The Washington Post

California’s Brown struggles to strike a budget deal on taxes, spending cuts

Gov. Jerry Brown discusses his approach to dealing with an estimated $25.4 billion state budget deficit during news conference where he released his $84.6 billion general fund state spending plan at the Capitol in Sacramento. (Rich Pedroncelli/AP)
Chief correspondent

California Gov. Jerry Brown looked tired and sounded frustrated. Leaving an impromptu meeting with his finance director on Tuesday afternoon in the Capitol, he paused briefly to assess budget negotiations that have reached a critical stage.

“We’re still climbing the hill, and I can’t see over the horizon,” he said, typically terse and oblique.

Dan Balz is Chief Correspondent at The Washington Post. He has served as the paper’s National Editor, Political Editor, White House correspondent and Southwest correspondent. View Archive

The negotiations involve the governor and five Republican state senators. He needs the votes of two of the five (plus two Republicans in the state Assembly) to win passage of a plan to eliminate a budget shortfall of more than $26 billion.

The package includes about $12 billion in spending cuts and $12 billion from the extension of several taxes due to expire. Brown has pledged to put any revenue proposals to a vote of the people. But to get it even that far, he needs Republican support in the legislature.

Asked what has hung up the negotiations, he said: “The Republican aversion to letting the people vote on a tax extension and Republican aversion to cutting the budget, like redevelopment. Republicans in California want to spend money, not cut the budget.”

That’s not quite the case. Republicans may be resisting some of Brown’s proposed cuts, which would affect most parts of the budget but leaving spending on K-12 education at current levels. But it is Brown’s tax proposals that are the most controversial with Republican legislators.

The Republican senators talking with Brown want the governor to make further concessions before they’ll agree to vote to put the taxes on a statewide ballot. They want a hard cap on spending, regulatory relief and reforms in public employee pensions. Brown was asked whether the negotiations have been stymied by his unwillingness to make concessions to the Republicans.

“We’re going to give a lot,” he said.

Brown declined to describe those concessions. Nor would he outline the demands Republicans are making. “There’s no term sheet yet,” he said. “There’s discussion, so we’re at the warm and fuzzy stage.”

Brown has staked his new governorship on finding a solution to the state’s deep and persistent budget problem. He won election last fall — returning to the governor’s office 36 years after he was first elected as the state’s chief executive — by assuring voters he could bring legislators together to solve the fiscal crisis. He has gotten close, but as his self-imposed deadline has come and gone, confusion surrounds the negotiations.

Brown has painted a dire picture of what will happen if Republicans reject the tax extensions. In a recent interview with veteran Los Angeles Times columnist George Skelton, Brown described what would follow: “There’ll be an unleashing of left and right forces,” he said. “Everyone will come out fighting. California will become a battleground. ... It’ll be a war of all against all. The loser will be the people of California.”

The same could happen if Brown wins the right to put the tax plan before the voters and they reject it. Then California legislators would have to balance their budget solely with spending cuts. State Sen. Tom Berryhill, one of the Republican senators in talks with Brown, was quoted Tuesday with a prediction as calamitous as Brown’s.

“If this thing fails in June, you are going to see catastrophic spending cutbacks that are going to hurt every single city and town in this state,” he said. “A lot of bad stuff is going to happen. There is urgency on our part to fix this thing before it all goes to heck in a hand basket.”

A new Field Poll of Californians adds to the confusion. Three in five Californians said they favor a special election in June to consider the tax measures, and almost the same percentage said they would support extending the temporary taxes put in place in 2009 for another five years. But when asked whether they would be willing to pay higher taxes to balance the budget, just 43 percent said yes.

The prospect of having to balance the budget through spending cuts alone could bring labor and business together to push Brown’s ballot initiative, if the governor can get the votes he needs in the legislature.

Union officials know they will be forced to make concessions on benefits for their workers, no matter what happens. They sense a change in public sentiment in the state similar to that seen in other states grappling with sizeable budget shortfalls. Without the tax revenues in Brown’s package, they know the cuts would be far worse.

Business groups fear the failure of Brown’s package could bring future ballot initiatives calling for more onerous taxes on their members.

Everyone knows that, without the tax money, there would be no way to shield public education from deep and painful cuts.

Brown has won praise for the way he has tackled the budget problem. Former governor Arnold Schwarzenegger often went over the heads of the legislature to try to rally public support, with mixed results. Brown has concentrated on the legislators first.

“He’s worked from the inside out, rather than the outside in,” said Dan Schnur, director of the Jesse M. Unruh Institute of Politics at the University of Southern California.

But there is no guarantee he can persuade both the legislators and the public to extend the taxes. Some Democrats have questioned Brown’s insistence on the ballot initiative, which he is not required to do. With modest Republican help in the legislature, he could enact the taxes without risking a potentially costly defeat by the voters.

Further complicating the current talks is that GOP negotiators face rebuke from their own party. California Republicans will consider a resolution at their convention here this weekend that would brand as “traitors” any member of the legislature who supports Brown’s tax proposals.

Democratic leaders in the legislature have scheduled votes on the budget on Wednesday, which would put everyone on record on the spending cuts but would not resolve the issues of taxes. Brown has gotten agonizingly close to a deal on that part of the package, but as one Democrat put it Tuesday, “He’s having a hard time figuring out how to close” the deal.

As he left the office of his finance director Tuesday afternoon, Brown was told he did not sound optimistic. “There’s many ways to get to the goal, so I’m reasonably optimistic,” he said without elaboration.

And then, as he walked away, he said in a stage whisper to a colleague, “I don’t know what you can do with that.”


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