Party convention hinders key California budget vote

Reuters News
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Posted: Mar 21, 2011 3:48 PM

By Jim Christie

SACRAMENTO, California (Reuters) - California lawmakers on Thursday approved most of the bills making up Governor Jerry Brown's state budget but the most important part of the plan -- an extension of temporary tax increases -- may not be tackled until next week.

Potentially standing in the way of a vote on extending the tax increases is a major event for Republicans this weekend in the state capital of Sacramento -- their party convention.

There is little point for Democrats who control the legislature to schedule a vote on a tax measure with activists on their way to the convention demanding that Republican lawmakers live up to their anti-tax rhetoric, analysts said.

"The more probable outcome is that they'll wait until after the convention," said Jon Coupal, president of the Howard Jarvis Taxpayers Association, an influential group within California Republican circles dedicated to the 1970s-era proposition that capped property taxes.

California, which has the world's eighth largest economy, has established a dubious tradition in the past two decades of rarely approving its state budget before the July 1 start of its fiscal year.

The state Senate and Assembly late Thursday afternoon took steps toward improving that record with party-line, simple-majority votes approving a bill that will enact spending cuts and planned revenue in Brown's budget plan.

But wrapping up a budget before July requires lawmakers approve all bills that make up Brown's plan and that a tax measure goes to voters and is approved in a June election.

If there is no tax measure or if voters reject one, Brown has said California's budget gap will be closed solely with spending cuts.

TALKING ABOUT TAXES

Legislators, however, appeared under no pressure from constituents to move fast on a bill to advance a tax measure to the ballot.

Public concerns about radiation from Japan's crippled nuclear power plant may serve to give lawmakers a few more days for negotiations over a tax measure, said Jack Pitney, a professor of government at Claremont McKenna College.

"I don't think voters are obsessing about this yet. They're too busy buying potassium iodide pills," Pitney said, referring to tablets used to prevent the absorption of radioactive iodine.

The cornerstone of the budget plan unveiled in January by California's 72-year-old Democratic governor is a proposal for voters to decide whether to extend temporary tax increases that expire this year.

That measure requires that two-thirds of lawmakers in both the Senate and Assembly vote to advance a tax measure to the ballot for a special election in June. Democrats back the plan but lack enough votes to put a tax measure to voters on their own. So far, no Republican is supporting a referendum.

Under the governor's budget plan, revenue raised by extending tax increases for another five years would be paired with some $12 billion in spending cuts to help plug a budget gap approaching $27 billion through mid-2012 and to strengthen California's state's future finances.

California has the biggest shortfall of any state, adding to anxiety in the $2.9 trillion U.S. municipal debt market and in Washington, where some in Congress are keeping a close eye on weak state finances.

In addition to being split on a tax measure, lawmakers must also find common ground on a bill in Brown's plan that would scrap local redevelopment agencies and put $1.7 billion of their funds in state coffers.

Still, compared to the brutal budget battles under former Governor Arnold Schwarzenegger, which routinely dragged on well after deadlines for having state budgets in place, Brown's budget package is advancing quickly, Pitney said.

"The question, of course, is if they can get the tax extension on the ballot," he said.

(Reporting by Jim Christie; Editing by Bill Trott)