CSUN University News Clippings

Budget talks go nowhere in Capitol

(June 30, 2009)

By Thadeus Greenson

With the prospect of the state issuing IOUs instead of checks just hours away, the state’s lawmakers appear to be spinning their wheels, unable to get any traction on a deal to bridge the state’s $24 billion budget deficit.

Even before legislators took up the debate on a package of seven bills that make up a Democratic plan to bridge the state’s budget gap, Gov. Arnold Schwarzenegger vowed to veto the bills. Following the state Assembly’s lead, the Senate passed the bills Monday seemingly without any Republican support, and Schwarzenegger repeated his vow.

”I will veto any majority tax increase bill that punishes taxpayers for Sacramento’s failure to live within its means,” the governor said in a statement. “The Legislature will have a difficult time explaining to Californians why they are running floor drills the day before our budget deadline. We do not have time for any more floor drills or partial solutions. It’s time for the Legislature to send me a budget that solves our entire deficit without raising taxes.”

The governor’s statement, and the perceived lack of compromise by Senate Republicans, caused Democratic North Coast Sen. Patricia Wiggins to say they were “hell bent on ramming their value system down our throats.”

In getting the budget plan passed Monday, Democrats had seemingly worked their way around the state’s requirement that any tax increases be approved by a two-thirds vote of the state’s lawmakers. The seven bills approved Monday included a new tax imposed on oil production; a $1.50-per-pack hike on cigarette taxes; a doubling of the $28 fee to obtain a driver’s license; an almost 5 percent levy on property insurance policies and a $15 registration fee for motor vehicles designed to stave off cuts to the state parks system.

Democrats argued that the bills abolish some existing taxes, replacing them with fees, and therefore do not need a two-thirds vote for passage. Others strongly disagree.

”The multi-billion dollar tax package passed by the Assembly and the Senate only received a simple majority — not enough to legally impose such measures,” said Californian’s Against Higher Taxes Chairman Allan Zaremberg in a statement. “A growing economy is the best way for California to pull itself out of the current budget mess. Tax increases are a huge obstacle to that solution. We urge the governor to veto these illegal tax hikes.”

Republican lawmakers also largely agree with Schwarzenegger’s pledge to veto the bills. They argue that the budget deficit needs to be bridged through cuts, and cuts alone. Tax increases of any kind, they say, are off the table.

”We can’t go any further on taxes,” said Sen. John Benoit, R-Palm Desert. “Borrowing is not the answer … . Spending reduction is how we have to balance this budget.”

For his part, Schwarzenegger has proposed $16 billion in cuts, including dropping health care for 930,000 low-income children and eliminating the state’s main welfare program.

He also would borrow $2 billion from local governments, take $6 billion from other government accounts, accelerate personal and corporate income tax collections, and cut state employee pay by another 5 percent. The Democratic plan called for $11 billion in cuts.

State Democrats say they have moved toward compromise — agreeing to cut more than they would like — but that Republicans have not reciprocated. North Coast State Sen. Patricia Wiggins said her values don’t include throwing people out into the street, forcing seniors into nursing homes or closing state parks.

”The governor, and Senate Republicans, say they don’t want these things either, but their actions suggest otherwise,” Wiggins said in a statement. “They seem intent on backing us into a corner with no real offer of compromise. We’ve presented a budget that’s fair and just, but they seem hell bent on ramming their value system down our throats, which is not the way to get it done … . We cut and we cut, but they tell us we need to cut deeper. At some point, enough is enough.”

North Coast Assemblyman Wesley Chesbro could not be reached for comment Monday nor provide a statement by the Times-Standard’s deadline.

The state’s deficit is roughly a quarter of the state’s general fund and has been widening this year as tax revenue has plunged. That has left the state with too little money to pay all its bills, and State Controller John Chiang has said he will be forced to start sending out roughly $3 billion worth of IOUs in July, unless a compromise is reached to close the deficit before July

According to Chiang’s office, the IOUs will include $159 million in student loan payments, $591 million in Department of Social Services payments, $495 million in Calworks payments and $424 million in vendor payments. Local officials told the Times-Standard last week that receiving IOUs would necessitate local municipalities’ spending reserve funding in order to get by, which would carry them through in the short term, but is not viable for more than a couple months.

With the threat of IOUs looming, some questioned why Democrats spent special time pushing a plan the governor had already vowed to veto.

The Senate budget committee chairwoman, Sen. Denise Ducheny, D-San Diego, said Democrats’ decision to take up their budget plan despite the veto threat was “not a political exercise.”

”It’s an effort to present an option,” she said. “It’s an effort to do our job. We have cut so much over the last 10 years.”

She said the plan “does all of the things necessary to get our house in order so the controller can issue checks. It does reduce every program in the state.”

The Associated Press contributed to this report.

Publication: Times-Standard