California Budget Crisis: Democratic Proposal Calling for $8.1 Billion in Cuts and $8.1 Billion in New Revenues

California Progress Report
November 25, 2008

By Marty D. Omoto
Director/Organizer
California Disability Community Action Network


Two bills containing proposals by legislative Democrats to cut spending by $8.1 billion and raise new revenues also by $8.1 billion over 18 months, were defeated in the Assembly, failing to win any Republican votes. Both Democrats and Republicans in both houses remain far apart on how to solve the budget deficit. A bill to cut spending in the Assembly was defeated 40 to 30, falling 14 votes short of approval. And a bill to raise taxes and other revenues, failed to win approval by 41 to 31, falling 15 votes short. Democratic Assemblymember Nicole Parra of Hanford, who is termed out, voted against both bills, defying Assembly Speaker Karen Bass.

Assembly Speaker Karen Bass said if the Assembly Republicans would have given their votes for revenues, Assembly Democrats had been prepared to consider other spending cuts and even the idea of a spending cap. She urged members to put ideology aside and to put their futures “at risk” .and warned that doing nothing and that California was headed for a economic “train wreck”.

Both houses considered two bills (Senate debate continues)[Editor’s note: The Senate also later failed to pass any bills.] – one containing cuts, and the other containing proposed revenues. Both require votes from Republicans – 6 in the Assembly (assuming all 48 Democrats vote for it – and Nicole Parra did not), and at least 2 Republicans in the Senate, assuming that all 25 Democrats vote for it. Republicans in both houses are refusing to support either bill.

The debate in both houses sometimes grew heated – and resembled the strong words exchanged last summer and during the fall during the 3 month budget stand-off.

With 100 members whose terms of office will expire at the end of the day November 30th, today is considered the final deadline for the current Legislature to meet and take action. On Monday, December 1, the newly elected and reelected members will take office. The Governor is likely to issue a new proclamation calling the new Legislature into a special session.

Both Bills Fail To Win Approval in Assembly

“All cuts are real” said Assemblymember Laird “I don’t particularly want to make these cuts. I don’t particularly want to raise these taxes” but said that the risk of not acting is that “the problem does not go away. We will run out of cash in February”
He warned that failure to act now will mean that “cuts and taxes would have to be greater”.

Senate Republican Leader Dave Cogdill (Republican – Fresno) however said that Republicans would not support new tax increases “particular at this time” when the State’s economy is bad and urged lawmakers to look at other options.

The two bills in the Assembly that came up for vote today were:
Note: the “ABx4” stands for Assembly Bill – 4th extraordinary or special session. Sometimes people at the Capitol will refer to such bills, as AB 7 followed by “x’s

Democratic legislative leaders in both houses said that both bills were “joined” together – meaning both the revenue bill and the spending cuts bill the Democrats proposed have to pass or both would fail and not be sent to the Governor. Democratic leaders in the Assembly and State Senate promised additional budget related legislation (called “trailer bills”) if the bills passed.

SPENDING REDUCTIONS BILL

In the Assembly the bill proposed was ABx4 7 (or AB 7xxxx) by Assemblymember John Laird (Democrat – Santa Cruz) is an urgency bill that contains $8.1 billion in mid-year spending cuts over 18 months.

ASSEMBLY ACTION 11/25/08: The bill was defeated in the Assembly 40 to 30. Democrat Assemblymember Parra opposed it.

An identical proposal was considered at the same time in the State Senate.

REVENUE BILL

In the Assembly the bill proposed was ABx4 6 (or AB 6xxxx) also amended on the Assembly floor focused on revenues, including reinstating the vehicle license fee at the level it was before Governor Schwarzenegger reversed after the historic recall election in 2003. It would include about $800 million in other revenues through fund shifting, primarily to help support local public safety.

ASSEMBLY ACTION 11/25/08: Vote failed in the Assembly 41 to 31. Assemblymember Parra voted against the bill.

An identical proposal was considered at the same time in the State Senate.

Assemblymember Parra Voted No

In the Assembly, Assembly Democrats have a higher hurdle to pass bills to raise taxes because one of their members voted against the proposal.

Assemblymember Nicole Parra (Democrat – Hanford) who abstained from the budget vote in the summer and in September because she wanted the Legislature to also address water issues – opposed both ABx4 7, and ABx4 6 furthering her estrangement from the Democratic caucus.

Parra in late October had supported a Republican to succeed her to the Assembly, who narrowly won.

Governor Called Special Session – Called For Mixture of Cuts and Increases

On November 6th the Governor released proposals, which differ from the Democratic bills proposed today, to address the budget shortfall that totaled about $9 billion – just under half of that calling for permanent spending cuts and half calling for proposed revenue increases, including a temporary 3 year 1.5% increase in the state sales tax, that would be followed be a cut in that tax.

The Governor’s proposed cuts focused primarily on education (Kindergarten through 12th grade) and health and human services programs, including Medi-Cal, CalWORKS, regional centers, In-Home Supportive Services, SSI/SSP, Cash Assistance Program for Immigrants.

While legislative Republicans – and the Governor – would likely support most spending reductions proposed by Democrats – legislative Republicans oppose proposals to increase taxes that legislative Democrats insist must be voted on with any spending cuts.

The California Disability Community Action Network, is a non-partisan link to thousands of Californians with developmental and other disabilities, people with traumatic brain injuries, the Blind, the Deaf, their families, community organizations and providers, direct care, homecare and other workers, and other advocates to provide information on state (and eventually federal), local public policy issues.