Tuesday Budget Deadline will come and go without action – business as usual for California

Posted on June 14, 2010


Tuesday’s constitutional deadline for the Legislature to pass a budget will come and go without action, as it nearly always does. But the dawn of Tuesday will signal the moment that Californians begin to take note that their state, once again, is confronting a budget crisis that could drag into summer, forcing contractors to miss payments, investors to fret about the state’s credit-worthiness, and lawmakers and Gov. Arnold Schwarzenegger to engage in political gamesmanship that could take California to the brink of insolvency. This year, however, new Assembly Speaker John Pérez believes there will be a new twist in the almost-annual summer budget drama. He believes that Assembly Democrats have framed the debate in language the public can understand: jobs, jobs, jobs. Pérez, D-Los Angeles, calls the Assembly Democrats’ proposal the “Jobs Budget,” and the rationale goes like this: If Schwarzenegger’s proposed all-cuts solution for closing the state’s $19 billion budget shortfall were adopted, it would result in the loss of 431,000 jobs. Instead, the Assembly leadership has put forth a budget plan that would save all of what Schwarzenegger proposes to eliminate, including the state’s welfare-to-work program, publicly funded child care and in-home care for the aged and disabled. In addition, it would repay $3 billion to schools, $1 billion to cities and counties, and set aside another $1 billion for tax credits and other incentives to create jobs in the private sector.

“We are using jobs as a lens for everything we look at,” said Assembly Budget Committee Chairman Bob Blumenfield, D-Van Nuys.

The plan would finance all of that by, in essence, implementing an extraction tax on oil pumped from California wells and then leveraging 20 years of revenue from that tax to borrow $10 billion that would get the state through next year without further cuts and the job losses they would generate. Many observers have dismissed the plan as a gimmick. A spokesman for Schwarzenegger said it relies on “legal gymnastics.” The nonpartisan legislative analyst estimates it would still leave the state with a $16 billion shortfall to fill next year. Republican lawmakers complain that it focuses on public-sector jobs while doing little to promote the kind of private-sector growth that is needed over the long term to restore the state’s economy. But the critics concede that other approaches will result in job losses. That reality could change the context of this summer’s budget debate.

“What the speaker is doing with his jobs message is he’s trying to frame the debate around an issue that voters care about,” said Democratic pollster Ben Tulchin. “The budget debate is usually about big numbers: a billion dollars here, a billion dollars there. Voters have no real sense of what it means. But if you say 430,000 jobs are lost, that puts it in language voters can understand.” Tulchin also believes that by taking the offensive on jobs, Pérez will force Schwarzenegger and legislative Republicans into a defensive mode. “If the speaker says their budget will result in the loss of x-number of jobs, they have to respond to that. They can’t just say, ‘Cut waste and no new taxes.’ ”

With the Legislature’s Budget Conference Committee scheduled to open discussions about potential new revenues this week, opponents of the oil-severance tax included in Pérez’s plan are gearing up their defense.

Last week, a business-sponsored group called Californians Against Higher Taxes issued a statement attacking the Assembly Democrats’ plan. “It is unfortunate to hear the Assembly speaker portray his tax and borrow and spend plan as a jobs bill,” said California Taxpayers Association President Teresa Casazza. “Adding even more of a burden on to job-creating businesses with new and higher taxes will prolong this painful recession.”

The plan has not been embraced by Senate Democrats, whose more traditional budget proposal includes $4.9 billion in tax increases, some additional spending cuts and a long-term focus on addressing structural budget problems by restructuring programs to give local governments direct authority over them as well as the means to raise revenues to finance them.

Senate President Pro Tem Darrell Steinberg, D-Sacramento, does not support the Assembly plan, noting that under it, “the hole next year remains large.” Still, he said: “I’m not criticizing it. I think it’s much better than the governor’s budget. The beauty of a two-house system is that you meld ideas, and melding may be the order of the day. What we’re not going to do is decimate the safety net, and what we’re not going to do is continue to take down education.”

Pérez has been pitching his budget plan to local government and education groups, hoping to build ground-level support for an approach designed to save the jobs of teachers, police officers and other local government workers.

Scott Plotkin, executive director of the California School Boards Association, said the speaker’s proposal “at least gives people a place to start the conversation.” He notes that this spring school districts sent 26,000 layoff notices to teachers. “Districts always pull back a lot of them, but if things don’t come together a lot of those layoffs are not going to be pulled back,” he said. Plotkin said critics who say the Assembly plan is overly concerned with public-sector jobs need to acknowledge these are permanent jobs that have value to society. “The criticism would have merit if we were talking about make-work jobs,” he said. “If people lose these jobs, the concurrent effect is that they go bankrupt or lose their homes and maybe you start a second wave of the recession.”


Posted in: The Anti News