Legislature Passes Budget That the Governor Will Sign
Culminating a wild week in Sacramento, the Legislature met late Friday, September 19, 2008, to pass a revised Budget compromise. This revised measure addresses some of the criticisms the Governor had leveled against the spending plan that the Legislature had adopted earlier in the week.
On a vote of 30-0 in the Senate and 56-12 in the Assembly, the Legislature adopted the more- stringent provisions for the “rainy day fund” sought by the Governor. SCA 30 (Ashburn) restricts withdrawals from the fund to years in which revenue growth falls below prior-year spending, adjusted for workload and inflation. The prior version allowed withdrawals without regard to the condition of state revenues and expenditures.
The other measure adopted by the Legislature (with votes of 41-30 in the Assembly and 22-14 in the Senate) was SBX1 28, which revised various tax accelerations and accounting adjustments. The Governor objected to the Legislature’s plan to accelerate income tax withholding by 10%, arguing that this was simply forcing a loan from state taxpayers. SBX1 28 withdraws this provision and instead increases the penalty on corporations that underreport their tax liability. The penalty is expected to prompt the payment of back taxes owed by corporations. These changes, along with other adjustments, are expected to reduce the 2008-09 reserve to roughly $800 million compared to the $1.2 billion reserve in the Legislature’s Budget plan adopted earlier this week.
The Governor is expected to sign the Budget bill and the accompanying trailer bills early next week. While there are rumors that he may veto as much as $200 million in legislative augmentations, there is no information about what items are vulnerable.
Stay tuned . . .
—Deborah Harmon and Robert Miyashiro