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  • HECTOR AMEZCUA / hamezcua@sacbee.com

    Flanked by business and governmental leaders, Gov. Jerry Brown said Monday that he "will take a very hard look at" a budget balanced with non-tax revenue sources widely viewed as gimmicks.

  • HECTOR AMEZCUA / hamezcua@sacbee.com

    Gov. Jerry Brown discusses his budget options on Monday.

More Information

  • Faith-based, community groups pray for California budget fix
  • The State Worker: Unions challenge 'pension-gutting agenda' amid budget talks
  • Four legislative Republicans negotiating with Gov. Jerry Brown over tax extensions said Monday there is "significant agreement" between them and Brown on a "vast majority" of demands they have made. Brown is seeking an election for voters to decide whether to extend 2009 tax increases on sales, income and vehicles. The Republicans will not agree to extend the taxes from July until the election can be held, as early as this fall.

    Here is some what the senators are demanding to vote for a tax election:

    PUBLIC PENSIONS

    • Mandatory "hybrid" plan for new workers that includes smaller defined benefit plus a 401(k)-style component.

    • Cap on annual pension pay at $106,000 for Social Security participants and $119,000 otherwise. Allows cost-of-living adjustments.

    • Allow public employers to reduce future unearned benefits at any time for new employees.

    • Eliminate ability to purchase "air time" service credits for up to five years of work not performed.

    • Prohibit employees from working for a government while collecting a pension from the same entity.

    • Require future employees to prepay about 50 percent of post-retirement health benefit costs.

    SPENDING CAP

    • General fund and special fund spending cannot increase more than 2011-12 level plus adjustments for population and inflation growth.

    • Maintain minimum funding guarantee for K-12 and community colleges.

    • Cap remains in place until governor's $34.7 billion "wall of debt" is eliminated. Afterward, transition to a "rainy day fund" submitted last year for voter consideration.

    • Prohibit local governments from imposing various taxes.

    REGULATORY CHANGES

    • Require economic analyses of cost-effectiveness for all "major" regulation changes.

    • Provide resources for the nonpartisan Legislative Analyst's Office to conduct a cost-benefit analysis of "major" legislative proposals.

    • Create a new office in the Department of Finance to review economic analyses.

    • Increase penalties for frivolous environmental lawsuits.

    • Exempt projects from environmental review if they are only subject to review because of greenhouse-gas emissions.

    SOURCE: Offices of Republican Sens. Tom Berryhill of Oakdale, Anthony Canella of Ceres, Bill Emmerson of Hemet and Tom Harman of Huntington Beach.
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Jerry Brown opens door to gimmicks budget

Published: Tuesday, Jun. 14, 2011 - 12:00 am | Page 1A
Last Modified: Sunday, Oct. 9, 2011 - 1:24 pm

Two days before the state budget deadline and with no sign of a deal, Gov. Jerry Brown said Monday he would consider using accounting gimmicks to balance California's budget deficit, despite his longstanding promise not to.

His changing rhetoric, following months of failed talks with Republicans, comes as Brown braces for the Legislature to send him a budget that does not include the tax revenue he is seeking.

"I will take a very hard look at it," Brown told reporters at the Capitol. "We've had discussions with the leadership, and I've told them the way I see things, and we'll see what happens when they bring it down."

Such a move would be politically perilous for Brown's still-young governorship, but it remains unclear if he would follow through.

Brown, who is trying to close the state's remaining $9.6 billion deficit, said he is still negotiating with Republicans and would continue to after Wednesday's rarely-met constitutional deadline. The Democratic governor could continue talks without committing to a budget for as long as 12 days after it is passed, the time he has to sign or veto it.

Brown has long said that he would sign only two kinds of spending plans, one relying on voter-approved taxes – a plan requiring a two-thirds majority in the Legislature and at least two Republican votes in each house – or one imposing all cuts.

Otherwise, Brown said in February, California "wouldn't have a budget. … Things would break down over time, and then they would do something eventually."

Asked about his promise to not accept gimmicks, Brown said Monday that nothing has changed.

"I just don't give you all my strategies before I implement them," he said.

Lawmakers are under pressure to send a balanced budget to Brown by Wednesday or forfeit pay, and sources not authorized to speak publicly said legislative Democrats are drafting a plan that relies on non-tax revenues and cuts while avoiding the harshest program reductions.

The majority-vote budget would reimpose $3 billion in deferred payments to schools, forcing districts to borrow more while avoiding deep program cuts. Brown proposed in May using additional tax dollars to pay schools that money on time.

It also would rely on taking funds from First 5 programs. Lawmakers had agreed to take $1 billion in March, but Brown stopped counting on that revenue in May in the wake of legal challenges filed by First 5 commissions.

Democrats are also exploring a majority-vote method to scale back redevelopment agencies and still get $1.7 billion from them for the budget.

Other parts of the plan are unclear. Two sources said lawmakers are again entertaining the idea of selling state buildings and leasing them back to raise cash, though the plan would be different from the controversial one pursued by former Gov. Arnold Schwarzenegger and dismissed by Brown.

Senate President Pro Tem Darrell Steinberg, D-Sacramento, suggested the upper house will move forward with a plan that does not include Brown's tax proposal if Republican support fails to materialize by Wednesday.

"We're going to pass a budget by June 15. Period," Steinberg said, after which he said Brown could continue negotiating until month's end.

For a governor who has made public service reductions and an election on taxes the focus of his administration, accepting an alternative spending plan could weaken him politically.

"If the governor can't come in in his first year in office, be able to pull the Legislature across the line with him and get a budget done, there's a question of who's driving the ship," said Bill Whalen, a research fellow at Stanford University's Hoover Institution and former speechwriter for Gov. Pete Wilson. "If he cannot get the budget done, or really gets it done in kind of a bloody, ugly way, then the question is how forceful can he be in getting the agenda done next year."

By suggesting he is open to one-time, non-tax revenue, Brown is advertising to Republicans that he has options other than negotiating. Political observers of both parties said Brown is unlikely to sign a budget that includes the most egregious accounting maneuvers.

"He made it pretty clear that he wasn't going to support a gimmicks budget," said Bill Carrick, a Democratic strategist. "I think he's right at trying to maintain as much flexibility and give and take as he possibly can."

Following Brown's appearance on Monday, four Republican senators who have been negotiating with Brown released details of their demands for a spending cap and pension and regulatory changes. Talks most recently stalled over Brown's plan to extend tax increases, which are scheduled to expire this month, until after a fall election.

One of the four senators, Anthony Cannella of Ceres, said of the prospect for a budget deal by Wednesday, "Two days is a lifetime here, and so I can't put a prediction on that."

But the third-term governor, who once believed he could reach a deal by March, said in a YouTube video late Sunday that he was "perplexed" by the lack of budget deal, and he suggested the conflict could drag on.

"This battle this week is battle one," Brown said Monday. "But there will be several more before we get finished."

© Copyright The Sacramento Bee. All rights reserved.


Call David Siders, Bee Capitol Bureau, (916) 321-1215. Torey Van Oot of The Bee Capitol Bureau contributed to this report.



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