California Budget - Still No Sign Of Land

There are budget votes scheduled for Sunday, but given that the Republican effort to impose an unworkable spending cap died in committee yesterday, it'd be hard to see how this all gets resolved in a matter of days. Clearly the GOP's ACA 19 overreached to the extreme, throwing in practically every goodie on their wish list and expecting the majority Democrats to roll over. This time, they didn't.

They are holding out for a strict formula written into the state Constitution that would limit how much spending can grow in a year. They unveiled their plan, ACA 19, written by Assembly Republican Leader Mike Villines of Clovis, at a legislative hearing Friday. Democrats spent much of the 3 1/2 -hour meeting tearing it down, saying it would strangle government.

"It seems to me the objective of this proposal is clearly to promote less government," said Assemblyman Sandre Swanson (D-Alameda). "I don't think your proposal allows any practical flexibility to deal with real-life crises." [...]

An analysis by the California Budget Project, which advocates for low-income Californians in the budget process, concluded that the GOP plan would make it impossible for the state to keep funding schools at the current levels approved by voters through Proposition 98.

The nonprofit further said the GOP plan would "ratchet down the state's ability to support public services" as government spending failed to keep pace with the state economy.

Republican lawmakers argued that the naysayers were basing their criticism of the spending cap on unrealistic revenue scenarios. Democrats responded that the entire GOP plan is unrealistic. And so it went. The plan was ultimately rejected by the Democrats who control the committee.

This just doesn't sound like two sides reaching an endgame, but of course stranger things have happened in Sacramento. Plus there are deadlines for the state ballot that hit in a matter of days.

The worry here is that, as Frank Russo notes (and he's a must-read in these times), the lobbyists who hold much control over what happens in the state will use the chaos to carve out some treats for their industries.

A prime example (pun intended) is California’s response to the subprime mortgage mess, where our state is experiencing one of the highest rate of mortgage foreclosures—something that has kicked our economy in the gut—and has exacerbated the fiscal problems we have with our budget.

Even Halper of the Los Angeles Times exposed in an article yesterday that the Schwarzenegger Administration at the bidding of the powerful banking industry in California is trying in closed door meetings, with the connivance of legislative Republicans, to hold the budget up and extract hundreds of millions for their friends. The article starts off:

“One reason California still has no state budget is a closed-door dispute over a tax proposal that could be a multimillion-dollar boon to banks that engage in subprime lending.

“The proposal, according to legislative sources and industry lobbyists involved in the private budget talks, was brought to the table by the Schwarzenegger administration at the urging of lenders and other corporate interests. The proponents argued that it would help offset costs to businesses that could result from other tax changes under consideration. “

Essentially this would happen by refunding tax hikes to those companies who did poorly in 2008, i.e. subprime lenders. It's complicated but the beneficiaries are clear. High-tech industries are trying to repeal some worker rights as part of a deal. In the waning hours there's going to be a lot of opportunity for mischief. And then there's Schwarzenegger's blue pencil to deal with.

It almost makes you think it's a GOOD thing there's no budget yet.