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GOP in California tax talks

Posted 9 years 132 days ago ago by newspaper editor    0 Comments  2 Likes Like Dislike

Wall Street Journal

In what could become a turning point in Gov. Jerry Brown's effort to close California's $26.6 billion deficit, a group of Republican state senators may support the Democratic governor's plan to ask voters for extended tax increases, in exchange for concessions, people familiar with the matter said.

Some members of the group met with the governor Monday evening, these people said. The senators, who include Tom Berryhill, Bill Emmerson and Sam Blakeslee, are seeking changes to the public-pension system, a cap on state spending, changes to regulations that would be favorable to businesses and tax modifications.

"The governor has had an open-door policy since he introduced his budget and continues to meet with legislators on both sides of the aisle to reach a balanced and bipartisan budget plan," said Mr. Brown's spokesman, Evan Westrup, who declined to give details of or participants in any specific talks..

A spokeswoman for Mr. Blakeslee declined to comment. Spokeswomen for Messrs. Berryhill and Emmerson didn't immediately respond to phone calls seeking comment.

Some people familiar with the matter said the senators hadn't offered votes in exchange for any concessions but were in early talks about elements they want included in the budget.

The stakes are high for California. The fiscal year starts on July 1, and the state controller warned Wednesday that a delayed agreement would put the state at risk of a cash crisis that would hurt its recovery. California has the nation's largest economy and is its biggest debt issuer, so its fiscal health is closely watched.

The budget talks come as many states suffer their worst fiscal crises in years, in some cases sparking tensions between governors and lawmakers.

Mr. Brown's proposed budget includes $12.8 billion of spending cuts and fund shifts. He also wants to ask voters for a five-year extension of several tax increases that are set to expire this year. That, along with other taxes, would be expected to raise $14 billion by June 30, 2012.

By state law, Mr. Brown needs support from two-thirds of lawmakers to move forward with a ballot measure, rather than the simple majority vote required in most other states. While the California legislature is made up mostly of Democrats who have pledged their support for Mr. Brown's plan, he still needs votes from Republicans—likely two in the Senate and another two in the Assembly, assuming all Democrats vote for his plan.

To that end, Mr. Brown has in recent weeks met with Republicans, both individually and in caucus gatherings, to express his openness to making concessions. But no Republicans have publicly indicated a willingness to put the tax measure on a ballot. That makes the GOP senators' outreach particularly important.

The Republicans are now working to craft language for their proposals, people familiar with the matter said. They see Mr. Brown's wish for a ballot measure and his willingness to negotiate as an opportunity to win policy changes which Republicans have pushed for years, and which they feel would ease the state's perpetual fiscal crises.

To be sure, the talks between the group and Mr. Brown are in an early stage and could fall apart. And it is unclear which GOP members of the Assembly would vote for his plan, if any.

It also isn't known how far the governor and Democratic lawmakers are willing to go to secure key Republican votes.

Mr. Brown has said publicly he wants changes to public pensions and regulations. He may also consider a ban on spending on new programs during the tax extension, people familiar with the matter said. But he may not agree to some regulatory and tax changes Republicans have suggested, these people said.

Mr. Brown hopes to hold a special election on the tax extension by early June. He has set March 10 for the legislature to approve the ballot measure.

Several Republican senators have said they won't vote for the ballot measure, no matter what.

"[The Brown administration is] saying, 'Do something you know is going to be really harmful for the people of California in order to do something that will help the people of California,' " said Sen. Tony Strickland. "It's like cutting off your arm to reattach your toe."

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