State Budget Talks Stall Amid Disagreement on Plans To Extend Taxes

On Tuesday, Republican and Democratic lawmakers said they had reached an impasse on whether to temporarily extend taxes and allow voters to ratify the tax measure later this year, the Los Angeles Times reports (York/Goldmacher, Los Angeles Times, 6/8).

State lawmakers have a June 15 constitutional deadline to send a state spending plan to Gov. Jerry Brown (D) (Lin, AP/San Francisco Chronicle, 6/7). If lawmakers fail to pass a balanced budget by the deadline, state Controller John Chiang (D) has threatened to withhold their pay (Yamamura, Sacramento Bee, 6/8).

Budget Background

To balance the budget, lawmakers will need to address the state's remaining $9.6 billion deficit.

Last month, Brown released a revised spending plan that aims to close the state's budget gap through tax measures and additional spending cuts. The governor's plan would:

• Extend a fee on hospitals to bring in $320 million for Medi-Cal, California's Medicaid program;
• Shift beneficiaries of Healthy Families -- California's Children's Health Insurance Program -- to Medi-Cal; and
• Shut down several state boards, including the Managed Risk Medical Insurance Board, which runs Healthy Families and other programs (California Healthline, 6/3).

Impasse Details

Current sales and vehicle tax rates are scheduled to decrease on July 1, but Brown wants to extend them and let Californians weigh in on the taxes this fall (York, "PolitiCal," Los Angeles Times, 6/7). To obtain the two-thirds majority necessary to pass his tax extension plan, Brown would need votes from all Democrats and two Republicans in each house of the Legislature (Harmon, San Jose Mercury News, 6/7).

However, Republican lawmakers want to let the tax rates decline and remain at the lower level, unless Californians vote to reinstate them.

Sen. Robert Huff (R-Diamond Bar) said, "There's no Republican votes for a temporary tax," adding that Democrats should look for other methods to cover the deficit.

Brown said that if Republicans fail to support his tax plan, he will be forced to pursue deeper cuts to state services. Brown said, "If we don't get that bridge tax, it's pretty much the budget goes to all cuts" ("PolitiCal," Los Angeles Times, 6/7).

Prospects for a Vote

Senate President Pro Tempore Darrell Steinberg (D-Sacramento) said he plans to hold floor sessions on the budget this week.

Steinberg added that this week's floor sessions will involve sharing testimony on the possible effects of an all-cuts budget plan (Van Oot, "Capitol Alert," Sacramento Bee, 6/7).