Gov. Brown and Democrats in the Legislature said they have reached agreement on a budget that will require passage with only a simple-majority vote. But the governor abandoned his plan for a tax election and the budget is all but certain to trigger a new round of cuts. Other than that, no problem.
From Shane Goldmacher and Anthony York in the L.A. Times: "The proposal, which Democrats said they would pass as
soon as Tuesday, does not include the renewed tax hikes that the governor had
been pushing to put before voters. But it does contain some charges that
Democrats believe they can legally raise without GOP support."
"Car owners, for example, would pay $12 more per year to
register their vehicles. Residents of wildfire-prone zones would pay a new fee
for state firefighting efforts. Other revenue would come from forcing online
retailers such asAmazon.com to collect sales tax on
purchases by California residents."
"The budget is partly based on an expectation of an extra $4 billion in income.
Without that cash, steep cuts to education and other state services would kick
in, including a reduction in schools spending that could shorten the
instructional year by seven days in some districts."
The budget deal means that Democrats control the reform agenda, according to an analysis by Reuters. "Republicans who could have won political capital on the budget issue left the bargaining table with only the satisfaction of having blocked tax extensions."
"Brown need only negotiate with Democrats from this point forward on major issues that require only majority votes. The Republicans did not earn a 'chit' from Brown by agreeing to his tax plan, which they were able to block because tax increases require a two-thirds vote of the legislature."
"Rhetoric from the governor's camp has grown increasingly harsh. Brown, who early this year stressed bipartisanship, on Monday referred to "religious reluctance" among Republicans against taxes. His spokesman Gil Duran told KPCC radio last week, "The Republicans in Sacramento are basically moronic."
The new budget blueprint is yet another in a long line of smoke-and-mirrors spending plans that California's elected officials cobble together, notes the Bee's Dan Walters.
"Brown and Democrats went back to the budgetary drawing
board, and a new rosy scenario emerged – that above-expectation tax revenue this year means the state will collect
an extra $4 billion during the fiscal year."
"The extra money – coupled with some one-time cuts and
deferrals – would get the state through the year, they say, without the
wholesale slashing that Brown had predicted if the tax extensions were blocked."
"Brown et al. insist that it's legit, of course. They're
including what Brown called "severe trigger cuts" that would go into
effect automatically should revenues fall short, probably to satisfy bankers
from whom they'll be seeking billions in short-term loans."
"We have a very good plan going forward for the
budget," Brown told reporters."
Here are some details of the budget agreement, courtesy of the Bee's Kevin Yamamura.
Meanwhile, a decision by the U.S. Supreme Court in a case originating in California gives a boost to the tribes' clout.
From Michael Doyle in the Sacramento Bee: "The U.S. Supreme Court on Monday undercut states' negotiating clout
with Indian tribes, effectively upholding a decision that the
state of California overreached when it sought to compel general fund payments
in exchange for casino approvals."
"The court's decision not to hear California's appeal is
an immediate victory for the San Diego-area Rincon Band of Luiseño Indians. The
tribe wants to add hundreds of slot machines to its existing Harrah's Rincon Casino &
Resort, north of Escondido."
"More broadly, the court's decision not to hear the case
leaves intact a 9th U.S. Circuit Court of Appeals opinion that makes it harder for
states to demand certain payments from tribes."
"We are mindful that many states, and especially
California, are currently writhing in (a) financial maw," the lower
appellate court noted last year."
The fact that CalPERS has paid $11 million to a Washington. D.C., law firm and its advisors to conduct an internal review has raised eyebrows in the financial community. The LA Times' Marc Lifsher has the story.
""I've
never heard of a pension fund paying that kind of money" on an internal
investigation, said Ed Siedle, an expert who investigates pension fund
investment portfolios.
CalPERS — which oversees a $232-billion fund — defended the fees, noting that
it used the findings from the 18-month review by Steptoe & Johnson to
negotiate $215 million in fee reductions from private equity investment
managers who handle a large swath of its assets.
The 56-page report, issued in March, also made recommendations for reforming
CalPERS' administrative, oversight and ethical practices, many of which were
subsequently adopted by the CalPERS board.
"This study was worth every penny," CalPERS Chief Investment Officer
Joseph Dear said.
