SACRAMENTO – State senators were locked into the Senate chamber for a long night of negotiations after Republicans yesterday refused to vote for a new state budget approved by the Assembly.
Senate President Pro Tempore Don Perata, D-Oakland, barred lawmakers from leaving as Republicans pushed for deeper spending cuts and other changes in the pending budget.
The dramatic tactic recalled a lockdown of the Assembly in 1963 by Assembly Speaker Jesse “Big Daddy” Unruh, who forced members to remain on the Assembly floor overnight until Republicans voted for a budget-related bill.
Four years ago, former Assembly Speaker Herb Wesson, D-Culver City, broke Unruh's record by locking members in the Assembly chamber for more than 27 hours until Republicans voted for a budget.
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Developments
The compromise: In budget
negotiations, Democrats agree to
all but $700 million of a $2 billion
cut demanded by Republicans in
the original Democratic plan with a
general fund of $104.4 billion.
Democrats say their new plan
spends almost $800 million less
than Gov. Arnold Schwarzenegger
proposed in May.
The Assembly: With some
Republican support, lower-house
lawmakers approve the budget
near midnight Thursday.
The surprise: Republicans
demand, and get, Assembly
approval of a $538 million business
tax cut before dawn yesterday.
The Senate: The budget stalls but
negotiations continue. Republicans
want further spending cuts;
Democrats say they've given
enough.
The stunner: Because a drafting
error in the tax cut bill wipes out an
existing research and development
tax credit, the net result would
actually be a tax increase.
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“These bills will be on call,” Perata said yesterday after Republicans failed to provide the two votes needed for the two-thirds approval required to pass the $145 billion budget and its companion bills.
Perata said that a vote would be held every hour, and that orders would be taken for breakfast this morning, which would be brought into the chamber.
Some Republicans didn't think Perata was serious about enforcing the lockdown and tried to leave yesterday afternoon through the back door in a hallway that is part of a complex of chamber support rooms.
“Lock the door and have them walk away,” the chief Senate sergeant-at-arms, Tony Beard, instructed another sergeant. “Till he (Perata) says different, they stay inside.”
The Assembly worked until nearly 5 a.m. yesterday to pass the budget and related bills before departing for a scheduled monthlong summer recess.
“Probably some of the things we are talking about would require the Assembly to come back,” said Senate Minority Leader Dick Ackerman, R-Tustin.
Perata said there will be no changes in the Assembly-approved budget, declaring that the Senate will “stay here” until Republicans decide to approve it.
“I'm not reopening the budget,” Perata said. “Period. End of Sentence. We're done.”
The Assembly approved a budget with a $103 billion general fund, about $1.3 billion lower than the previous Democratic proposal and $800 million below Republican Gov. Arnold Schwarzenegger's proposal.
Senate Republicans are pushing for an additional reduction of $700 million. They say this would produce an “operationally” balanced budget that does not spend more than the projected revenue during the fiscal year.
California has been struggling for seven years with a chronic deficit. Budgets have been balanced using reserves from previous years, some from a $10.3 billion deficit bond issued in 2004.
The deficit has been shrinking in recent years. But Senate Republicans said the Assembly budget would cause the projected deficit to balloon to about $5.5 billion next year, even more if a slowing economy produces less tax revenue.
“We will be at least making a head start rather than kicking the can down the road as we have done year after year after year,” said Sen. Dennis Hollingsworth, R-Temecula, as he argued for more spending cuts.
Assembly Speaker Fabian Núñez, D-Los Angeles, who negotiated a budget agreement with Assembly GOP leader Mike Villines of Clovis, said the compromise protects education, social services and “human infrastructure.”
At the same time, Núñez said, the budget not only spends less than Schwarzenegger's proposal but also has a $3.4 billion reserve, larger than the $2.2 billion reserve proposed by the governor.
“As a Democrat, I think I'm a little bit more conservative these days than the governor when it comes to fiscal prudency,” Núñez said with a smile.
The Assembly budget takes $1.1 billion from a windfall that public transit expected to get from soaring gasoline sales tax revenue – less than the $1.3 billion cut proposed by the Republican governor.
Regional planners said last month that Schwarzenegger's proposal would cost San Diego County transit systems $30 million – $23 million from the Metropolitan Transit System and $7 million from the North County Transit District.
“Without those dollars, the operators will have to scale back their operations at a time when they should be expanding,” said Gary Gallegos, executive director of the San Diego Association of Governments.
The Assembly budget does not contain a $400 million cut feared by school groups. Democrats said the proposed reduction, which would cut funding to the minimum required by the Proposition 98 guarantee, was on a Republican list of potential cuts.
In a side agreement between Núñez and Villines that helped garner votes for the budget, the Assembly passed a $538 million tax cut, phased in over four years, for corporations, the movie industry and buyers of jet fuel.
But Hollingsworth and Senate Republicans said the bill, hastily drafted without the customary public hearings, contained a “fatal flaw” that would actually raise taxes by eliminating a research and development credit worth about $650 million.
Núñez and Villines issued a statement yesterday saying that the “inadvertent drafting error” in SB 98 would be corrected when the Assembly returns from the summer recess.
Perata pronounced the tax bill “dead on arrival” in the Senate. He sent a strongly worded letter to Núñez saying the budget sacrificed funding for education and delayed inflation-adjustment increases in payments to the aged, blind and disabled.
“But most ironic, we have surrendered $185 million in teacher tax credits to balance the budget!!!” Perata wrote. “How could you now throw them over for Hollywood movie moguls and multinational corporations?”
In addition to less spending, Ackerman said Senate Republicans are pushing for changes in budget bills that allocate money from a $43 billion public-works bond package.
He said Senate Republicans also want a change in the environmental laws that are being used by Attorney General Jerry Brown to obstruct development, including new refineries. Brown told The Associated Press that Republicans were distorting his efforts to make sure California cities and counties are implementing the state's landmark global warming bill.
Ackerman also said Senate Republicans want a tax cut for businesses that invest in California as a way to encourage them to stay in the state.
After the lockdown, Ackerman and his leadership team were allowed to go to the governor's office to discuss the budget stalemate.
Schwarzenegger issued a statement praising the Assembly budget for lowering spending and increasing the reserve. He said he would use his “blue pencil,” the line-item veto, to further reduce the $700 million operating deficit.
“Bringing the operating deficit to zero would mean a cut to the education budget,” Schwarzenegger said. “The question now is whether we cut education funding and I don't think that's what the people of California want. I will not cut education.”
Ed Mendel: ed.mendel@uniontrib.com
