Well, the preliminaries in the budget dance are just about done, and the LAT's Shane Goldmacher and Eric Bailey report the stage is set for some high drama.
We'll bring the pillow.
Democrats will formally unveil their plan at a Capitol press conference this afternoon, but here's a quick look at what's in the proposal -- and what's not...
"Setting up a contentious partisan showdown, a legislative
budget panel
approved plans Tuesday to boost oil and tobacco taxes, slash money for
schools, eliminate the high school exit exam and reduce
the budget for
state prisons.
"But in completing a budget blueprint to put
before the full Legislature next week, the committee
pulled back from
some of the deepest cuts proposed by Gov. Arnold Schwarzenegger
to tame
California's $24.3-billion deficit.
"
The proposal, approved on a straight party-line
vote by the six Democrats on the 10-member budget panel, calls for a
new 9.9% levy on oil pumped from California soil, which would
produce
about $830 million in the coming fiscal year. It would increase
the
state's cigarette tax by $1.50 a pack, raising $1 billion. And the
repeal of a corporate tax break approved just months
ago would net $80
million.
But the levies on big business are anathema to the
Republican governor and GOP lawmakers, who blasted
the plan and vowed
to block it.
"In the midst of the worst recession since the
Great Depression, it makes absolutely no sense to solve
our budget with
proposals that target Californians' pocketbooks," said Aaron McLear,
Schwarzenegger's spokesman"
The Bee's Jim Sanders adds the conference committee backed off the governor's plan to cut state worker pay an additional 5 percent.
The 5 percent salary reduction had been proposed by Gov. Arnold Schwarzenegger to save $470 million and preserve cash in the coming fiscal year's general fund budget.
The legislative committee rejected the pay cut by a party-line vote, 6-4, with no Republican support.
So, after the budget plan fails on the floor next week, we know where the battle lines will be...
The Bee's Susan Ferriss reports Darrell Steinberg wants to cut Senate staff pay . "Moving to match the level of budget cuts its "Assembly counterparts have made, the state Senate is aiming to cut pay for staff and senators by 5 percent, but is unlikely to eliminate the highest-profile symbol of legislative pampering – state-paid cars.
"The staff salary cuts – through a furlough day – and benefits cuts would add up to about $4 million in savings, according to Secretary of the Senate Greg Schmidt. The Senate has 900 staff employees, most of whom make more than $50,000."
Hey, then the staff can all take that furlough day to walk precincts for the Democrat running to replace Jeff Denham!
While the governor says tax hikes are bad for the economy, a new study out of UCLA says spending cuts are bad, too.
"California's economic recovery will be stymied by massive state work force cuts that could boost the unemployment rate to more than 12 percent and restrain growth even after housing markets stabilize, according to an economic forecast released Tuesday," AP
s Jackob Adelman reports.
Hmm...why do we think this might come up at the Dems' press conference this afternoon?
"An economic recovery "will be held back by a rising tide of former state employees conserving their spending while they seek work in the private sector," economist Jerry Nickelsburg said in the report. "The impact, which will be felt in the coming year, is decidedly negative and will retard economic growth in 2010."
The forecast said the construction and retail sectors will continue shedding jobs, and the state's unemployment rate would reach a high of 12.1 percent in the fourth quarter of 2010. Unemployment will not dip back into the single digits until late 2011, the report said."
And while the fight over gay marriage continues, the federal government is on the brink of extending some rights to same-sex couples.
"President Barack Obama, under growing criticism for not seeking to end the ban on openly gay men and women in the military, is extending benefits to same-sex partners of federal employees," AP's Philip Elliott reports.
"Obama plans to announce his decision on Wednesday in the Oval Office, a White House official said Tuesday. The official spoke on the condition of anonymity because the president hadn't yet signed the presidential memorandum."
The LAT's Tom Petruno reports the state's credit rating may soon take another hit.
"California's credit rating, already the lowest of the 50 states, may be cut again, Standard & Poor's warned Tuesday.
As
the debate over budget cuts drags on in Sacramento,
S&P put its "A"
grade on the state's $59 billion in general obligation bonds on
"negative credit watch," meaning the rating is at risk of a downgrade."
So, what does that mean in the real world?
"A further credit downgrade could spur investors to
force the state to pay even higher interest rates when
it borrows."
Still,
California Treasurer Bill Lockyer has insisted all
through Sacramento's
deepening budget woes that he would never allow the
state to renege on
what it owes bondholders.
S&P's language Tuesday incensed
Lockyer's spokesman, Tom Dresslar. "S&P raises undue alarm about
the potential for missed bond payments," he said. "There is zero chance
of that happening."
While the California budget world is focused on Sacramento, Greg Lucas looks to Los Angeles, where a tax commission appointed by the governor and Legislature began to weigh in on California's future.
"The Commission on the 21st Century Economy is starting to wind up its work to transform California’s Depression-era created tax system.
At the 14-member commission’s penultimate meeting in Los Angeles June 16, its members appeared to narrow its potential recommendations, due July 31, to two proposals.
Both would lower the top income tax levels and, in one case, eliminate the state’s corporate tax and the portion of the sales tax pocketed by the state. Each proposal is aimed at smoothing out the spikes and valleys in the state’s increasingly volatile tax system.
Under one proposal, what the commission refers to as Tax Package 1B, all Californians would pay a 6 percent income tax rate. The state’s wealthiest residents currently pay 9.3 percent with lower percentages as earnings fall.
The effect of the proposal would be to increase the taxes on Californians earning less than $100,000 to broaden the tax base."
Sounds like that one needs to be tweaked a bit to have a snowball's chance in Sacramento...
And finally, from our Can You Hear Me Now? Files"A burglary suspect who tried to evade police by hiding in a narrow storm drain under a busy freeway for 12 hours finally agreed to give himself up after speaking to a local TV reporter on his cell phone. The man resisted multiple applications of tear gas, a police dog, negotiators, an improvised plunger and a professional urban search-and-rescue firefighter, authorities said. But police and fire officials credit KABC-TV reporter Leo Stallworth with opening the communication that led to the man's safe surrender Tuesday.
Band name alert! Improvised plunger! Improvised Plunger!
Just as firefighters were about to jerry-rig another plunger with a cable, the man called his girlfriend on his cell phone. "He's 30 feet underground, and somehow he has cell coverage," Moore said. "The girlfriend calls the news media, and he gets on the phone with Channel 7."