Senate Republican Budget Proposal Surfaces
Over the Labor Day weekend, Senate Republicans unveiled their proposed resolution to the now record-breaking 64-day State Budget stalemate. The Republican plan adds another wrinkle into the negotiations as the two houses and the Governor struggle to find a middle ground and forge an agreement.
The Republican plan would reject the Democrats’ tax proposal and reinstate several of the Governor’s January cut proposals (about $1.5 billion), as well as institute additional cuts to health and welfare programs. The plan would include the Governor’s proposal to borrow against the State Lottery and use those funds to keep K-12 education funded at the 2007-08 level. The plan would also shift more than $340 million in redevelopment funds from cities and counties to local educational agencies to reduce general fund costs for education.
The San Francisco Chronicle also reported that State Controller John Chiang has not been able to write nearly $4.2 billion in checks and stated that, “failure to pass a budget by the end of September will hold up another $7.6 billion.”
Compared to the Governor’s “August Revision,” the Senate Republican plan contains the following:
· Rejection of sales, fire, and home owner/renter tax proposals
· Support for funding K-14 education at $57.9 billion, which is equal to last year’s levels
· Support for a constitutional spending limit and rainy day fund
· Elimination of a proposal to grant early release to state prisoners
· Restoration of specified Medi-Cal rates
· Rejection of borrowing from local government
· Shift of $349 million from redevelopment agencies to schools to offset General Fund expenditures
Assembly Republican Leader Mike Villines (R-Clovis) embraced the proposal as “the basis for a very good compromise,” while Assembly Speaker Karen Bass (D-Los Angeles) criticized it as a “blueprint for economic disaster.” Governor Schwarzenegger continued to express concern for closing the gap through more borrowing. Only time will tell if consensus can be reached on a plan that can garner a two-thirds vote in each House. As of right now, the Senate is in session, and the Assembly is scheduled to hold a Budget Committee hearing on the Senate Republican’s proposal on September 3.
Finally, late on September 2, the Governor released the following letter to the four legislative leaders.
Dear Speaker Bass, Senator Perata, Mr. Villines and Senator Cogdill,
It is irresponsible not to have a budget more than two months into the fiscal year and 80 days past the legislative deadline. California is now headed into unknown territory, but what we do know is that some state checks will not be cut and that state services will be impacted.
We cannot afford a temporary fix. Legislators should not be devising band-aid solutions like continuing appropriations. What legislators should be focused on is passing a budget— the best way to ensure that state payments are made.
This delay in the Legislature could cost California more than a billion dollars, because we are losing another month of budget solutions included in the compromise budget I proposed. Assembly Bill 207 would require the state to take out a short-term loan that would cost hundreds of millions of dollars—maybe more than a half-billion—and would dig our budget hole that much deeper and make our cash situation that much worse.
The best way forward is to vote on and approve the compromise budget I proposed two weeks ago.
Sincerely,
Arnold Schwarzenegger
—Nancy LaCasse