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Jerry Brown's Budget: Can He Sell Spending Cuts And Tax Extensions?

Paresh Dave, Ryan Faughnder |
January 10, 2011 | 1:23 p.m. PST

News Editors

Jerry Brown’s budget proposal, unveiled Monday, threatens to again take away millions of dollars from state welfare programs, transfer control of $10 billion from the state Legislature to county supervisors and eliminate lines of state funding meant to spur investment in local communities. 

On the other side of the budget is an equal amount of new revenues, which have to be brought on by extending a series of taxes for five years.

All of this is supposed to significantly reduce California's daunting $28 billion projected deficit - if he can get it passed.

The question now is how will Brown get Republicans to show some support for the extension package and how will he deal with the challenges to his proposal from Democratic politicians at the local level.

First, he has to convince Republicans and Democrats in the state legislature to accept the proposal, which will be a challenge because the budget includes severe cuts to programs that Democrats hold dear, as well as tax extensions, which Republicans will likely oppose.

Brown will need to get support from at least four Republicans in order to secure a two-thirds majority needed to place the tax cuts extension measure on the ballot. Brown faces a self-imposed deadline of March 1 to get a handshake agreement with legislators on a budget and a mid-March deadline to get a measure on the ballot.

In exchange for supporting the cuts he’s already proposed, Republicans will likely jockey for the next several weeks, asking Brown to make even more spending cuts.

“His budget is not very gimmicky,” said Raphael Sonenshein, a political expert at California State University, Los Angeles. “It’s already a rough one, so I don’t know if there’s any room to cut further.”

Republicans could also ask Brown to promise he will eventually tackle one issue missing from his first budget proposal: pension reform.

Democrats are used to getting backlash after making cuts to welfare programs year after year. But for the first time, Brown’s budget proposal could lead to outcry in Republican constituencies because no longer do Democrats need Republican support to pass a budget measure.

Sonenshein said previous cuts have always been in Democratic policy areas. Brown’s ploy to kill redevelopment agencies will finally affect some suburban Republican areas. It’s an advantage former Governor Arnold Schwarzenegger didn’t enjoy.

Brown also will need to build public support for the extension of the 2009 tax hikes. K-12 education will only be spared from cuts if the extensions pass. Taxes are a tough sell, but Brown may be able to convince voters, given that the additional revenue is necessary to protect education and the social safety net.

Arnold Schwarzenegger tried to repair the California state budget with a special election when he still had a large amount of political capital, but all of his ballot measures were shot down.

Bill Whalen of the Hoover Institute said that one of Schwarzenegger's biggest mistakes was trying to use the special election tactic to push through too many things at once. By only offering one proposal at a time, Brown may have an easier time passing the tax extensions.

“The state can swallow only one big animal at a time,” Whalen said.

Brown still faces one dilemma that Schwarzenegger also faced: special elections are normally low turnout elections, which tends to disadvantage Democrats who make up a smaller group of permanent absentee voters.

Brown, however, already seems to have accounted for this. To get Democrats to vote, he’ll need help from the political machines of labor groups. His plan to spare education is something the California Teachers Association will love.

Brown’s budget also includes a $200 million boost for corrections’ officers. The prison guards union spent millions of dollars to help get Brown elected.

“I think a lot of unions are going to see value in helping Brown succeed in the long-term because they would rather give up on some of their short-term goals to keep a centrist Democrat in office than see a Republican governor,” Sonenshein said.

At the local level, Democrats are insecure about Brown’s “realignment” idea to transfer more power to local government. They fear unfunded mandates will only lead to larger deficits at the local level. They could push for Brown to get rolling on an oil tax, saying cuts to welfare are continuing while oil companies continue to enjoy tax breaks.

Jean Ross, Executive Director of the California Budget Project, said she is "cautiously supportive" of the suggested austerity measures. At least at the outset, she said, the budget will allocate funding to local governments to support the additional responsibilities.

"It is a more balanced approach than what we've seen recently," she said. 

Whalen, who worked with Gov. Pete Wilson during a different budget crisis, said the new budget proposal resembles one put forth in the 1990s by Wilson in which he posed $7 billion in spending cuts and $7 billion in tax revenue.

Giving voters and legislators a combination of two equally unpleasant options is easier to pass than one completely unpalatable one.

“This is the new math in Sacramento: minus one times minus one equals one,” Whalen said.

Stephen Levy, director of the Center for the Continuing Study of the California Economy, said that, politics aside, the budget proposal is "honest" about what the state needs.

"It's honest and the math works," he said. "There are only difficult choices, so this is a very important step."



 

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