March 24 (Bloomberg) -- California Governor Jerry Brown faces his first legislative defeat this year as he races against time to persuade at least four Republican lawmakers to support a June ballot measure on extending tax increases.
Brown, a 72-year-old Democrat elected in November, has been lobbying Republican legislators to allow a statewide vote on extending $9.3 billion in temporary tax and fee increases, to no avail. The governor said yesterday that he remains hopeful.
Still, Brown and his advisers are weighing alternatives such as an initiative that would reach the ballot in November through a petition process rather than legislative approval. The extension is the key part of the governor’s plan to close a $26.6 billion budget deficit projected through June 2013.
“Nobody said it was going to be easy,” Brown told reporters outside the Capitol in Sacramento yesterday. “Whichever way I look, I see bears in the forest.”
Brown was elected to a third term last year on pledges to repair financial strains that have left California with the biggest deficit and the lowest credit rating among U.S. states. The former attorney general and Oakland mayor served two terms as governor from 1975 to 1983.
The Legislature has already approved bills that cut the deficit by $14 billion. Brown will sign some of those measures today, according to a statement from his office.
Credibility an Issue
If lawmakers snub his plan for a June vote, both Brown and the Legislature will likely lose credibility, said Mark Baldassare, president of the Public Policy Institute of California in San Francisco. A survey from the organization yesterday showed approval ratings for both Brown and the Legislature have fallen since January, when the governor took office.
“People had really prioritized the budget and budget solutions as something that this Legislature and this governor would be able to accomplish,” Baldassare said by telephone yesterday.
“This is what matters,” he said. “This is something in control of the governor and the Legislature.”
State officials say it may be too late to set up a special election for as early as June 14 without running the risk of disenfranchising voters because of the time it takes to prepare the ballot. Brown hasn’t set a hard deadline for reaching a deal or abandoning his goal of a June plebiscite.
Brown had sought agreement in the Legislature by March 10 to give election officials time to get ready for a statewide vote June 7 or June 14, the last possible day before the constitutional deadline of June 15 for passage of a budget.
So far, no Republican has publicly come over to Brown’s side. The survey by Baldassare’s group showed that support for the governor’s plan has waned, with 51 percent of likely voters backing it compared with 66 percent in January. The poll also showed that Brown’s approval rating among likely voters dropped to 41 percent from 47 percent in January.
Brown’s personal popularity will be crucial to support his pitch to voters for tax increases or extensions, said Sherry Bebitch Jeffe, a political analyst at the University of Southern California.
The governor will have a harder time selling his proposal in November, as then the measure would be framed as a tax increase rather than as an extension of existing taxes in June, Jeffe said. The higher taxes and fees are set to end that month.
“He would have to put it on the ballot as a tax increase” after they expire, Jeffe said. “Words matter.”
California law requires the Legislature to approve ballot referendums at least 131 days before an election, a deadline that has passed. Lawmakers can rewrite the statutes if they want and have before, setting a vote in as little as 88 days -- yet June 14 is closer than that.
The 88-day period was set in 2009, when former Governor Arnold Schwarzenegger sought to extend the same temporary tax increases. Voters rejected the measure.
Treasurer Bill Lockyer said he isn’t optimistic Brown will find a compromise with lawmakers before time runs out.
“I’m skeptical,” Lockyer said in an interview yesterday on Bloomberg Televison’s “InBusiness With Margaret Brennan.”
“If there’s not an agreement, there are some very substantial cuts that need to be made and some of these citizen groups that care about these issues are talking about circulating petitions and getting it on the ballot by initiative and having an election in the fall,” Lockyer said.
A citizen-sponsored ballot initiative in November would probably need to seek tax increases, because the temporary measures end with the fiscal year in June.
A November vote likely would favor Brown’s cause because Democratic turnout is typically heavier for elections that month, said Jaime A. Regalado, director of the Edmund G. “Pat” Brown Institute of Public Affairs at California State University at Los Angeles. On the other hand, opponents would have an easier time labeling Brown’s proposal a tax increase, he said.
“We’re in a climate right now where people feel they can’t afford any more taxes, even though they still want the services,” Regalado said by telephone from the institute, named after Brown’s father, a former governor.
“A continuance is not the same thing as asking voters for an increase,” Regalado said.
In November, about 57 percent of California voters rejected an $18 increase in vehicle license fees to pay for state parks. Tom Del Beccaro, the new chairman of the California Republican Party, said that result spells trouble for the larger tax package that could appear before voters this year.
“Californians are never going to pass this tax increase,” Del Beccaro said. “They don’t have the money. Californians didn’t ask for these tax increases.”
Republicans have said they want voters to have a choice to curb public-employee pension benefits, to cap spending and to rescind business and environmental regulations. A group of five Republican lawmakers has met with Brown in an attempt to forge a compromise, without producing a deal.
California’s general-obligation debt 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 gives California an A-, its fourth-lowest level for investment-quality securities and the worst for any state.
The poll by Baldassare’s group surveyed 935 likely voters by telephone from March 8-15 and had a margin of error of plus or minus 4.2 percentage points.
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