Capitol Alert: Jerry Brown optimistic for tax deal with time running out

SAN DIEGO - Gov. Jerry Brown said this morning that he is negotiating variations of his tax and jobs plan with Republican lawmakers, and is optimistic he can reach agreement in the final days of the legislative session.

Brown, a Democrat, said at a press conference in San Diego that some Republican lawmakers are "on board' with his plan and that it will "reshape itself as it goes through the legislative process."

Brown last month proposed eliminating a corporate tax benefit that allows companies to pick the less-expensive of two tax formulas when calculating tax liability. He proposed using the money, about $1 billion, to fund a sales tax exemption for purchases of manufacturing equipment, and he proposed expanding an employer tax credit.

Even before Brown announced the plan, Republicans criticized it and Democrats acknowledged it was not likely to pass. The change would require a two-thirds vote in the Legislature, and Republicans blocked a similar proposal in budget talks with Brown earlier this year.

"Any time you have legislation, it's the work of more than one hand," Brown said at the biotech company Gen-Probe Inc. "There are some Republicans that are already on board, and there's active discussion by those individuals with other legislators of that party. So, I'm reasonably optimistic we're going to get something by the end of the week. It will reshape itself as it goes through the legislative process."

Brown would not say specifically what changes to his plan are being considered. He said any changes are "obviously going to be made to satisfy the minds of these Republicans, and I assume Republicans are going to want to create as many jobs as they can. So whatever they come up with, I'm sure it'll be good."

Senate Republican leader Bob Dutton of Rancho Cucamonga was skeptical.

"I haven't seen any details of the governor's revised tax proposal, nor have I heard from the administration on this issue," he said in a prepared statement. "It still appears to be an attack on one set of job creators to benefit a different set of job creators, and that simply doesn't make sense."

Dutton said "any discussion of amending the single sales factor formula should only occur as part of a comprehensive, bipartisan tax-reform effort. If the governor is serious about retaining and creating California jobs, he will veto the onslaught of job-killer bills that legislative democrats are passing these last few days of session. Actions speak louder than words."

A public appeal such as Brown issued this morning does not typically suggest progress in private negotiations, but he was less critical of Republicans than he has been recently.

"We seem to be picking up a little support from some conservative quarters, and that makes it helpful," Brown said. "I don't want to count the chickens before they're hatched. But there is a lot of cackling going on, so it bodes well."

With California's unemployment rate at 12 percent, Brown has shifted his focus in recent weeks to job-creation. He is also considering possible tax increases to propose to voters in November 2012.

Brown's appearance at the biotech company was reminiscent of stops Republican Meg Whitman made at businesses throughout the state during last year's gubernatorial campaign, with a crowd of employees gathered for his address. Whitman lobbied during the campaign for the manufacturing equipment sales tax exemption that Brown is proposing.

Editor's note: This post was updated at 11:59 a.m. to include comments from Dutton.