(California State)Senate Rejects Governor Schwarzenegger's Budget Plan

BakersFieldChannel ^ | DEc. 5, 2003 | BakersFieldChannel

[FairOpinion]

SACRAMENTO, Calif. -- The state Senate has turned down Gov. Arnold Schwarzenegger's budget package. That leaves little possibility for a last-minute agreement as the clock ticks toward Friday's midnight deadline to put measures on the March ballot.

Senators vote 34-0 against the governor's plan to cap spending, with even Republicans voting no after the outcome became clear. The governor's bond measure also lost.

At the same time, counter proposals from Democrats failed to get the two-thirds majorities needed for passage.

Senate Republican leader Jim Brulte of Rancho Cucamonga is warning that Republicans will try to put an even tougher spending limit on the November ballot if the negotiations fail to produce a March ballot agreement.

Schwarzenegger wants voters to consider his idea for borrowing up to $15 billion to wipe out the state's existing deficit.

He also wants the Legislature to place a spending cap on the spring ballot.

[Southack]

I'm unconvinced that things are as dire as you predict. California can have another ballot election prior to June. It just costs a little more.

Likewise, the increased revenues that California is receiving from the current recovery could open up some new financing options, as could the state selling property.

In fact, the state could sell perennial money makers (toll bridges, for instance, also airports, dockyards, forests, etc.). Or the state could lease those assets in exchange for a big upfront payment. Ditto for a deal struck by Arnold that gives the Indian casinos more slot machines in exchange for an upfront payment timed to make the June bonds.

Also, Arnold has enormous popularity. He's the odds-on favorite to win any pissing contest with the Legislature, should Arnold decide to go to the mat and let the state run out of money altogether. "They voted down my plan, and now they complain that they have no money" when said by Governor Arnold will make one heck of a soundbite on the nightly news.

[Sabertooth]

I heard Arnold talking about this. He said it's ONLY refinancing.

Then vote for more debt and spending. I'll vote against both.

[Hildy]

AAARRRGGGHHHH....BUT THE DEBT HAS TO BE PAID. What part of that don't you understand. He can cut everything 50% and we'd still have to pay off this debt.

[SteveH]

The reason doesn't matter -- only the result.

But the immediate result would not have changed, even if the Republicans had all voted for the bond.

Their vote was symbolic either way.

So what was lost and what was gained?

Let me speculate a bit just for a moment.

If the Republicans had voted "yes", and the bill lost anyway, the Democrats could come back with a DIFFERENT bond bill, and a much worse one. How would you like a $30M bond, or a $60M bond, and raised spending? Then the Democrats could say to the Republicans, why not vote for this bond, since you voted for last one? And the Republicans would find it more difficult to argue against.

So the strategy might be to force Democrats into a box canyon: no raise in taxes, no bond bailout.

Only alternative left: lower spending.

Just a thought... ;-)

[FairOpinion]

"California can have another ballot election prior to June."

===

The Legislature had to approve the measures to put them on the March ballot. The deadline is in 3 minutes: midnight today.

Since the legislature rejected it, it won't appear on the March ballot.

Because the R-s voted with the Dems to unanimously defeat Arnold's proposal, they can't say that it's the Dems fault that the budget crisis will get worse. They voluntarily forfeited a major issue, and showed their non-support for a governor of their own party, who is desperately trying to save the state. Shame on all of them.

[Sabertooth]

AAARRRGGGHHHH....BUT THE DEBT HAS TO BE PAID. What part of that don't you understand. He can cut everything 50% and we'd still have to pay off this debt.

You should have voted for someone else, then.

McClintock outlined ways to get back in the black without borrowing, and without 50% cuts.

I'm totally OK with a full fledged government shut down, if that's the best that Schwarzenegger can do. It needs to happen.

[TheAngryClam]

Did you ever consider that maybe it was because Arnold's proposed cap sucked?

[TheAngryClam]

A good portion of that existing debt is in lieu of current cuts, so no, it's not "just refinancing" even though he's trying to sell it to you as if it were.

[Southack]

"I'm totally OK with a full fledged government shut down, if that's the best that Schwarzenegger can do."

To be honest, the Dems have far more at stake over this issue than we do. This state is "theirs" by numbers of Registered voters and by numbers of elected officials, after all, so if the public chooses to blame them for a June bond default and a government shutdown, then it is their entrenched powerbase that will get hammered.

At most, Republicans can lose their non-controlling interest in the state...i.e. a completely meaningless loss.

So with little to no downside for us Pubbies, and complete downside potential for Dems (should the voters so choose to be swayed that way), I say go for it. Shut down the state government if need be.

But in all fairness, this isn't all Arnold's doing. He is going up against a hostile opposition Legislature, after all.

Of course, that fact not only gives him an alibi should things go wrong for him, but it also opens up numerous ways to "win" politically. For instance, if Arnold makes reasonable budget proposals that all get shot down by the Legislature, then no doubt the public at large will sympathize with the Governor rather than with the Legislature. So Arnold doesn't even have to get his own budget passed to "win" here.

Likewise, the public is probably going to be pretty favorable to whatever budget that Arnold puts on the next ballot election, whenever that next option may be available.

Frankly, it's going to be difficult for the Dems to play hardball and still win the sympathy of the voters should the state government shut down.

Their current behavior indicates that they haven't correctly judged the new political climate.

If so, then hand them some more rope... as they are about to run headfirst off a cliff with a noose around their collective necks.

[TheAngryClam]

Uh, yes Arnold is a politician. That's what that whole election was about and all.

[Hildy]

Oh, please.

[Pro-Bush]

McClintock outlined ways to get back in the black without borrowing, and without 50% cuts.

BUMP!

[TheAngryClam]

No, a good portion of that debt is not yet incurred, as it is debt for the coming fiscal year.

No bond = no spending.

[TheAngryClam]

Oh, what then would you call someone who ran for and holds the highest partisan, political office in the state?

[TheAngryClam]

Arnold loses ping.

[concentric circles]

Lawmakers, Schwarzenegger unable to reach compromise
By Ed Mendel
San Diego Union-Tribune
December 5, 2003

Gov. Arnold Schwarzenegger's proposal to put a spending limit and $15 billion in deficit bonds on the March ballot was blocked by the Democratic-controlled Legislature on Friday night, giving the Republican governor his first legislative defeat.

Barring an extension of the midnight deadline, the governor will bypass the Legislature and gather signatures to place a spending limit on the November ballot, a Schwarzenegger spokesman said.

"The governor is disappointed, yet firm in his resolve to follow through on his mandate to represent the people and to let the people have a say," said Rob Stutzman, Schwarzenegger's communications director.

"As he said he will do, he will go over the head of the Legislature – that appears to be necessary – and put this spending limit on the November ballot next year," Stutzman said.

The governor's bond and spending limit proposals were defeated on the Senate floor. In the Assembly, his proposals failed to get out of committee.

The governor met with legislative leaders Friday morning before leaving the Capitol for a public rally for his "California recovery plan" in Tracy, east of the Bay Area. Similar campaign-style events were held earlier in the week in San Diego and Bakersfield.

Stutzman said it became clear late Friday afternoon that there would be no compromise after calls made by the governor's aides to Democratic legislative staff were not returned.

"I haven't heard from the governor since he went to Tracy," Senate President Pro Tempore John Burton, D-San Francisco, said Friday night. "There ain't time for compromise."

It was not clear Friday night whether Secretary of State Kevin Shelley would extend the deadline or, if given more time, whether the governor and the Legislature could reach a compromise.

Some Republican legislators argued that the bonds, which could ease the need for additional spending cuts, should give Democrats a reason to vote for a firm spending cap that would prevent deficits in the future.

"In the politics of this, the bond is for you," Assemblyman Ray Haynes, R-Murrieta, told Democrats during a committee hearing. He said he could vote to close the state's huge budget gap with deep spending cuts.

But Democrats said the bonds would do little to ease cuts in education, health and welfare programs and funding for public works, given the state's budget gap.

"It will not avoid cuts," Burton said. "That bond has nothing to do with next year's budget."

Republicans made it clear that they would vote for the alternative $15 billion bond proposed by Democrats, which would be paid off in seven years rather than the 15 to 20 years proposed by the governor.

But the Republicans, like the governor, were demanding that the bond be linked to a spending limit that would provide much tighter control of state spending than the limit proposed by Democrats.

Senate Minority Leader Jim Brulte, R-Rancho Cucamonga, told Democrats during a floor debate that if the governor has to resort to an initiative, the spending limit is likely to be even tighter.

"I want to signal everyone here that we will want a stronger spending limit, so you will know how serious we are about restraining state spending," Brulte said.

The current budget is based on $10.7 billion in deficit bonds and $1.9 billion in pension bonds, which are being challenged in court as a violation of a state constitution provision requiring voter approval of long-term debt.

The pension bond has been blocked by one court and is being appealed by the state. Legislators think the deficit bond, which has different financing, is more likely to withstand a legal challenge.

The $15 billion in deficit bonds proposed by Schwarzenegger would have replaced both the deficit and pension bonds.

The Schwarzenegger administration, wanting a backup plan in case the bond proposal failed in the Legislature or was rejected by voters, convened a panel Friday to proceed with plans to issue the $10.7 billion in deficit bonds.

The governor's deputy finance director, Mike Genest, told a legislative committee earlier this week that the failure to issue either the governor's proposed bonds or the $10.7 billion in bonds in the current budget would be an "armageddon scenario."

The state had an estimated $10 billion budget gap for the next fiscal year, and Schwarzenegger increased the shortfall by keeping a campaign promise to repeal a $4 billion increase in the vehicle license fee.

The governor has promised big-city mayors that the state will replace the revenue lost to local governments through his repeal of the tax increase, an estimated $3.4 billion this fiscal year and $4.2 billion next year.

The governor, who must propose a new budget by Jan. 10, wants to close the budget gap without raising taxes or reducing the Proposition 98 school-funding guarantee.

Some Democratic legislators suggested that Schwarzenegger should have remained in the Capitol on Friday to negotiate with them, rather than traveling to rallies and urging voters to contact legislators in support of his plan.

Burton, the Senate Democratic leader, made an allusion to Schwarzenegger's campaign remarks about ending "politics as usual" at the Capitol.

"I have great affection for the new governor," Burton said. "But politics as usual might have had the governor in the Capitol during those weeks and not going around the state."

[Ernest_at_the_Beach]

I think there may be a game plan:

CA: Legislature rejects budget packages

[Paul C. Jesup]

The Democrats want to leave Arnold NO other option, except to raise taxes, and the Republicans are helping the Democrats to put Arnold in that position.

They seem to forget that Arnold does still have the option of declaring bankrupcy for the State of Calf.

[Joy Angela]

Down with Democrats!

We will remember
in November!!

[Edmund Burke]

Why doesn't California just repudiate it's debts, and start over again with a clean slate? They won't be able to borrow again for a while, but perhaps they could live with that?