California lawmakers were poised Wednesday afternoon to approve a plan to erase the state's remaining $9.6 billion deficit as a midnight deadline loomed, threatening legislators that they will lose their salaries if they cannot send a budget to the governor. A measure passed by voters last year means that if lawmakers don't meet Wednesday's deadline, they'll go unpaid until they pass a budget. And they won't get back pay.
California Gov. Jerry Brown has already signed $11.2 billion in cuts and other measures, which shrank the state's deficit by more than half. But he has so far failed to gain enough support for his plan to close the rest of the gap by extending tax increases set to expire.
California's budget machinations are closely watched because of its importance to the national economy. The state issues the most debt, has the largest economy and is the most populous.
On Wednesday morning, Democrats revealed a new plan to get a state budget passed, including proposing measures to require local economic-development agencies to provide $1.7 billion in funds to schools and selling and leasing back state buildings to save $1.2 billion. About $3 billion in funding to schools and community colleges would be shifted to the following fiscal year.
"This budget is not our preference," said Senate President Pro Tem Darrell Steinberg, a Democrat. "The governor has pushed for a better plan, and we support his plan. Maybe and hopefully it will still get done."
A spokesman for Mr. Brown didn't immediately respond to a request for comment.
The new plan was revealed after Mr. Brown failed to strike a deal with a handful of Republicans to win their support for extending some tax increases. Such tax measures require a two-thirds vote by the Legislature.
Now Democrats are taking advantage of a constitutional change voters approved last November that called for the state budget to require only a majority vote–though any elements that raise taxes still require a two-thirds vote. According to Democrats, the new law means they can pass their alternate version without any Republican votes.
The same voter-approved measure also called for legislators to lose their salaries if they don't pass a budget by June 15.
Democratic lawmakers expressed guarded support for the new plan, saying they preferred Mr. Brown's approach. Republicans, meanwhile, criticized Democrats for attempting to cut them out of the budget discussion, with the Republicans negotiating with Mr. Brown indicating they are willing to continue talks about the tax hikes.
Anthony Cannella, one Republican senator involved in the talks, said he and his colleagues still want to ask voters to restrict spending and change pension benefits for new public employees as well as ask them about taxes.
"I encourage you to work with us, get these reforms hammered out, so we can take these very important questions to the public so they can be voted on," Mr. Cannella said to his Democratic colleagues.
Mr. Brown is expected to keep negotiating with Republicans as the end of the fiscal year approaches on June 30 rather than immediately signing the plan crafted by Democrats.
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