"Legislative leaders and Gov. Arnold Schwarzenegger
have reached a tentative deal to close the state's projected $40 billion budget gap on the backs of virtually every Californian, from
taxpayers to state workers to welfare recipients, according
to sources close to the negotiations," reports the Bee's Capitol team.
"The plan includes $15.8 billion in spending cuts, $14.3 billion in taxes and $10.9 billion in borrowing, according to a budget outline
obtained by The Bee. The state also anticipates billions
in federal stimulus money, which would reduce each
component of the solution if California receives more
than $9.2 billion.
"Staff members are still drafting bills, but sources
said the Legislature plans to vote Friday. It remained
unclear whether leaders could corral the votes necessary
for approval."
Capitol Weekly looks at the cuts.
"Overall, according to Capitol sources, the plan includes
about $15.8 billion in spending cuts, $14.3 billion in tax increases and about $10.9 billion in new borrowing. Details of the revenue package
began to surface earlier this week, with increases
expected in the state sales tax, gasoline tax and vehicle
license fee.
"More than half of the cuts are to K-12 schools and community colleges. The plan calls for
about $8.4 billion in savings by reducing the constitutional
guarantee to schools. Details of where the specific
cuts would be made remained unclear, but Capitol sources
indicated more than $5.6 billion would be cut in the current budget year.
"About $3 billion in savings will be realized in the 2009-10 fiscal year.
"The other major savings comes from reduced state employee
salaries. The state is hoping to save about $1.4 billion in reduced worker salaries through the furlough
program started by Gov. Schwarzenegger last week. That
plan would stay on the books through June 2010, unless the Schwarzenegger administration and state
employee unions can find other ways to save money.
State workers will also lose two state holidays -- Lincoln's Birthday and Columbus Day -- under the proposal."
The LAT's Evan Halper and Patrick McGreevy report:
"Republican legislative leaders fought for and won a major corporate tax break as part
of the spending plan. It would allow some large companies to change how
they compute their state taxes to save potentially
millions of dollars over the course of several years.
Instead of being taxed on a formula that factors in
how much California property they own, the size of
their payroll and their overall sales, they could elect
to be taxed on sales only.
"Champions of the tax break, projected to deprive state
coffers of $690 million a year, say it will create jobs because the
current tax formula penalizes companies with facilities
and workers in the state. They point to a large facility
that the biotech company Genentech says it built in
Oregon instead of California for that reason.
"Advocates for the poor call the proposal a giveaway.
"'A bunch of states have done this, and it hasn't created any new jobs or any new investment,' said Lenny Goldberg, executive director of the Sacramento-based California Tax Reform Assn. 'It just allows companies to avoid paying taxes.'
"Film companies would get tax breaks totaling $100 million annually to keep their productions in California,
an incentive the movie-star governor has been trying to put in place for years.
"The budget blueprint also includes the relaxation of
environmental laws on some major highway projects,
openings for private companies to take over some public-works construction and a tax credit for new hires -- all demanded by the Republican leaders, Assemblyman
Mike Villines of Clovis and Sen. Dave Cogdill of Modesto, in exchange for supporting the temporary
tax hikes."
The education cuts are expected to be partially backfilled by the federal stimulus bill, which appeared to near final agreement yesterday.
"House and Senate leaders, under intense pressure from
President Obama, buried their differences over competing
economic stimulus bills Wednesday and agreed to a $789 billion package aimed at jump-starting the economy," reports Zachary Coile in the Chron.
"The final package, likely to be approved by week's end, will be less generous to California than the
House version of the bill. But the state will still
reap tens of billions of dollars for education, infrastructure,
health care costs and other programs.
"At least 12 million California taxpayers will see their payroll
taxes cut, although lawmakers trimmed the tax cut from
$1,000 to $800 for couples earning up to $150,000, and from $500 to $400 for individuals making up to $75,000.
"A $15,000 tax credit for new home purchases, which home builders
and real estate interests pushed to revive the housing
market, was pulled from the bill. But car buyers will
be able to deduct the sales tax they pay on a new vehicle.
"Lawmakers said the deal would restore about $10 billion in a fiscal stabilization fund for the states,
which was cut in half by the Senate. Under the Senate
bill, California would have received about $4 billion, and that share could grow by about $1 billion under the compromise."
"[E]xpected cuts to assistance for the blind, aged and
disabled are deemed by poverty-watchers as among the most devastating, given the inability of those clients to, say, take
on a second job to fill the gap," reports Karen de Sa in the Merc News.
"Statewide, 1.3 million residents rely on shrinking Supplemental Security
Income benefits, which help provide for basic needs
but leave them ineligible for food stamps even as food
costs soar. Cuts to the federal assistance program
that includes an added state supplement appear likely,
as Sacramento inches closer to a budget deal this week.
"Basic monthly grants for individuals are expected to
be reduced from $907 to $870. And Gov. Arnold Schwarzenegger is pushing for even
lower grants — $830 a month — to save the state more than $1.3 billion a year beginning in May."
"California labor unions, business associations and
other interest groups spent more than $558 million – about $764,000 a day –
to influence California government during the 2007-08 legislative session, according to state records analyzed
by Capitol Weekly.
"Leading the way was the Service Employees International Union which spent $10.9 million over the two-year period. The Western States Petroleum Association, which represents oil and gas companies, spent $10.5 million over the same biennial span.
"Rounding out the list of top five spenders was the California Teachers Association ($7.9 million), the Bromine Science and Environmental Forum ($6.5 million), and the California Hospital Association ($5.9 million)
"Spending for the last legislative cycle was up from
$504 million spent during the 2005-06 cycle."
Jerry Brown "told a gathering of California newspaper publishers
and editors Wednesday that he spends his spare time considering a potential return
to the governor's office," reports the AP's Samantha Young.
"'In my spare time, late at night, I do a little plotting,' Brown told an annual meeting of the California Newspaper
Publishers Association.
"He refused to say definitively whether he will enter
the contest. Instead, Brown said he is focused on his
job as attorney general and does not plan to make a
decision about the governor's race until later this year.
"His campaign committee, Jerry Brown 2010, has $4.1 million cash on hand.
"'I have more money in the bank than any other candidate
that I know of except Bill Lockyer,' Brown said of the state treasurer.
"Lockyer, who has not publicly expressed an interest
in running for governor, has raised $9.7 million. Newsom has slightly more than $718,000 cash on hand, while [John] Garamendi has about $500,000. [Steve] Poizner has about $600,000 cash on hand, according to contribution reports filed
with the secretary of state's office.
"Whitman has yet to report any contributions, while
Villaraigosa has been focused on his re-election campaign, with the Los Angeles mayor's race less than a month away."
"As more than a dozen business executives, labor leaders
and city officials hunkered down for a three-hour meeting Tuesday on fixing San Francisco's staggering budget shortfall, Mayor Gavin Newsom held court at another gathering - in San Jose," write the Chron's Marisa Lagos and Erin Allday.
"Newsom headed to the South Bay city to host an evening
town hall meeting as part of his unofficial campaign
for governor. And while San Francisco business leaders
and elected officials attempt to grapple with the local
effects of a worldwide economic slowdown, many wonder
whether the mayor should be spending more time running
the city instead of running for governor.
"The Tuesday budget meeting was organized by Board of
Supervisors President David Chiu in an attempt to build consensus among key groups
over how to deal with the city's unprecedented $576 million budget shortfall for the fiscal year beginning
July 1. That the mayor didn't attend the San Francisco meeting disappointed many
in attendance.
"Newsom pointed out that he and his staff have been
meeting with labor representatives and business leaders
separately for weeks - including a negotiating session Wednesday with the
city's largest labor union - but many people close to the issue have argued that
the only way to get consensus on such controversial
issues as tax increases, budget reform and wage concessions
is to bring everyone into one room."
"A big share of the financial burden of raising Nadya Suleman's 14 children could fall on the shoulders of California's taxpayers, compounding the public furor in a state already billions
of dollars in the red.
"Even before the 33-year-old single, unemployed mother gave birth to
octuplets last month, she had been caring for her six
other children
with the help of $490 a month in food stamps, plus Social Security
disability payments for three of the youngsters. The
public aid will
almost certainly be increased with the new additions
to her family.
"Also, the hospital where the octuplets are expected
to spend seven to
12 weeks has requested reimbursement from Medi-Cal, the state's
Medicaid program, for care of the premature babies,
according to the
Los Angeles Times. The cost has not been disclosed."
"As newspaper staffs wither, Capitol reporters are leaving to join the government they once covered. But their new mission is a lot like their old one – digging up information on state government," reports Capitol Weekly's John Howard.
"Both the Assembly and Senate have created entities
to investigate government. In the Assembly, Speaker
Karen Bass has established the Committee on Accountability
and Administrative Review. In the Senate, it’s the Senate Office of
Oversight and Outcomes – an office that Senate Leader Darrell Steinberg
hopes
will become an institutional watchdog, a sort of inspector
general of state operations. They say the effort will
be bipartisan, and that the goal is to improve government
efficiency.
"'The chairman assures me that his goal is to really
reform and cut back on the waste in government. There
are no sacred cows at this point, and it is nonpartisan,' said freshman
Assemblyman Curt Hagman, R-Diamond Bar, a member of the Assembly panel. 'The reporters have the skills to get into some of this
stuff,' he added.
"But for the reporters doing the work, there is a different kind of political power that comes with the job.
"'It’s the same thing as a being a reporter, but with subpoena
power,' said Tom Dresslar, who spent 13 years covering the Capitol for the Daily Journal legal
newspaper, then left to join the Capitol staff under
then-Speaker Bob Hertzberg as an oversight investigator."
Maybe they can find the gems in this budget plan.