Brown Sees ‘Positive Signs’ in Bid for Republican Votes on California Tax
California Governor Jerry Brown said there are “positive signs” in negotiations with Republicans on a $9.3 billion tax referendum, the cornerstone of his plan to balance the budget of the most populous state.
Democratic majorities in the Legislature slashed $12.5 billion from spending March 17. Brown wants a special election to approve extensions on higher taxes and fees, and needs four Republican votes to authorize the ballot. So far, Republicans have been united in opposition.
“I’m not prepared to cease negotiating in good faith in every way that I can,” Brown said after a speech to a labor conference in Sacramento yesterday. “I remain hopeful. There are some positive signs.”
The 72-year-old Democrat won election to a third term on a promise to restore fiscal stability to the nation’s most indebted state as it faces a $26.6 billion deficit through June 2012.
Brown drew applause when he excoriated Republican lawmakers, without naming any, for the budget deadlock.
“If you’re not going to do anything, why do you take a paycheck?” he told labor leaders, who had earlier chanted, “Let us vote! Let us vote!”
Unions were the second-largest source of funds for Brown’s 2010 campaign, putting in almost $5 million, or 12 percent of his total contributions, according to the National Institute of Money in State Politics. Only Brown’s own campaign treasury, from his successful run for attorney general four years earlier, provided more.
Private Meetings
Brown has been meeting privately with lawmakers from both parties in an effort to persuade all Democrats and at least four Republicans to back his tax plan.
Five Republican senators met with Brown, suggesting that they might back the referendum in exchange for limits on public pensions, a ceiling on spending and changes to environmental regulations. No similar effort has emerged in the Assembly.
Brown said some of the Republican proposals are legitimate, although he said they should be uncoupled from the short-term need to adopt a balanced budget. The governor said public pensions are “unsustainable in certain circumstances.”
Although both chambers are controlled by Democrats, Brown needs two Republicans in each chamber to vote for his plan, which requires a two-thirds majority.
Brown met earlier in the day with the Legislature’s top two Democrats, Assembly Speaker John A. Perez and Senate President Pro-Tem Darrell Steinberg.
‘Productive Conversations’
“There have been some positive and productive conversations on some of the issues that have been bandied about by the Republican caucus,” Steinberg said, without going into specifics. “We’re going to try to bring this together.”
Steinberg said Republicans may be more open to compromise now that their annual convention is over. Delegates to the California Republican Party didn’t take up a resolution to censure any “traitors” who voted with Brown on the tax measure.
The author of the proposed resolution, Celeste Greig of the conservative California Republican Assembly, withdrew the measure before it was to come up for a committee vote.
Still, the gathering of party faithful was full of anti-tax messages.
“If the Republicans vote to raise taxes, hell hath no fury like a taxpayer scorned,” Republican pollster and commentator Frank Luntz said at the convention March 19. “Don’t you dare vote for the taxes.”
Redrawing Districts
Two factors further complicate the political calculus. Before the next election, in 2012, a nonpartisan commission will redraw legislative districts, which may do away with some seats that were considered “safe” for incumbent Democrats or Republicans.
Also, traditional partisan primaries will be replaced by a system in which the top two finishers -- regardless of party -- face off in the general election. That means an anti-tax Republican could be pitted against an incumbent Republican who voted to put the tax measure on the ballot.
The changes are weighing heavily on the minds of lawmakers, said Mark Baldassare, president of the nonpartisan Public Policy Institute of California.
“They just don’t know the shape and form of their districts and what it’s going to mean to run in a nonpartisan primary,” he said in a phone interview last week. “It may be different thinking that’s going to lead to different behavior.”
Billions in Shortfalls
With an economy bigger than Russia’s, California has fought through a combined $100 billion of shortfalls in the past three years. U.S. governors face deficits totaling as much as $113 billion in the coming fiscal year, according to the Washington- based Center on Budget & Policy Priorities.
If the ballot measure is approved, voters would be asked to retain a 0.25 percentage-point increase in personal income-tax rates; a 1 percentage-point boost in the retail-sales tax rate, to 8.25 percent; an increase in the rate for auto-registration fees of 0.5 percentage point, to 1.15 percent of a vehicle’s value; and a reduction of the state’s child tax credit to $99 from $309.
Brown has said he wants to know the outcome of that vote before June 15, the constitutional deadline for the Legislature to send him a budget. Last year’s financial plan was passed a record 100 days into the fiscal year, which begins July 1.
California shares with Illinois the lowest credit rating of any state from Moody’s Investors Service. The A1 grade is Moody’s fifth-highest. Standard & Poor’s rates California A-, its fourth-lowest level for investment-quality securities.
To contact the reporter on this story: James Nash in Sacramento at jnash24@bloomberg.net
To contact the editor responsible for this story: Mark Tannenbaum at mtannen@bloomberg.net
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