More talks ahead despite $92B California budget

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By JUDY LIN, Associated Press

SACRAMENTO, Calif. (AP) — Gov. Jerry Brown and Democratic leaders still face tough negotiations on welfare cuts even though lawmakers passed a $92 billion budget to meet their constitutional deadline for getting paid.

While the budget was sent to Brown Friday along with a handful of companion bills nearly 10 hours before the midnight deadline, Democrats did not take up any of the contentious bills needed to implement the spending plan because they refuse to make deeper cuts to CalWORKS, the state's welfare-to-work program, and other social services for the poor.

The governor wants welfare reform and a larger reserve to help pull the state out of its projected $15.7 billion deficit.

California's new fiscal year begins July 1. Without a budget in place, the state would not be able make certain payments to school districts and vendors, or pay salaries of elected officials and staff. Democratic leaders said they hope to work out a deal with the governor in the next week.

Democratic lawmakers in the Senate passed the main budget bill that outlines state spending on a 23-16 vote without Republican support. The bill, AB1464, was also passed by majority Democrats in the Assembly on a 50-25 vote.

After Friday's vote, Senate President Pro Tem Darrell Steinberg, D-Sacramento, said he expected the governor may not act until all the bills are before him.

"We will engage in more discussion with the governor about the remaining issues that have been vetted and discussed throughout this week," Steinberg said.

Brown did not indicate Friday whether he would sign or veto the bill. Brown spokesman, Gil Duran, said negotiations are continuing. "We're still not there yet," he said.

Republicans, who have been sidelined from talks because Democrats can pass the budget on a majority vote, called the plan incomplete and urged Brown to veto the budget bill. Democrats would need Republican support to reach the two-thirds majority needed to override a veto.

"This budget is a slow-motion train wreck and you're driving the bus," said Sen. Tom Berryhill, R-Modesto. He criticized Democrats for omitting pension and regulatory reform and a cap on state spending that Republicans say are all needed to rescue state government in the long run.

In passing the main budget bill Friday, the lawmakers met the minimum requirement for keeping their paychecks flowing under a voter-approved measure that blocks their pay if a budget is late.

Last year, the governor vetoed the budget passed by Democrats, calling it unbalanced. The state controller withheld 12 days' pay but a judge has since found that the controller has no authority to block paychecks because it violated the separation of powers clause of the California Constitution.

Controller John Chiang has until July 9 to file an appeal.

Republicans also asked the state treasurer to evaluate whether the Democratic budget is balanced. Treasurer Bill Lockyer responded that the plan is "financeable" and would allow the state to borrow about $10 billion for cash flow needs for the fiscal year.

In introducing the Democratic spending plan, Assembly Budget Committee Chairman Bob Blumenfield said lawmakers tried to soften the most severe cuts to social services and proposed "more compassionate alternatives to some of the governor's proposals."

Both the governor's plan and the Democrats' plan assume voters will approve Brown's tax initiative in November. The measure seeks to raise the state sales tax by a quarter cent and increase income taxes for people who make more than $250,000 a year, which is projected to raise $8.5 billion through mid-2013.

If voters reject the tax hike, schools and other public entities would be subject to severe automatic cuts, which include shortening the educational year by several weeks.

The governor and lawmakers propose filling the remainder of the deficit with a combination of cuts and shuffling funds, but Brown wants more cuts to CalWORKS, child care, in-home support and college aid.

Assembly Budget Committee Vice Chairman Jim Nielsen, R-Gerber, said voters will not approve the tax hike because they will understand how poorly the budget was crafted.

"The cynical ploy is to put the pressure on schools, since they will be the hardest hit if the tax fails," Nielsen said. "I think that argument is going to fall on deaf ears in November."

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Associated Press writers Don Thompson and Hannah Dreier contributed to this report.

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