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THE NOONER for June 28, 2011

Well, THAT was easy.

The governor, allegedly after receiving a text message breakup Sunday night, reached the conclusion that there was no hope in a package that brought the two parties together and decided to deal only with Democrats.

In an afternoon presser, Brown, Speaker Perez and Pro Tem Steinberg outlined a package that seems remarkably similar to the June 15 Democrats' budget, albeit with some of the gimmicks replaced with rosier revenue scenarios of $4 billion more than assumed in the budget passed two weeks ago.  If the revenues don't materialize, $2.5 billion in cuts will be automatically triggered in a three-tier priority system, with any remaining shortfall kicked into 2012-13. 

It's a brilliant play by Democrats and the governor, setting up a January showdown if the revenues don't materialize.  No voters--Democratic or Republican--want a shorter school year.  That means child care or someone staying home to watch over junior.  Oh, and home-to-school transportation...that means mom and dad have to take junior to school.  This is the Plan B that people have dreamt of all year, although we're doing it next January instead of March or June.  However, everyone would like to see the revenue come in--it's a game of pray or play.

The three biggest questions with the plan:

  1. Will the revenues materialize, or will the January Joust occur?
  2. Will redevelopment agencies, essentially eliminated under the plan, be successful with their planned lawsuit? ($1.7b)
  3. Will anybody sue over the Prop. 98 gimmickry that relies on a shift of sales tax revenue to local government as a way to recognize new revenue while ignoring the formula that would ordinarily require about 40% to go to K-14?  The big education groups have promised not to sue, but there are whispers that Republicans, who have a newfound love for the guarantee, just might.

The votes are planned this afternoon and it's fair to expect lots of jeers from Republicans. While they walk away "winners" by blocking tax extensions, their irrelevance may be found next year if Democrats pursue Plan I--taxes by initiatives targeted at some of the biggest special interest supporters of Republicans.  That is why the Chamber is particularly unhappy with the negotiating Republicans, who kept upping the ante on the demands in exchange for a tax vote on which the Chamber was okay.  That said, Republican lawmakers are legitimately scared for their political lives in the most uncertain political landscape anyone in office has ever seen.

It probably doesn't need to be said that very few Republican bills are likely to be passed or signed this year...

The only way anybody wins with this budget is dramatically higher revenues. This would avoid the triggered cuts Democrats would hate and would allow Republicans to return to the time-honored argument that lower taxes drive higher tax revenues.  Of course, when we're relying on Facebook, Zynga and Twitter IPOs to save us, it's hard to say those are contingent on Friday's sunset of sales and car taxes.  Meanwhile, these revenues would mostly be one time in nature, and we'd be back to a structural problem in 2012-13.

The budget isn't the only thing to watch today.  The governor has until midnight to act on Steinberg's SB 104, the farmworker card check bill.  Will Steinberg be happy getting a budget that comes pretty close to what he got his members to vote on July 15?  Will the governor sign it, veto it, or will it be withdrawn from enrollment?


Jerry Brown, Democratic leaders announce budget deal - Torey Van Oot @ blogs.sacbee.com
Gov. Jerry Brown and Democratic legislative leaders announced today that they have reached an agreement on a new majority-vote budget plan.

Jerry Brown And Democrats Team Up On Budget Plan Without GOP Input - Shane Goldmacher @ latimesblogs.latimes.com
Gov. Jerry Brown said Monday he was abandoning hopes of striking a bipartisan budget deal on taxes and instead would push through a spending plan solely with the support of Democratic lawmakers. The new plan, which Brown unveiled in a joint news conference with the Democratic leaders, would rely on hopes for an economic surge generating billions more in windfall tax collections. Brown and the Democrats would agree in advance to further cutbacks in case the money does not materialize, though they did not immediately provide details on what programs would be cut.

Jerry Brown, Democrats Agree On New Budget Plan - Marisa Lagos,Wyatt Buchanan @ sfgate.com
Eleven days after he vetoed their budget, Gov. Jerry Brown joined Democratic leaders at the Capitol to announce that they've agreed on a revised budget plan to erase the state's deficit , in part by relying on $4...

New Democratic Budget Relies On $4 Billion More - Kevin Yamamura @ blogs.sacbee.com
Gov. Jerry Brown and legislative Democrats are hashing out a new majority-vote budget that relies on $4 billion more flowing into state coffers but "triggers" mid-year cuts to education and other programs if that money never materializes.

Brown, Democrats Reach Budget Deal Without Taxes - Shane Goldmacher and Anthony York @ latimes.com
The proposal does not include the renewed tax hikes that the governor had been pushing to put before voters. But it does contain some charges that Democrats believe they can legally raise without GOP support.

Brown And California Democrats Find Budget Deal That Bypasses Republicans - Bloomberg - bloomberg.com
California Governor Jerry Brown dropped his plan to extend expiring taxes to close a budget deficit and will back a new proposal based on $4 billion in higher-than-forecast revenue, additional spending cuts and a tax initiative requiring voter approval next year.

Dan Walters: Will Democrats' rosy-scenario budget work? - Dan Walters @ sacbee.com
When governors and legislators face seemingly big budget deficits, they often turn to gimmicks to balance income and outgo on paper.

Brown, Democrats crafting budget without the GOP - JUDY LIN @ pe.com
Gov. Jerry Brown and Democratic lawmakers are expected to release the framework of a budget plan to address California's $9.6 billion shortfall.

Brown Joins Dems In Budget Deal - John Myers @ blogs.kqed.org
To hear the governor tell it, of course, it's not for his lack of trying. In fact, the great question to be answered in the weeks and months to come: did Brown's plan -- a package of extended taxes he wanted ratified by voters -- die for lack of Republican clarity on side issues, Democratic refusal to deal on those side issues, or both? For now, though, the Democratic compromise is the star of the show. And it all hinges on something much rumored in the Capitol of late -- a mechanism to allow deep cuts to be avoided, if possible -- as well as something not talked about or even known until today: much more rosy revenue assumptions.

Brown Ditches Special Election, Seeks New Budget - JUDY LIN, Associated Press @ signonsandiego.com
Gov. Jerry Brown has abandoned his plan for a special election this year to ask voters to extend temporary tax hikes as a way to help close California's budget deficit.

California Nears Deal On A Budget - Jennifer Medina @ nytimes.com
Gov. Jerry Brown of California and the Democratic-controlled Legislature have reached a tentative deal on the state budget, relying on more optimistic revenue predictions to add $4 billion to next year’s budget. The plan, which the Legislature is expected to begin approving on Tuesday, would also trigger deeper cuts in education and social services if those revenues did not materialize.

Calif. redistricting could emperil GOP House seats - KEVIN FREKING @ pe.com
Democrats hoping to regain the majority in the House in 2012 might get a strong head start in California, where voters handed the authority for drawing political boundaries to a citizen commission.

California Governor, Democrats OK Budget Deal - Jim Christie and Peter Henderson @ reuters.com
California Governor Jerry Brown and Democratic legislative leaders have reached a deal that bypasses Republicans and relies on higher tax revenue forecasts and some spending cuts to close a $10 billion gap.

Brown ditches special election, plans more cuts - JUDY LIN @ pe.com
Gov. Jerry Brown on Monday abandoned his plan to hold a special election this year on whether to renew expiring tax hikes and instead said he will balance California's budget with a combination of spending cuts and a projected increase in normal tax revenue.

Gov. Brown And Democratic Lawmakers Unveil New Budget Plan - Shane Goldmacher @ latimes.com
Gov. Jerry Brown said Monday he was abandoning hopes of striking a bipartisan budget deal on taxes and instead would push through a spending plan solely with the support of Democratic lawmakers.

Will Senate GOP pick No. 1 'No' voter as next leader? - Torey Van Oot and Phillip Reese @ sacbee.com
Sen. Joel Anderson may be angling for "ayes" to become the next Senate GOP leader, but the Alpine Republican is much more likely to vote no than yes himself in the chamber and committee rooms.

Redevelopment Pushed To Brink, For Real - Liam Dillon @ voiceofsandiego.org
Gov. Jerry Brown and Democratic legislators announce budget deal that includes redevelopment-busting bills.

Woolsey: Redistricting Had No Impact On Retirement - pressdemocrat.com
Former Rep. Barbara Boxer, redistricting and the late Judge Joseph Rattigan of Santa Rosa figured in Lynn Woolsey's first bid for Congress in 1992.

California sales tax drops by a penny Friday, thanks to budget dance - Dale Kasler @ sacbee.com
California's sales tax is about to drop by a penny, to a statewide rate of 7.25 percent. The change takes effect Friday, with the expiration of the tax hikes approved by the Legislature in February 2009.

Brown, Legislative Dems Announce Budget Deal - Malcolm Maclachlan @ capitolweekly.net
Well, that didn’t last long. Less than two weeks after Gov. Jerry Brown vetoed a budget sent to him by fellow Democrats, he sat with the party leaders from each house and announced a new budget deal they said was balanced—and which cuts Republicans completely out of the loop.

Congressional Republicans Launch Tv Spot Against Democratic Rep. Lois Capps In Midst Of Redistricting - latimesblogs.latimes.com
In some early fallout from the political upheaval expected under proposed new districts for California lawmakers, the campaign arm for House Republicans said it would begin airing a TV ad slamming Rep. Lois Capps (D-Santa Barbara) over her position on Medicare.

Brown Ditches Special Election, Plans More Cuts - JUDY LIN, Associated Press @ signonsandiego.com
Gov. Jerry Brown on Monday abandoned his plan to hold a special election this year on whether to renew expiring tax hikes and instead said he will balance California's budget with a combination of spending cuts and a projected increase in normal tax revenue.

Rhetoric-rich Reactions To New State Budget Deal - ibabuzz.com
By Josh Richman Monday, June 27th, 2011 at 6:39 pm in Bob Dutton, California State Senate, Connie Conway, Darrell Steinberg, John Perez, state budget.