Yesterday was certainly an interesting day inside the Capitol
as Democrats used their Proposition 25 majority vote authority to pass a
spending plan before paychecks were halted at midnight. The day
included passionate speeches and near fisticuffs between two former community college trustees. Today, however, is likely a more important day, when the governor responds.
The governor, who has maintain a constant and frank media
presence about the state budget, was eerily silent yesterday. The
spending plan obviously doesn't meet his goal of fixing the structural
budget problem, and insiders guess that it leaves a $6-7 billion
shortfall in subsequent years. It also does nothing to tackle the "wall
of debt" that thematically framed his May revision to his budget
However, to borrow a phrase the governor the governor used on
March 24, everywhere he looks, he sees "bears in the forest." There
simply may be no way out.
Let's reset for a moment:
- The governor desparately wants to fix the structural problem
so he doesn't see his governorship swallowed by perennial budget fights
like his predecessor, but he pledged in his campaign not to extend or
increase taxes without a vote of the people.
- Democrats and their labor allies do not trust that the voters
will approve the tax extensions/increases until November 2012's
presidential election, and don't really want to spend limited campaign
money when it's needed to work for two-thirds majorities in both houses
after redistricting next year.
- All but, now perhaps 6, Republicans are 100% against tax
extensions or increases. The few remaining, however, continued to
increase their demands for a spending cap, and reforms to pensions,
regulatory procedures and CEQA.
- Labor will not agree to the pension reforms and hard spending
cap, which would lock in spending at the 2011-12 levels, reduced to
remove the temporary tax revenue. In the end, labor and Democrats feel
that they are being set up by Republicans in a no-win situation, as they
don't think the voters will extend taxes, but will approve the changes
to pensions and institution of a spending cap.
- Business interests generally support the governor's plan to
ask the voters to approve the taxes, are not particularly crazy about
yesterday's spending plan, and really want the regulatory and CEQA
reforms on the Republican request list.
Indeed, there are bears in the forest, and in every direction.
Democratic leaders are pushing the governor to agree to this temporary
package and wait to fight next year, when a friendlier economic and
political environment just might enable them to get the revenues they
want without giving in to Republican demands. Some Republicans privately
feel like they've overplayed their hand and are worried that Democrats
and the governor may pursue that strategy, and, because of
redistricting, the clock may be running out for Republican influence in
the state Legislature.
The governor has scheduled a 12:15 pm press availability in his
Los Angeles office (notably, upsetting Sacramento-based reporters who
are charged with covering the state budget).
Governor, the ball is in your court.
For community colleges, the budget is as explained on Tuesday,
and essentially mirrors the March budget plan. For most districts, this
reflects Scenario A in the League's budget scenarios, and the full
amount ($961 million) in deferrals is back on the table. One notable
change might be about a $100 million reduction in general fund revenues
in exchange for an equal amount of local property tax revenues, through
what is referred to as the "single flip." We have been told to expect
this shift, although the actual budget bill didn't appear to be changed
to reflect it.
As always, don't hesitate to contact us with any questions at email@example.com.
President and Chief Executive Officer, The League
Orange Coast College '94