After a veto fight with his own party and unresolved differences with Republicans, Gov. Jerry Brown signed an on-time $85.9 billion spending plan Thursday that slashes higher education and the safety net while relying on a windfall of tax revenues.
Besides a February 2009 budget that was $24 billion out of whack that same May, the plan Brown signed Thursday was the state's earliest since 2006. Democratic lawmakers relied on new voter-approved powers that enabled them to pass a budget with majority support rather than two-thirds.
Since talks with Republicans died over the weekend, GOP leaders have declared victory by blocking tax extensions and allowing taxes on vehicles and sales to fall Friday as 2009 rates expire. They celebrated Thursday by holding a press conference at Downtown Ford.
Democrats were measured in their response, bemoaning the program cuts but saying it was the best package they could construct without Republican support. Brown chose not to have a public signing ceremony Thursday, signing the budget bills behind closed doors.
Brown's budget includes $270 million total in line-item vetoes, and $23.8 million within the general fund. The bulk of the general fund cut affects trial courts; Brown's veto statement says they do not need $22.9 million because the state is delaying the transfer of parole revocation hearing responsibilities.
Brown and Democratic leaders have vowed to pursue a 2012 ballot initiative asking voters to reinstate those tax hikes. One of the budget bills, Assembly Bill 114, lays the groundwork for such a measure, setting terms for a retroactive $2 billion school repayment should voters reject taxes or the ballot proposal never materialize.
As of 2 p.m., the governor had signed the main budget bill, Senate Bill 87, and about half of the related "trailer" bills. He has not yet signed seven others, including AB 114.
The latest deficit was as large as $26.6 billion in February. Since that time, lawmakers and Brown balanced the budget with a roughly even mix of cuts and tax windfall, as well as a smaller amount of fund shifts and internal borrowing. They are relying on about $11.8 billion in unanticipated tax growth, an amount nearly equal to the $12 billion that Brown originally wanted over 18 months through his tax extensions on vehicles, sales and income.
The budget plan did involve deep cuts to the state's neediest, a point that has been overlooked recently because of the two-step way in which Democrats solved the budget this year.
Lawmakers passed the bulk of their spending cuts in March, most on a majority vote without Republican support. The March reductions hit virtually every program that subsidizes the state's poor. It included a $1.5 billion reduction in Medi-Cal spending, a nearly $1 billion cut in welfare-to-work and a $178 million reduction in SSI/SSP payments to low-income elderly and disabled.
Higher education also got hit hard. The state cut the University of California and California State University systems each by $500 million in March and another $150 million this week. Both systems have said they will seek tuition hikes. Lawmakers also raised community college fees by $10 per unit. Further cuts could come if the state falls short of its optimistic revenue projections for the next fiscal year.
A smaller, but highly visible cut, will result in the closure of up to 70 state parks.
Democrats solved the $9.6 billion remainder of the problem Tuesday with a grab bag of changes. Those include: a $4 billion optimistic revenue projection backed by "trigger" cuts; nearly $3 billion in delayed payments to schools; a $1.7 billion restructuring of redevelopment agencies; additional cuts to higher education and courts; and fee increases on rural homeowners and drivers.
Majority-party lawmakers reached that compromise with Brown only after a spirited battle with the governor after he vetoed their first budget two weeks ago. Brown's veto led to Controller John Chiang withholding legislators' pay, though the two executives rejected the Democratic budget for different reasons.
The biggest change in the final budget was that Democrats removed some dubious solutions, such as the sale of state buildings and taking $1 billion from First 5 commissions. They also took out a quarter-cent local sales tax increase, both because it was legally risky on a majority vote and would have undermined Brown's pledge not to raise taxes without a vote of the people.
They replaced those ideas with the $4 billion optimistic revenue projection. They said that was not a gimmick because it was backed by $2.5 billion in cuts that would "trigger" if the money never materializes.
PHOTO CAPTION: Gov. Jerry Brown, flanked by Assembly Speaker John A. Perez, D-Los Angeles, left, and Senate President Pro Tem Darrell Steinberg, D-Sacramento, signs the budget Thursday shortly after noon at the Capitol. Photo by Hector Amezcua