Wednesday, March 9, 2011

Sacramento Bee: Budget Status on Day 59: Doubts, but Talks

Brown's Countdown, Day 59: Budget talks resume amid doubts Dems and GOP can agree

Published: Wednesday, Mar. 9, 2011 - 12:00 am | Page 1A
Gov. Jerry Brown and a splinter group of Republicans resumed negotiating on the state budget Tuesday, despite doubts the governor and his fellow Democrats are able to meet their demands.

The Republicans, who call themselves the "GOP 5," reached out just hours after announcing they had reached impasse – unable to agree with Brown about his tax proposal or their demands for pension, regulatory and other changes to government.

Facing a $26.6 billion budget deficit, Brown needs at least two Republican votes in each house to ask voters to extend 2009 tax increases on vehicles, income and sales. He had set Thursday as a deadline to get the deal done – in order to meet election deadlines for a June 7 special election.

Republican Sens. Tom Berryhill of Oakdale, Sam Blakeslee of San Luis Obispo, Anthony Cannella of Ceres, Bill Emmerson of Hemet and Tom Harman of Huntington Beach have declined to elaborate on their talks with Brown, but said in a joint statement Tuesday that they met with him again "out of a mutual desire to keep the conversation moving forward. ... But we are realistic. Getting to a constructive agreement involves difficult compromise."

Democrats have clear limitations in how far they will go on the top two Republican priorities, a long-term cap on state spending and overhauling public pensions.

The majority party is not willing to approve a "hard spending cap," as GOP lawmakers have demanded. Two chief Democratic constituencies – public employee unions and social service advocates – oppose a rigid limit on future state spending.

But Democrats are willing to entertain a temporary spending limit that lasts as long as the five-year tax extensions on sales, income and vehicles, according to Senate President Pro Tem Darrell Steinberg.

"The idea of defining the spending commensurate with the five-year extension of the taxes, I think that is something we should talk about," Steinberg said last week.

On pensions, Democratic lawmakers have long believed that unions should bargain major changes through negotiations with the governor, which most have done with Brown and former Gov. Arnold Schwarzenegger.
But Democrats do not want to overhaul the structure of the state pension system, as Republicans are seeking. The five Senate GOP lawmakers suggested a "hybrid model" that includes a reduced pension and a 401(k)-style component, similar to what federal employees have.

"I think that's too far," Steinberg said Tuesday before meeting with Brown and Assembly Speaker John A. Pérez. "There's a whole lot we can do to deal with the excess and abuse and cost issues. And we're willing to do a lot."

Democrats prefer targeted changes that address what are perceived as the worst pension abuses, such as preventing employees from "spiking" their retirement payouts at the end of their careers.

To discourage Democrats from even considering the GOP plan, a revived labor coalition issued an open letter Tuesday saying that unions agreed to sacrifices last year and that Republican efforts rely on "myths and falsehoods."

Steinberg, D-Sacramento, said earlier Tuesday that the Senate would put Brown's budget to a vote Thursday, passing $12.5 billion in spending reductions despite Republican resistance to tax extensions.

But by the end of the day Steinberg spokesman Nathan Barankin said the vote could be delayed if budget negotiations "get more serious" with Republicans.

"There's a little movement – yes, there is," Brown said between meetings at the Capitol. "Not as much as I want, but it's there."

A spokeswoman for Pérez suggested the Assembly is preparing for a Thursday vote, too. It was unclear whether the Assembly would go forward without a deal on tax extensions in place.

Brown acknowledged Monday he may not reach a deal by Thursday, his self-imposed deadline, saying it "might take a few more days."

If Brown reaches an agreement, but not until after Thursday, the delay could push further into June any ballot measure on taxes. The next fiscal year starts July 1.

Brown, meanwhile, kept up his campaign to pressure Republicans from outside Sacramento and to line up political cover for any Republican who might support his tax extension plan. Four more business groups endorsed his budget proposal at two Capitol news conferences Tuesday.

"We want to provide them that assurance that the business community is not going to walk away from them," Carl Guardino, president of the Silicon Valley Leadership Group, said after meeting with Brown.
Guardino had a simple message for Brown and lawmakers: "Make a deal."

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