Capitol Alert: Softer cuts, cuts-only budget strategy in the mix

As the calendar heads into February, Democrats are searching for alternatives to Gov. Jerry Brown's harshest budget cuts.

Senate President Pro Tem Darrell Steinberg, D-Sacramento, said Wednesday that Democrats remain committed to reducing general fund spending by $12.5 billion. But he said his caucus hopes to "manage" Brown's cuts and find more palatable ways to save the same money.

In committee hearings, for instance, Democrats have resisted the notion that California would cut off welfare-to-work payments to children after 48 months. But it's not yet clear how Democrats would otherwise save $698 million.

Brown is counting on Republican votes to pass the budget package and put tax extensions on a June special election ballot. Republicans have not yet provided a formal counter to Brown's budget proposal, though some have said they want additional pension rollbacks.

Anti-tax activists are also clamoring to place a tax cut on the June ballot, though one Senate Republican source said GOP lawmakers are not getting behind that idea. Assembly Speaker John A. Pérez called the suggestion "laughable."

Meanwhile, legislative leaders are trying to figure out how to set up the March budget package, Steinberg said. Among the competing options so far:

Option No. 1 (Brown proposal): Pass about $17.5 billion in solutions (cuts, business tax hikes, fund shifts) in an initial March legislative vote. Then place five-year tax extensions on a mid-June ballot that would raise $11 billion toward solving the current budget deficit. If the taxes fail, come back in late June and reopen budget talks. (These numbers add up to more than $25.4 billion because the Brown budget devotes $2 billion toward schools that doesn't count as deficit relief and $1 billion toward a reserve.)

Option No. 2: Pass a cuts-only budget that solves the state's $25.4 billion deficit with mostly spending cuts. This likely would include new cuts that fall largely on education and public safety programs, in addition to the Brown reductions to health and social services. Lawmakers would tie the education and public safety cuts to the June ballot, so voters could "trigger off" those reductions if they agree to more taxes.

The second option puts more pressure on voters and raises the stakes for the June ballot. But it would also require lawmakers to agree to massive cuts to schools and public safety that would be difficult for them to stomach.

At the very least, Steinberg said, voters should know what would happen if they reject taxes. Sen. Mark Leno, D-San Francisco, chairman of the Senate Budget Committee, has asked the nonpartisan Legislative Analyst's Office for a list of cuts that the Legislature could pursue should voters or lawmakers reject the taxes.

"I think that will begin to frame the discussion about why it would be unacceptable for the people of California to cut $25 billion," Steinberg said. "And at a minimum, they ought to have the choice ... I think it's important that there be some impartial analysis about what the choices are when it comes to an additional $12.5 billion in cuts."