Democrats find end-run solution to budget

December 17, 2008 12:00:00 AM PST
The California budget in a word can be summed up as a mess. Late Wednesday night, state Democrats are making an end-run around Republicans, but it is a plan that will cost taxpayers money. Among the proposals are sales tax increases, added fees at the gas pump, and a surcharge when you pay your income taxes.

Democrats were hoping to pass their plan Wednesday night, but negotiations with the governor went longer than expected. The plan now is to vote on it Thursday and Democrats are hopeful the governor will sign it.

On day 42 of the budget gridlock in Sacramento Democratic leaders say they have a plan to help bridge the $40 billion shortfall, claiming they can do it without Republican votes.

"We cannot sell any bonds at all unless we are able to pass this and the governor signs it. This will be a real boost to the market to know that at least we've stopped the emergency that we're facing in March, which is running out of cash," said Assembly Speaker Karen Bass (D).

The plan contains $9.3 billion in new fees and taxes, while cutting $7 billion. Democrats say they can pass it with a simple majority, instead a of two-thirds super majority, because it doesn't raise the amount of taxes overall, it just shifts them.

The creative maneuvering includes dropping all state taxes in gasoline and replacing it with a 39-cent-a-gallon fee and adding a 2.5 percent surcharge on state income tax. The proposal also includes a sales tax hike of up to three quarters of a cent and an economic stimulus plan demanded by the governor. Democrats added the economic stimulus Wednesday evening after hours of back-and-forth negotiations.

"That's $3 billion in acceleration and an additional $2.5 billion annually of transportation investment. We are also agreeable to expediting hospital construction," said Senate President Pro Tem Darrell Steinberg (D).

There is a lot at stake. Earlier in the day, the budget crisis prompted the State Investment Board to kill about 2,000 publicly financed state infrastructure projects. Even so, Republican lawmakers say they will do everything they can to kill any proposal that includes tax hikes.

"The people of this state have been very forthright over the years in reaffirming the fact that they like the two-thirds majority on raising taxes. This is obviously an end-run around that and I'm sure there will be legal challenges filed as early as tomorrow morning," said Senate Minority Leader Dave Cogdill (R).

So Republicans are not giving up without a fight. They say Democrats are violating the spirit of the law, if not the letter of the law.


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