Prop Zero
The Starting Point for Commentary and Coverage of California Politics

Narrow Budget Deal Hits Narrower Snag

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    NEWSLETTERS

    It's bad enough that California's leaders, facing a big budget and governance crisis, are fashioning a very small budget deal that, by all accounts, won't address the state's fundamental problems. The deal reportedly includes a new spending limit (for a state choking on spending mandates and limits), pension reform (that doesn't address the state's problem of retirement security), and temporary and tiny extensions of taxes -- 1 percent on sales and income -- that merely kick the budget can five years down the road.

    But now comes word that even this very modest deal can't be completed -- because of a dispute over three months of those temporary taxes. The small may be undone by the smaller.

    Here's the specific problem: Gov. Brown and the Demorats want to keep higher taxes on sales and vehicles fees in place for the three months between the start of the new budget year -- July 1 -- and an expected fall special election, when voters will decide whether to keep the taxes. Under that scenario, Brown would be able to argue to voters that he's not asking them to increase taxes -- he's merely asking them to preserve the status quo on taxes.

    Republicans don't want to provide Brown that extension for a similiar reason. They want voters to defeat the taxes and it would be easier to do that if the tax rates drop on July 1, so that voters in the fall will be voting on an honest-to-goodness tax increase. The handful of GOP legislators amenable to any deal with Brown also are wary of voting for any kind of tax increase; it's hard enough to convince them just to give voters a chance to vote on the temporary tax extensions.

    On one level, it's very hard to care about any of this. California will be broken fiscally whether a deal is made or not. On another level, however, a faiure to secure tax extensions will, at the very least, hasten greater cuts to important programs, most notably in education.

    (/blogs/prop-zero)