Budget Deal Sealed...Again

CapAlert sez it's all over, and it's marginally better, actually:

Legislative leaders said today that they have reached a deal on the long overdue state budget that will satisfy demands made by Gov. Arnold Schwarzenegger.

The Republican governor has said he would veto the $104.3 billion plan lawmakers passed this week. He demanded that a proposed rainy day fund to help the state though bad economic times be tightened to prevent its balance from being depleted in good times.

And he said lawmakers must remove a maneuver, worth $1.6 billion, that would have increased the amount of withholding tax paid by personal income taxpayers.

Republican leaders and Senate President Pro Tem Don Perata emerged from a meeting this afternoon saying they had agreed to the governor's demands. They have proposed making up the lost revenue by increasing penalties on corporations that underpay taxes. The leaders also agreed to lower the amount of the state's reserve fund from $1.2 billion to $800 million. Under the proposal, corporations who underpay their taxes by $1 million or more would see penalties rise from 10 percent to 20 percent. The deal also assumes a cancellation of a proposed tax amnesty program.

A mixed bag here. I think the rainy-day fund is kind of silly, and the worst part of this is that Schwarzenegger will now get to wield his blue pencil on the budget (last year he struck funding to treat mentally ill homeless people, you recall. How moderate!). But eliminating the interest-free loan all of us taxpayers were going to give to the state against our will is a good thing, especially in return for increasing penalties on corporate tax cheats. The withholding gambit wasn't going to pass the override, because Republican leaders wouldn't have gone along (they somehow snuck it into a party-line vote the first time around).

Of course, that isn't a reliable form of income. And there are still plenty of gimmicks inside this budget. And, the $8 billion dollar chunk that could be siphoned off by judicial mandate to rescue prison health care has yet to be dealt with. So this end result is not exactly wonderful.

The pundits who gave Arnold a tongue bath over having the post-partisan postpartisan-ness to veto the budget ought to take a look at the finished product. It's still a piece of garbage. And that's by design in the dysfunctional budget system, where you practically are destined to come out with an illegal finished product.

The Bay Area Council, a group of high-level executives from around the state, has the right idea - it's time for a Constitutional convention that can blow all of these contradictory and debilitating rules off the table and start anew.

A constitutional convention was used nearly a century ago to wrest California's government from the hands of railroad barons. Today, some say it could help the state out of its current political dysfunction.

The Bay Area Council, which represents the chief executives of Google, Yahoo, Chevron, Wells Fargo and other major San Francisco Bay Area businesses, is leading the charge for a state constitutional convention to revamp state government.

"This year's budget deadlock shows better than perhaps any other recent event that our state needs a constitutional convention to fix a governance system that is hopelessly broken," Jim Wunderman, president of the Bay Area Council, said in a statement.

Among some of the changes being proposed:

Adopt a two-year budget cycle.

California's taxing and spending systems, along with its ties to local government spending.

Remove the two-thirds vote requirement to pass a budget in the Legislature.

The devil's in the details, but the current system doesn't work, and we end up suffering. There are dozens of teachers, health care workers, managers of clinics, public employees, and countless other groups who get hurt every summer by the late budget. The legislators aren't currently allowed to do their job. Reform is desperately needed.