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Calif. Lawmakers Pass Cuts, But Budget Unfinished

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The California Capitol in Sacramento

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SACRAMENTO, Calif. (AP) — Indicating they have gone as far as they can for now, California lawmakers on Thursday took a break from budget votes after tackling about half of the state’s $26.6 billion shortfall through cuts, loans and transfers.

They left the most contentious parts of Gov. Jerry Brown’s proposal unresolved, including his call for a special election so voters can consider extending recently enacted tax hikes.

The Legislature remains stalled over Brown’s proposal for additional revenue to fill the other half of the budget shortfall. The Democratic governor wants a special election June 7 so voters can decide whether to extend temporary increases in the personal income, sales and vehicle taxes enacted two years ago. If voters approve, those taxes would bring in an estimated $9.2 billion a year for five more years.

“The cuts we’ve made over the last two days are deep and painful,” said Senate President Pro Tem Darrell Steinberg, D-Sacramento, as he criticized Republicans for not putting the tax choice before voters. “Let’s finish the job over the next several days.”

Lawmakers spent the past two days chipping away at the budget by passing bills that reduced spending, give counties more responsibility over inmates and parolees, and make changes to education funding. On Wednesday the Legislature agreed to cut health care services for the poor and elderly, among other spending cuts totaling an estimated $7.4 billion.

Democrats said the actions over two days totaled nearly $14 billion and meant real cuts to people who rely on government services, but Republicans said many of the actions did not involve true program reductions.

Sen. Bob Huff, R-Diamond Bar, the ranking Republican on the Senate Budget Committee, said the budget contains “phony cuts,” including gimmicks and one-time spending options after Democrats rejected $1.6 billion in cuts proposed by Brown.

The Assembly and Senate adjourned until Monday, leaving Brown to continue negotiations with five senate Republicans who are seeking pension reform, a state spending cap and reduced environmental regulations, although none had yet agreed to provide the votes needed to put the tax extensions before voters.

Most Republican lawmakers have joined a group that pledges not to vote for any deal that involves tax increases unless the Legislature also gives voters the chance to enact a tax cut of equal or larger value.

“This proposal assumes a $14 billion tax increase,” said Sen. Tony Strickland, R-Thousand Oaks. “It’s an extra $1,000 burden to every taxpayer.”

Brown and Democratic leaders also have not been able to get enough Republican support to eliminate the 400 redevelopment agencies throughout the state, which the governor’s administration estimates will save the state an estimated $1.7 billion.

The bill fell short by one Republican vote in the Assembly on Wednesday. Democrats did not take up the issue on Thursday, adding to the tough choices ahead.

Brown argued that eliminating redevelopment agencies would allow the state to divert more tax dollars to essential services such as public safety and education. He also wants to eliminate tax credits for businesses located in enterprise zones.

While the houses adjourned, the legislative leaders instructed lawmakers to remain close to the Capitol throughout the weekend while Brown and Democrats negotiate with Republican lawmakers who willing to engage in talks. Assuming he has the backing of all Democrats, the governor needs two Republican votes in each house to call a special election.

Republicans argue that raising taxes would drive employers out of state and harm the economy.

“We keep piling more stuff on, more costs of doing business,” said Senate Minority Leader Bob Dutton, R-Rancho Cucamonga.

The taxes in question would hit individuals and consumers. For example, a couple earning $60,000 a year and filing a joint tax return would pay an extra $175 a year if the increase in the personal income tax is allowed to continue. The additional state licensing fee on a 2010 vehicle bought for $20,000 would be $100.

GOP members said the state should adopt public employee pension reforms, a cap on state spending and more government efficiencies before seeking to extend the tax increases, which are scheduled to expire this year.

“Any budget plan that does not include pension reform is incomplete,” said Assemblyman Brian Jones, R-Santee.

Democrats said they fear lawmakers will have to make even more draconian cuts to vital services if voters aren’t asked and don’t agree to extend taxes that will expire this summer.

“The decisions we make today are going to hurt,” said Sen. Kevin de Leon, D-Los Angeles. “These are not … phony cuts. These are real lives, these are real human beings.”

In a sign of the impasse, the Legislature invoked Proposition 25 for the first time Thursday after Republicans would not assure support of bills that would give counties more responsibility over inmates and parolees and make education funding changes. Proposition 25 was approved by voters last fall and changed the legislative vote requirement to pass a budget from two-thirds to a simple majority.

The main budget bill also was approved on party-line votes — passing 25-15 in the Senate and 52-26 in the Assembly.

Realignment is part of Brown’s plan to have local governments take responsibility for many services now provided by the state, but the bill that would make counties responsible for incarcerating and supervising certain lower-level offenders, AB109, produced a partisan debate in both houses.

Democratic lawmakers said the step was necessary to save money in the state’s expanding corrections system. Corrections spending in the current fiscal year is $9 billion, or about 10 percent of all general fund spending.

Sen. Mark Leno, D-San Francisco, said the corrections realignment will result in 38,000 fewer inmates in state prisons by 2014. Democrats say the realignment, if enacted, would cut $450 million from the corrections budget in the first fiscal year, with the savings growing to $2 billion over three to four years.

Republicans objected that many of the inmates who would be shifted to county jails should be considered violent. They also warned that jail overcrowding would lead local sheriffs to simply release some of the inmates.

“Tell your constituents to get a dog, buy a gun and install an alarm system. The state of California will no longer protect you,” said Sen. Sharon Runner, R-Lancaster.

(Copyright 2011 by The Associated Press. All Rights Reserved.)

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