California Legislature approves main budget bill 

California’s legislature on Friday approved the main bill in a state budget plan advanced by its Democratic leaders to close a $15.7 billion shortfall despite opposition from Democratic Governor Jerry Brown.

The votes by the Assembly and state Senate on the $92 billion budget plan followed vows by Democratic leaders of the bodies that they would meet the legislature’s midnight deadline for a budget plan.

The bill now goes to Brown, who is at odds with top Democratic lawmakers over spending cuts aimed at programs providing services to the state’s neediest.

Democratic leaders say Brown’s proposed cuts are too severe and they intend to press on with talks with the governor on these and other matters in order to reach a budget agreement he can sign before the start of the state’s next fiscal year on July 1.

The two sides are in agreement on many other moves to balance the state’s books, including asking voters in November to approve a ballot measure to raise revenue by increasing the state’s sales tax and income tax rates on wealthy taxpayers.

“We’re not talking about radical differences in priorities,” said Jack Pitney, a professor of government at Claremont McKenna College.

Pitney said the two sides are engaging in political theater - Democratic lawmakers demonstrating concern for a key political constituency and Brown aiming to show the broad electorate he is willing to make draconian spending cuts to win their backing for tax increases.

“Each side has an incentive to make a strong public statement, but in private there is a great deal of opportunity for splitting the difference,” Pitney said.


Meanwhile, “Republicans are just spectators,” Pitney said.

Republicans in the Assembly and Senate voted against the budget bill as they had said they would. They oppose its proposed tax increases and have complained that they were not included in budget talks in recent weeks. They also charge that the bill is full of accounting gimmicks.

Brown last year vetoed a spending approved by Democrats, saying it was not a truly balanced budget. The two sides resolved their differences, allowing Brown to sign the state budget before the start of the current fiscal year.

California’s governor is technically required to sign a plan balancing the budget before start of the new fiscal year, but the state has a long history of its leaders engaging in protracted battles and missing deadlines for spending plans.

To remedy that, California voters in 2010 endorsed a ballot measure allowing the legislature to approve budgets that do not include tax increases by a simple majority vote - compared with a previous two-thirds vote requirement.

This effectively empowers Democrats to advance spending plans to the governor’s desk on their own.

The ballot measure also provided for suspending lawmakers’ pay if they do not approve a budget by their June 15 deadline.

Brown’s office was not immediately available to comment on the votes by the Assembly and Senate, which, Pitney said, would allow lawmakers to continue to receive their paychecks.

Credit rating analysts have said they will take a close look at California’s budget, which, when signed, will allow the state to sell short-term debt in the form of revenue anticipation notes to raise proceeds for its short-term cash needs.

Having a budget in place will also allow California to sell its general obligation bonds, which are popular with municipal debt investors despite the state’s low credit rating.

Standard & Poor’s has said its A-minus rating and positive outlook for the state could change if the legislature approves a budget filled with gimmicks.

Moody’s Investors Service has said its A1 rating, with a stable outlook, could be lowered depending on how state leaders plug the budget shortfall.

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