Saturday, July 28, 2007

29 DAYS WITHOUT A BUDGET: more info on the budget impasse than you could possibly stand


By Don Perata, President pro Tem | California State Senate

from California Progress

July 27, 2007 We are more than three weeks into the budget year which began July 1st, but have no 2007-08 state budget. I thought you would appreciate an update on the continuing negotiations.

The Legislature has spent months preparing a budget and we need to pass one immediately. Democrats have made all the cuts we can and support the budget plan passed by the Assembly and backed by the Governor. Senate Republicans are demanding more than their Assembly counterparts and our Republican Governor.

Before the Assembly voted on the budget, Democrats from both houses agreed to $1.3 billion in cuts. The Senate Republicans are calling for additional cuts aimed at children, seniors and people who are homeless. These cuts would destabilize families, undercut education and cost the state more money in the long run by putting thousands of Californians at risk of falling through the safety net and adding to the state's prison and corrections costs. While we continue to work on a compromise both parties can live with, I want you to know that I came to Sacramento to protect vulnerable Californians and I will not dismantle the few existing safety nets.

At the beginning of July, legislative leaders from both houses and both parties compromised on a budget that contains no new taxes, fees or social programs and dramatically cuts the "operating deficit." Ultimately, this is best we can do under our current budget constraints. In the fall, we need to have a conversation about how to change the way the state budgets. The structure is clearly dysfunctional.

For now, I am asking the Governor to work with the Senate Republicans to reconsider the merits of the budget proposal, which is financially sound and balanced. It includes:

• No new taxes, fees or social programs

• A reserve much larger than the Governor proposed

• Paying off state debt early providing $1 billion more than required

• An "operating deficit" much lower than the Governor proposed

I also appreciate that this budget:

• Invests in people and prevention to prevent future costs, instead of taking the "penny-wise-pound-foolish" approach the state often takes. It reforms juvenile justice so that youthful offenders can stay closer to their families and have a better chance at rehabilitation. It also funds programs for the homeless mentally ill.

• Restores grants for poor children, so they get fed and can stay in school, rather than falling through society's cracks and ending up in prison, costing the state in more funding and lost productivity.

• Restores needed funding for the disabled, blind and elderly. It is our job in government to provide baseline services for people who are physically incapable of providing it themselves.

• Protects K-12 education funding, providing everything promised by Prop. 98 and spending about 50 cents of every dollar in the budget on schools, colleges and universities.

• Keeps our promise to voters to build roads, schools and flood control to keep our economy strong

• Invests $4 billion to clear traffic bottlenecks and improve road safety in every corner of the state

Now it's up to Senate Republicans and our Republican Governor to resolve their differences.

No apology to Denham, says O'Connell

By Shane Goldmacher - Capitol Alert

Published 12:03 pm PDT Friday, July 27, 2007

Tempers continue to flare as California ends its fourth week of the fiscal year without a budget.

Today, Jack O'Connell, in a letter responding to Sen. Jeff Denham's report that O'Connell called to apologize for the tone of a press conference earlier this week, denied he ever apologized to Denham.

"I write to take issue with your press release dated July 24, 2007, which incorrectly described a phone conversation we had," wrote O'Connell, the state superintendent of public instruction, in a letter sent to Denham today. "Your description of my phone call as an apology mischaracterizes our discussion."

At issue is a Tuesday press conference called by the Education Coalition in Modesto - in Denham's district - to put pressure on the Republican senator to vote for the state budget passed by the Assembly.

"The students in Sen. Denham's district and in all of California are counting on the adults to do the right thing here and to pass a budget that funds these schools," said the California Teachers Association's Lynne Faulks on Tuesday.

But Denham took issue with the event, issuing a statement saying he would not be forced to vote for an unbalanced budget because of

"partisan press conferences."

Denham was the only legislative Republican the teachers' union endorsed in 2006.

To strengthen his case that the Tuesday press conference was overly political, Denham's office reported that O'Connell had called to apologize for the partisan tone of the event.

But O'Connell said today there was never an apology.

"I called as a courtesy to let you know the press conference would be taking place and that the tone of the event would remain respectful. I extend the same courtesy to all members of the Legislature when I am involved in public events in their districts," O'Connell wrote.

Below is the full text of Denham's press release (emphases were his), followed by the letter sent by O'Connell.

'Phil who?'

By Shane Goldmacher - Capitol Alert
Published 11:01 am PDT Friday, July 27, 2007

That's the official response from Assembly Speaker Fabian Núñez's spokesman answering the e-mail and letter-to-the-editor from former state Treasurer Phil Angelides criticizing the Assembly budget.

Steve Maviglio, deputy chief of staff for Núñez, who briefly worked for Angelides' campaign in the summer of 2006, passed on the non-too-subtle rebuke to the former gubernatorial candidate.

Angelides continues after Núñez

By Shane Goldmacher - Capitol Alert
9:50 am PDT Friday, July 27, 2007

After lambasting Assembly Speaker Fabian Núñez in an e-mail to those who supported his bid for governor, Phil Angelides keeps at in a letter to the editor in Friday's Sacramento Bee.

The former state treasurer says the budget passed by the state's Assembly "would deprive the aged, blind and disabled, and poor mothers with children."

In 2006, while serving as co-chairman of Angelides' gubernatorial campaign, Núñez struck deals with the Republican governor on everything from hiking the minimum wage to prescription drug benefits to global warming legislation.

With each deal, and the ensuing press conferences and then bill-signing ceremonies, the governor's popularity and bipartisan image grew and Angelides' already long-shot chances for the governorship sank.

Here's the full text of Angelides' anti-budget letter:

The state budget plan backed by Gov. Arnold Schwarzenegger and Assembly Speaker Fabian Núñez sets the wrong course for California.

This budget proposal would cut ongoing future public school and community college funding by over $400 million at the very time when we need to invest more, not less, in our kids. It would deprive the aged, blind and disabled, and poor mothers with children -- who are struggling to get by on $700-$850 a month -- of a modest cost-of-living increase so they can pay the rent and put food on the table.

It would strip $1.2 billion from public transportation when we need to relieve congestion, cut air pollution and fight global warming. And, to top it all off, the plan would give away nearly $1 billion a year in new tax breaks for the biggest corporations in the land, including the oil giants, leading to more cuts and bigger deficits in the future.

This budget should be rejected. We can do better by our children, our families, our environment and our future..

Governor urges end to budget standoff

The impasse could weaken the state's ability to fight wildfires, Schwarzenegger says.

By Jordan Rau, Times Staff Writer

July 27, 2007 - SACRAMENTO — As the latest effort to resolve the state's monthlong budget standoff collapsed Thursday, Gov. Arnold Schwarzenegger tried to heighten pressure for a quick resolution, warning lawmakers that a continued impasse would jeopardize critical state services such as fighting wildfires.

"Now is the time to come to agreement and have a budget," Schwarzenegger said at a news conference, his first devoted to the state budget since legislators missed their June 30 deadline to enact a spending plan.

"Transportation projects will come to a grinding halt if we don't pass a budget right now," he said. "Republicans will have projects in their neighborhoods that will came to a halt. And Democrats will have projects in their neighborhoods, and the people will get upset about it."

To buttress his argument, Schwarzenegger detailed a dire, though hypothetical, scenario in which state planes fighting wildfires could be grounded for lack of spare parts.

Schwarzenegger said seven companies that sell the airplane parts have stopped doing business with the state because they are not getting paid.

"We are in the middle of a terrible fire season right now, with one of the driest years in history," Schwarzenegger said, "and it is absolutely critical that we have all the resources necessary to keep California safe."

However, officials at the California Department of Forestry and Fire Protection, whom the administration had brought to brief reporters, acknowledged that those seven companies were among 300 the state uses, and that they had dealt with the dropouts by switching to more willing vendors.

"We haven't reached that crisis yet," said Mike Padilla, the agency's chief of aviation. But he said he anticipated that more vendors would refuse to fill orders.

After weeks of wrangling, the California Senate had scheduled a debate for Thursday morning in which the Republican minority, which has been holding out for more cuts to the bipartisan $145-billion plan approved by the Assembly, was supposed to present its alternative plan for a Senate vote..

But with both sides knowing that exercise had no chance of winning Democratic support, leaders canceled the session and agreed to continue negotiations into the weekend and ratchet down the hostile rhetoric.

Senate President Don Perata (D-Oakland), who had called Republicans "terrorists" for holding up the state budget earlier this week, told reporters his comment had been "intemperate."

Senate Republican Leader Dick Ackerman of Irvine told reporters that his members were holding out until Democrats agreed to enough cuts so that the state would be on target to end its fiscal year next June in balance, and not with a $700-million deficit as the Assembly plan was expected to produce.

Ackerman described as fear-mongering the predictions made by Democrats as well as the governor that essential state services would crumble if the budget fight continued. He said schools should be unaffected by the impasse because Republicans have pledged not to alter education aid.

He said he had lived through previous budget fights that lasted 45 days or longer without catastrophe.

"We're all worried about it, but the world will go forward," Ackerman said.

Despite a week of heightened rhetoric, an atmosphere of crisis has yet to descend on the Capitol. At a local nail salon, two GOP staffers were overheard complaining about a senator throwing a tantrum because a document was prepared in Microsoft Word instead of Excel.

Schwarzenegger's schedule has remained typical as well: After his news conference, he again tried to pressure GOP leaders to compromise. Following that meeting, he headed to the Bay Area for a political fundraiser, where his upcoming 60th birthday will be celebrated with donors giving as much as $20,000.

Indeed, even the ominous prediction of fires raging unchecked has to some degree been a staple of Sacramento budget battles. When the 2002 state budget was 18 days late, then-Gov. Gray Davis denounced Republican legislators for "literally putting firefighter operations at risk." That year's budget standoff ended Aug. 31.

As of now, no one in the Capitol appears to see a quick resolution to the standoff. The Republicans' demands go beyond a balanced budget. They also want to roll back part of a landmark law passed last year intended to curb greenhouse gases, saying that state Atty. Gen. Jerry Brown has been invoking the law to challenge building projects it was never intended to stop. GOP lawmakers also want to alter the way the state can spend public works money that voters agreed to borrow in November's elections.

Though Democrats command a 25 to 15 majority in the Senate, a budget cannot be passed without at least two GOP votes, owing to a two-thirds vote requirement.

In the past, governors have been able to pick off the votes needed to pass a budget from the Republican caucus by making side deals with individual lawmakers. But Schwarzenegger has been unable to do that so far.

Members of the caucus agreed earlier this year that none of them would vote for a budget until a majority of the caucus agreed that it would be appropriate to do so.

But the Democratic majority has shown no inclination to yield, as cutting the state budget any further would siphon money from programs dear to their party's heart, such as those geared to help children on welfare.

"We've really given as much as we're going to give," Perata said. "It really has to stop right here."

Analysis: Governor faces GOP roadblock

He needs votes of two of his own party members in the Senate, but influence wanes.

By Kevin Yamamura – Sacramento Bee Capitol Bureau

Friday, July 27, 2007 - Gov. Arnold Schwarzenegger's Republican problem has flared up again.

California has no budget nearly four weeks into the fiscal year, and the Republican governor has failed to persuade two of his own minority party's state senators to vote for a spending plan he likes.

While Republicans say they are standing on principle, the situation shows how little Capitol influence Schwarzenegger has over his own party after moderating his views and cutting GOP leaders out of legislative deals last year on the environment and minimum wage.

Senate President Pro Tem Don Perata on Thursday asked the governor to step in to resolve the latest flare-up between Democrats and Republicans. The Senate did not vote Thursday, sending the budget impasse into its 27th day.

The governor has tried to negotiate with some Republicans, but none has broken party ranks and provided the two GOP votes necessary in the Senate to pass the budget.

"This has not been a high point in relations between the governor and Republican legislators, and I think they've gotten his attention," said John J. Pitney Jr., a professor of government at Claremont McKenna College.

Schwarzenegger on Thursday held his first budget news conference since releasing his revised proposal in May. He said "now is the time" for lawmakers to approve the budget because some state operations are at risk of losing funding. The governor met separately with Perata and Senate Republican leader Dick Ackerman beforehand.

"I work with both of the parties together and try to let them know what is important here is not what is best for your party, but what is best for the people of California," Schwarzenegger said.

The governor added Thursday that he supports the Assembly version of the budget, which Senate Republicans refuse to approve.

Perata canceled a Thursday floor session to consider a GOP proposal to trim another $842 million from the $103 billion general fund budget for 2007-08 that the Assembly passed last week. Democrats oppose additional cuts to welfare and health assistance for poor families.

Perata said the dispute lies between the governor and Republican lawmakers. He urged Schwarzenegger to keep the situation from escalating into name calling, as it did Wednesday with Perata accusing Republicans of "fiscal terrorism" for demanding more cuts.

"It's really got to stop here," Perata said. "And it's really got to stop with the governor. I mean, the governor is the guy that I'm looking to now for the leadership to get everybody to calm down."

Sen. Dennis Hollingsworth, R-Temecula, said the governor's influence over GOP lawmakers has fluctuated with his views. When the governor entered office, for instance, GOP members worked with him to pass workers' compensation changes that reduced business costs.

"He had influence because his interests coincided with ours," Hollingsworth said. "I think in past budget years, our interests coincided when he was trying to fix the structural deficit and balance the budget."

Bill Whalen, a research fellow at Stanford University's Hoover Institution who wrote speeches for former Gov. Pete Wilson, said Republicans may be sending a twofold message. They are showing Democrats how difficult it will be to pass new taxes in future years while also proving their relevancy to Schwarzenegger.

"Eleven months out of the year, the poor Republicans in the state Senate and Assembly toil in obscurity," Whalen said. "They don't matter when it comes to party-line votes. When it comes to (Schwarzenegger's) post-partisanship, they're the ones standing on the outside while the governor basks in the spotlight."

If the governor cannot sway Republicans through persuasive arguments, he could opt for the power of purse strings. Former Gov. Gray Davis obtained votes from reluctant Republicans by including money for projects in their home districts. In 2001, for instance, Davis offered $76 million to Republicans for agriculture, law enforcement and other items.

Schwarzenegger also could promise political help to members of his own party when they run for future office. But the governor has drawn skepticism about how much his promises to GOP members are worth.

Last year, Sen. Abel Maldonado, R-Santa Maria, and former Assemblyman Keith Richman, both moderates, were upset after they carried legislation for Schwarzenegger but received no help from the governor in their primary races for statewide office. Some California Republicans remain bitter that the governor left the state party with debt after it paid for millions of dollars in advertising for him to win re-election last year.

"(Schwarzenegger) has basically flipped off the legislative Republicans most of the time, so it's hard to believe now he can go back and sweet-talk them," said Garry South, who advised Davis as his political strategist.

Schwarzenegger aides said the governor strategically gave lawmakers a chance to work out the matter by themselves, whereas previous governors called regular joint budget meetings with all four legislative leaders. The governor expressed a greater sense of urgency Thursday.

"Up until now, I thought it was a really great advantage to see the discussions and the debates and the negotiations go on, because the numbers did go down from my May revise," Schwarzenegger said, adding later, "But I think now is the time we should compromise and have a budget."

The governor invited criticism by traveling throughout the state to promote a water deal that could be negotiated in September while some school and transportation programs are in danger of losing funding as the budget goes unresolved.

In the past week, Schwarzenegger held news conferences in Long Beach, San Diego and South Lake Tahoe. Over the weekend, he was spotted watching David Beckham's Major League Soccer debut in Carson.

"You're not going to solve the budget crisis by talking about water in San Diego or fires in Tahoe," said Steven Maviglio, spokesman for Assembly Speaker Fabian Núñez, who is in Europe. "He needs to get engaged in the Capitol."

The governor called at least one Republican other than Ackerman on Thursday: Sen. Sam Aanestad. Schwarzenegger spotted the Penn Valley Republican at his news conference and called the senator afterward. Aanestad said Republican senators pledged last fall at a retreat to pass a balanced budget.

"We've heard now for two years, 'Oh, we'll do it next year, we'll do it next year.' Well, the fact of the matter is we got to start sometime," the senator said.

Schwarzenegger defended himself by saying he has fully engaged in the budget by meeting with lawmakers in his cigar tent into the wee hours and speaking with leaders constantly.

"I have offered my services, I have worked seven days a week on this," he said. "I make phone calls to the leaders on weekends. I am ready. We have sometimes met up until midnight, one o'clock, to resolve some of the outstanding issues. So I think it is just a very, very difficult situation."

Schwarzenegger planned to attend a fundraiser in Hillsborough on Thursday night and meet with U.N. Secretary-General Ban Ki-moon in San Jose today to tour a California technology company.


"Does Not Appreciate Partisan Press Conferences Aimed at Pressuring Votes for Unbalanced Budget"

from CapitolAlert/Sacramento Bee

SACRAMENTO-State Senator Jeff Denham (R-Merced) today continued to discuss the problems in Senate Bill 77, the proposed 2007-2008 State Budget. Denham wants the proposed budget to be balanced, but will not support cuts to K-12 education funding. Denham will also not support any tax hikes. However, he is willing to work with both Democrats and Republicans to achieve a balanced budget.

"My goal is to have a balanced budget," said Senator Denham. "It is not fair to the people of California for their Legislators to vote in favor of a budget that only increases the State's debt. A budget like this would force cuts to education next year. And, I do not support that."

This morning Superintendent of Public Instruction Jack O'Connell called Senator Denham to apologize for the partisan tone of press conferences being held by some education leaders that he was scheduled to participate in. Senator Denham is happy to work with Superintendent O'Connell on this budget. However, he does not appreciate unproductive partisan press conferences held in his district aimed to pressure him to vote in favor of a bad, unbalanced budget.

On Friday July 20, Senator Denham, along with 13 of his Republican colleagues in the Senate, voted no on SB 77. The proposed budget bill failed to garner the necessary 27 votes (2/3's of the 40 member Senate) and was held on the Senate Floor by a 25-14 vote. The proposed budget is out of balance by at least $699 million. If the budget is passed in its current form, California will face operating deficits next year that exceed $5 billion and will continue to climb each year.

"It's unconscionable to take away the teacher's tax credit, particularly given that part of the budget proposal would also give tax breaks to Hollywood moguls and airline companies," Senator Denham continued. "However, there are several areas of pork that could be cut."

Some areas of waste that could be eliminated or reduced include the Cannery Business Park (Sacramento) replacement furniture for $1 million and the Labor Union Institute at UCLA, which would receive $6 million. Another waste of money is to give the Tahoe Regional Planning Agency $4 million, which spends its time discouraging homeowners from keeping their properties fire safe. The UC Mexico facility in Mexico City should not receive $7 million in this budget.

"The Mexican government should actually owe California for the money we spend to educate, incarcerate and provide health services for illegal immigrants," Denham concluded. "This state also provides Mexico with water. California should not spend $7 million on this facility in Mexico City. The State should be focused on funding education for children who live in California."

Senator Denham is also open to the University of California and California State University systems paying back taxpayers for the millions of dollars wasted the last few years on secret pay hikes, bonuses and housing allowances (such as $30,000 for a dog run) for executives.

Here's the letter O'Connell sent:

The Honorable Jeff Denham

California State Senate

1640 N Street, Suite 210

Merced, CA 95340

Dear Senator Denham:

I write to take issue with your press release dated July 24, 2007, which incorrectly described a phone conversation we had earlier in the day regarding a press conference I participated in with education officials from the Modesto area. Your description of my phone call as an apology mischaracterizes our discussion.

The purpose of the press conference was to urge members of the Senate Republican Caucus to end the budget stalemate by voting for a balanced budget that protects public education. This event was held in your district expressly because of your record of standing up for public schools and to urge you to lead the caucus towards a responsible course of action.

I called as a courtesy to let you know the press conference would be taking place and that the tone of the event would remain respectful. I extend the same courtesy to all members of the Legislature when I am involved in public events in their districts. I did not call to apologize for participating in the press conference or the tone of the press conference and I most definitely do not apologize for asking that the Republican Caucus to do the job the people of California elected the Legislature to do - pass a balanced budget on time - in fact, I demand it.

With the State budget now 26 days late, I strongly urge you to work with members of your caucus to end the budget gridlock and vote to pass a State spending plan that protects public schools.



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