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Calif. GOP shakeup bodes ill for $42B budget plan

Posted: February 18, 2009 7:32 p.m.
Updated: February 18, 2009 4:33 p.m.
SACRAMENTO, Calif. (AP) - Chances of a quick resolution to California's budget stalemate appeared to fade Wednesday after Senate Republican holdouts ousted their leader in a midnight coup and promised to resist tax increases that GOP Gov. Arnold Schwarzenegger says are needed to close a $42 billion deficit.

The Democrat-controlled Legislature appears to need just one more GOP vote in the Senate to reach the two-thirds majority it needs to get the budget to the governor's desk, but that vote may prove impossible to get.

"We don't want to see taxes increased, increasing the tax burden on Californians," Sen. Dennis Hollingsworth, R-Murrieta, said Wednesday, hours after he replaced Modesto Sen. Dave Cogdill as Senate minority leader.

The proposal that has been before lawmakers since late last week would use spending cuts, borrowing and $14.4 billion in tax increases to close a projected $42 billion budget deficit through June 2010. As tax revenue has plunged, refund checks to taxpayers have been delayed, payments to state vendors have stopped and the state's credit rating has deteriorated to the worst in the nation, preventing borrowing.

With full support from Democrats, the bill needs three GOP votes in each house to pass. But many Republicans in the Legislature have signed a pledge against raising taxes and have decided to stick to it, even though they have not come up with a plan to close the entire deficit with cuts.

Late last year, Republicans proposed a plan they say would have saved about half that amount.

Some Senate Republicans want to focus on closing the deficit in the fiscal year that ends June 30 rather than focusing on the two-year shortfall. They want the immediate deficit closed with cuts and shifting money from other accounts.

"Our caucus is pretty solid in terms of not voting for a tax increase," said Sen. Tony Strickland, R-Thousand Oaks. "We know the dire situation the state is in, but we do more damage by taxing Californians."

Schwarzenegger criticized that stand during a Wednesday afternoon news conference. He said there is no way to close the $42 billion deficit without tax increases.

"If you think that you can do this without any increase in revenues, then you have a big math problem," Schwarzenegger said. "I despise revenue increases. I hate taxes. But when you're faced with that kind of a reality then that's where you have to go."

Schwarzenegger and the Democrats have said they have no appetite for reopening budget negotiations. A difficult two-month process involving leaders of both parties produced the compromise that is currently before lawmakers.

Just as Republicans do not want new taxes, Democrats will not agree to a cuts-only budget fix.

The Senate was continuing to vote on the tax portion of the legislative package every hour. Senate leader Darrell Steinberg of Sacramento said his fellow Democrats intend to stay until they secure the remaining Republican vote.

"We are not starting over," he said during a Capitol news conference. "We negotiated a bipartisan budget in good faith. We're going to work today, and we're going to stay here day and night until one more senator steps up and puts California first."

Cogdill's ouster and the vote to replace him with Hollingsworth was not unanimous within the GOP caucus. Senators that have been discussed as potentially supporting the budget fix - Roy Ashburn of Bakersfield, Dave Cox of Fair Oaks and Abel Maldonado of Santa Maria - abstained from voting on the new leader.

"I just can't believe in the middle of the night we would oust our leader," Maldonado said. "I didn't support Dave Cogdill for leader, but I didn't vote to vote him out today. It's the wrong time to make a change in the process."

The pressure on California lawmakers to pass a spending package has intensified during the budget impasse. Layoff notices went out Tuesday to state agencies and hundreds of public works projects will lose state funding on Thursday unless a budget fix is approved, throwing some 92,000 construction workers out of a job.

The proposed tax hikes include an increase of 1 cent on the dollar in the state sales tax, a 12-cent-a-gallon hike in the gasoline tax and a boost in vehicle licensing fees.

The measure also includes a one-time, 5 percent income tax surcharge for taxpayers who owe money to the state at the end of 2009. The surcharge would drop to 2.5 percent if California gets its expected share of money from the federal stimulus bill.

Many of the tax hikes would remain in effect through the 2013-14 fiscal year if voters approve a cap on state spending during a May special election.

Associated Press Writers Steve Lawrence, Judy Lin and Juliet Williams contributed to this report.

Copyright 2009 The Associated Press


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