Capitol Alert

The latest on California politics and government

No major breakthroughs to report on the state budget, but a few notes from the past couple days:

-- Senate Republicans don't seem particularly motivated to vote for taxes or a tax ballot, though they are still willing to engage in budget talks that involve pension changes and a long-term spending cap.

Sen. Bill Emmerson, R-Hemet, said he hasn't spoken to Gov. Jerry Brown since talks ended last month and that he feels Republicans "gave them a clear pathway" to a deal before. But he isn't ruling anything out.

Sen. Bob Huff, R-Diamond Bar, said that little has changed in the Senate Republicans' position. They still want pension and spending cap changes. They still dislike Brown's elimination of redevelopment agencies and enterprise zone tax credits, as well as his change to the corporate tax formula. Huff said Democrats would need to make concessions before any deal could be struck.

"It's in their court to make the first move, and it would have to be to agree to the stipulations that were put in there before," Huff said, referring to the Senate Republicans' March memo. "I just don't think they can go there."

Brown has floated the idea of a temporary tax extension as a bridge to a fall election, while the California Teachers Association suggested that lawmakers raise taxes on their own. Asked about those ideas, Huff said, "You see an incremental problem growing ... Each one of those is more and more difficult for Republicans. I don't think they would get there at all."

-- The Department of Finance issued its cash assessment Thursday with data similar to those posted last week by Controller John Chiang and the Legislative Analyst's Office. Finance included the $1.2 billion loss of the sale-leaseback cash, though the governor and Legislature have already agreed on ways to replace that money. Finance said the March jump in personal income-tax revenue was largely due to a "misallocation" in its prediction of when filers would seek refunds. The state also received $423 million less in corporate tax revenues, or 21.2 percent below estimates.

-- Excluding the sale-leaseback deal from the calculation, the state is roughly $2 billion ahead of forecast in general fund revenues in 2010-11. Speaker John A. Pérez alluded to this money in his press conference Tuesday, and lawmakers are starting to believe that it will put a dent in the remaining $15.4 billion deficit.

The impact could be greater than $2 billion if the governor has reason to believe the state should use more optimistic projections for 2011-12. Huff and others have heard speculation (wishful thinking?) of assuming as much as $10 billion in additional revenues, but that seems wildly optimistic. Much depends on what happens with April revenues, and it remains too early to tell where things will end up. It remains possible that there will be no revenue bump at all.


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