Brown halts budget talks with GOP lawmakers

AP News
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Posted: Mar 29, 2011 10:48 PM
Brown halts budget talks with GOP lawmakers

Gov. Jerry Brown cut off budget negotiations Tuesday with Republican lawmakers, effectively ending his plan to ask Californians to vote on tax extensions in a June special election and creating uncertainty about what steps he and the Legislature will take to close the rest of California's deficit.

Brown issued a statement saying he had halted talks days after GOP leaders released a list of 53 demands they were seeking in exchange for their support for a special election.

The Democratic governor and majority Democrats wanted to ask California voters in June to extend temporary tax increases enacted two years ago as part of their solution to close the deficit but were unable to get the Republican support needed for a ballot measure.

Those tax renewals were part of a plan that included a roughly equal amount in spending cuts to higher education, welfare, in-home support services, Medi-Cal and other programs.

Brown said in a statement and a video posted on YouTube Tuesday evening that he supports some of the reforms sought by Republican lawmakers, including a state spending cap, changes to the pension system for public employees and streamlining business regulations.

But he said after progress was made on those issues, the Republicans issued a much longer wish list that included items not related to the state budget debate and corporate tax breaks that would cost the state billions of dollars a year. The governor concluded that further talks would be fruitless.

"Each and every Republican legislator I've spoken to believes that voters should not have this right to vote unless I agree to an ever-changing list of collateral demands," Brown said in a statement.

Republicans wanted ballot measures on pension restructuring and a spending cap to appear alongside a question on tax extensions. They also sought to limit the tax extensions to 18 months rather than the five years Brown had proposed.

GOP legislators and Brown reached agreement "to a great extent" on pension reform, but couldn't overcome resistance by public employee unions to some details of a spending cap, said Joe Justin, chief of staff for Sen. Bill Emmerson, R-Hemet, one of five Republicans who met with the governor repeatedly.

"We think the people do have a right to vote on taxes. We think they have a right to vote on pension reform. We think they have a right to vote on a spending cap," Justin said.

In his video, Brown said among the issues that were impossible to solve was Republican opposition to his proposal to end a corporate tax break referred to as "single sales factor," in which out-of-state companies are allowed to choose their preferred rate of taxation.

Brown called it a "billion-dollar tax break to giant companies that keep jobs out of California. I don't think we should take money away from schoolchildren, public safety and our universities and give it to companies that don't want to create jobs in California."

The Democratic leaders of the Assembly and Senate showed their frustration with the breakdown in negotiations. The Legislature had reduced the $26.6 billion deficit by about $14 billion through spending cuts and fund transfers _ actions that were taken primarily by Democrats.

Assembly Speaker John Perez, D-Los Angeles, said Republicans showed that their true priority was demanding tax cuts for corporations.

Brown acknowledged in a letter to Senate Minority Leader Bob Dutton, R-Rancho Cucamonga, dated Friday, that the two sides had made progress on pensions, spending and regulatory reform, but said Dutton's new wish list added "almost two dozen new topics, including obscure aspects of labor law and shifting the presidential primary to March."

Dutton defended the Republican priorities, saying the GOP was unwilling to go along with the renewal of the tax increases without long-term reforms that he said would stabilize the budget in the future.

"While compromise is needed to avoid an all-cuts budget, it involves more than the Republicans going along with the first, last and only solution of higher taxes offered by the majority party during this budget debate," he said.

Senate President Pro Tem Darrell Steinberg, D-Sacramento, said the Republican demands do not reflect the desires of the vast majority of Californians. He also criticized Republican lawmakers for not engaging in budget talks for weeks before coming forward with a list of more than 50 demands, many of which he said have nothing to do with closing the immediate deficit.

"The only thing missing from this list is a pony," Steinberg told reporters. "And we'd give them a pony if they'd give the people the opportunity to cast a vote."

Under a ballot initiative passed last year, Democrats can pass the budget _ but not tax or fee increases _ with a simple majority vote. Steinberg and Perez said they would do that by the constitutional deadline of June 15, but would not say what such a budget would include.

Democrats have floated the idea of trying to press forward with a special election on a majority vote rather than the two-thirds, but that would almost certainly be challenged in court. They also have discussed an initiative drive for a special election so voters could consider the tax extensions this fall.

The increases to the personal income, sales and vehicle taxes enacted two years ago are scheduled to expire by July 1.

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Associated Press writers Don Thompson and Adam Weintraub contributed to this report.