Assembly Republicans Refuse to Adopt Democratic Budget Proposal as New Fiscal Year Begins

California enters its new fiscal year today without a budget plan after Republicans in the state Assembly refused to support a proposal approved by the Senate Saturday that includes more than $4 billion in new taxes, the Los Angeles Times reports. The Assembly fell five votes short of the two-thirds majority needed to pass the budget, voting 49 to 26 in favor (Tamaki/Bustillo, Los Angeles Times, 7/1). To ensure funds are available to cover expenses during the budget impasse, the state has borrowed $7.5 billion (LaMar, Contra Costa Times, 7/1). Facing a $23.6 billion shortfall, Democrats have insisted that taxes must be raised to "protect some of the state's most vital programs," such as social service and health programs. Democrats have proposed $7 billion in budget cuts, including reductions in such programs. Republicans, however, say that tax increases would hurt Californians during the "soft economy" and that "deeper spending cuts are needed" (Maxwell, Fresno Bee, 7/1). Contending the budget would "underwrite a spending binge," Republicans also have proposed eliminating new programs or projects that have existed one year or less (Hill, Sacramento Bee, 7/1). Democrats said Assembly Republicans were delaying the budget process simply to "embarrass" Gov. Gray Davis (D), who is running for reelection against GOP candidate Bill Simon. "I am disappointed in the Assembly Republicans. They proved they only had one goal and one goal only, which is to obstruct passage of the budget," Davis said (Los Angeles Times, 7/1).

The Senate approved a $100 billion budget plan Saturday after a joint legislative committee restored some cuts in social service and health care spending, the San Francisco Chronicle reports (Gledhill, San Francisco Chronicle, 7/1). Restorations included $373 million in health and welfare (Mendel, San Diego Union-Tribune, 6/30). For example, lawmakers rejected Davis' plan to cut the rate at which Medi-Cal reimburses physicians (Maxwell, Fresno Bee, 6/30). In addition, the Senate-passed plan provides funding to expand Healthy Families coverage to parents of enrolled children (Marimow, San Jose Mercury News, 6/30). To cover half of the state's deficit, the budget would use loans and a $4.5 billion bond that will be paid for with tobacco settlement funds. The other half would be covered by tax increases, including an increase of the state's tax on cigarettes to 63 cents per pack (Sacramento Bee, 6/30).