legislative houses were willing to make painful slashes in the state's social safety net, they would hold the line on future cuts - and expect Republicans to be more willing to talk about raising revenue and taxes.
But Senate Republican leader Dennis Hollingsworth of Murrieta (Riverside County), said lawmakers should be applauded for solving the entire deficit that includes government reforms such as rooting out fraud in welfare programs and consolidating state agencies without raising new taxes.
Schwarzenegger had a higher deficit estimate - of $26.3 billion - because it partly assumed on lost savings from the missed June 30 deadline to pass a deal. But the losses turned out not to be as high as expected, budget experts said this morning. In addition, Schwarzenegger initially wanted a deeper reserve - around $2 billion, a figure that was built into the estimated deficit. But in the end, the Legislature eliminated the reserve.
Still, lawmakers were keenly aware of the increasing pressures and growing criticism regarding the budget package's many complex facets.
On Thursday, the mayors, led by Los Angeles' Antonio Villaraigosa, angrily charged that the proposed deal constituted "highway robbery" that illegally raids billions of dollars in cities' share of gas taxes and redevelopment funding. "We want to be part of the solution ... but we're not going to allow this proposal to be balanced on the backs of our cities," Villaraigosa said.
As of Thursday, 188 cities across the state - including San Francisco and Oakland - had signed resolutions indicating their support for a lawsuit that is expected to be filed by the League of California Cities and the California State Association of Counties as soon as the budget is approved by the Legislature, said the league's executive director, Chris McKenzie.
"I've never seen a reaction like this. They are livid," said McKenzie of the local leaders.
