Capitol Alert: Don't expect budget resolution any time soon

With the ballyhooed July 1 milepost having come and gone, expect slow going on the budget for a while.

Republican and Democratic leaders met privately Thursday to discuss their next steps. They are interested in working out as much as possible in the Legislature, without Gov. Arnold Schwarzenegger, according to their offices. And they want to reconvene the joint budget conference committee next week to stay true to their promise of conducting work in public.

"At this point, the four legislative leaders are going to continue to pursue our discussions aggressively," Senate President Pro Tem Darrell Steinberg, D-Sacramento, said today. "Obviously the governor is necessary to sign the budget. By virtue of that, he will undoubtedly have significant input. But right now we're trying to establish and gain a little momentum among ourselves."

Democrats have kept their joint budget framework close to the vest, releasing a trickle of details from a two-page concept sheet. More than anyone, Assembly Speaker John A. Pérez in the past criticized the "Big Five" process of private budget negotiations. But he acknowledged Wednesday that lawmakers have reached a point where they have to conduct talks behind closed doors.

Democratic leaders are wary of releasing a complete budget at this point. After taking flak in the budget off-season for accepting too many spending cuts, Democrats are more sensitive this year to concerns from unions and constituents who rely on safety net programs. When the California Teachers Association liked Pérez's proposal more than Steinberg's, the union attacked Steinberg in his own district.

Meanwhile, Republican lawmakers will try to negotiate a budget plan that they didn't produce themselves. They have not drafted their own budget, instead adopting Schwarzenegger's plan with some exceptions, such as opposing an insurance tax to pay for wildfire suppression. It's clear that even if the four legislative leaders conduct negotiations among themselves, Schwarzenegger aides will be closely involved.

It's hard to see how the process gets resolved outside the closed-door "Big Five" process in the end. Legislative aides like to say that progress can be judged by how little information the leaders provide to the public, even if such sentiment is anathema to the ideals of a democracy. The thinking goes that if proposals are publicly released, interest groups have time to block them before leaders can persuade their caucuses to cast unpopular votes.

Republicans and Democrats remain far apart. Democrats are committed to taxes in some form -- right now on oil production and delaying corporate tax benefits. Republicans are committed to opposing any new taxes.

The rhetoric will get worse before the situation gets any better. Public employee unions will attack Republicans -- and possibly any Democrat who wavers -- for cutting education and services for the state's most destitute residents. Republicans, who want to eliminate or severely curtail welfare programs, will point to Los Angeles Times stories showing that welfare recipients had access to ATMs at some casinos and strip clubs.

Assembly Republican Leader Martin Garrick made those stories the subject of his radio address this weekend, saying, "We simply cannot afford to give cash to welfare recipients to spend at casinos or strip clubs or anywhere else." Transactions at those locations represented less than one-tenth of 1 percent of all CalWORKs dollars withdrawn in a nine-month period, but the stories grab attention.

The key determinant for solving the budget now may be the state's cash situation. The state can get through July and August by relying on internal borrowing and delaying payments to schools and local governments. Controller John Chiang said in a memo last month that the state "will fall well below a prudent cushion in September." That could mean IOUs around Labor Day, which would ramp up the stakes considerably, especially as the fall campaign season gets under way.

But even election pressures aren't always enough to force lawmakers to a deal. Consider this: The latest state budget on record was in the presidential election year of 2008. Schwarzenegger signed that plan on Sept. 23.