Just before Gov. Jerry Brown signed the state budget with little fanfare last week, Assembly Republicans celebrated at Downtown Ford, standing before cars they said would become cheaper overnight because they blocked tax extensions.

"This is a great day for California," said Assemblyman Tim Donnelly, R-Twin Peaks. "The death of these taxes is the rebirth of our economy."

If Republicans judge themselves by taxes alone, they scored a victory this year.

But Capitol experts say they also lost for the foreseeable future their best opportunity to reduce pensions, impose a stronger spending cap, or roll back regulations that affect businesses.

"It's up to them going forward if they want to put all of their resources into one issue or spread them between more," said Dan Schnur, a former GOP strategist and director of the Jesse Unruh Institute of Politics at the University of Southern California. "Right now, they are a one- issue party in the Legislature."

Under new budget-writing rules, Brown and Democratic lawmakers built a majority-vote spending plan – one that lacked the governance changes sought by Republicans.

Without GOP support, 2009 tax hikes on sales and vehicles expired Friday.

The lack of tax extensions will result in college tuition hikes, delayed payments to K-12 schools and further reductions to courts. Republicans declined to cast votes for many of those cost-cutting measures.

"When you look at this budget that was presented, and it was a Democrat budget, not ours, they are the ones who chose who got cut," said Assembly Republican Leader Connie Conway, R-Tulare. "They are the ones that made the priorities. So if people are suffering and hurting, they need to contact the people who did that to them. Our agenda was to put the money back in the taxpayers' pocket."

Republicans' business allies were less satisfied by last week's budget outcome.

The California Chamber of Commerce sought a bipartisan compromise with governance changes and broad-based taxes. Business groups will consider joining a coalition next year that places such a package on the ballot, said Allan Zaremberg, president and CEO of the chamber.

"I think there were lost opportunities here," Zaremberg said. "The programs that were not funded are important to creating certainty for someone who wants to come to California. We have not created enough certainty to tell an investor who wants to come here, 'Your taxes are going to be stable and your fees aren't going to go up.' "

Zaremberg said Republicans satisfied their constituents by voting against taxes and refusing to reduce school funding. He also said Republicans felt the governance changes didn't go far enough.

But, he noted, "I think it is really important for all of them to engage."

With strong Democratic majorities in both houses, the GOP in previous years wielded its greatest leverage during budget talks. The state's two-thirds budget vote requirement forced Democrats to negotiate with them.

In some years, that meant providing goodies to individual GOP members – district perks or specific law tweaks. At other times, Republicans negotiated tax cuts or governance changes as a caucus.

Proposition 25 allows Democrats to pass their own budget on a majority vote, but the constitution requires that they obtain a two-thirds supermajority for taxes or placing constitutional amendments on the ballot. Because Brown wanted both as part of his budget plan, Republicans had a negotiating window.

"They missed a chance for reforms," said Senate President Pro Tem Darrell Steinberg, D-Sacramento, on the night of the final budget vote. "They don't just sit on their hands. They sit on their pledges. I feel sad for them. I feel sad for California. There's so much more we could do together."

Still, Jon Fleischman, a Republican state party official and publisher of the conservative Flash Report blog, says GOP members scored a major achievement.

"There are a lot of Republicans out there who want to make it sound like Republicans didn't reach out to grab the brass ring," Fleischman said. "That is dismissive of the substantive policy victory achieved by Republicans. This isn't tax relief for the rich. This is across-the-board tax relief for everyone in California hit hard by the recession."

Democrats say they will still seek curbs on pension abuses, an issue that polls well with voters. But they have little need for Republican votes at this point, giving labor unions a greater say in the outcome.

Some have speculated that Republicans could put a stronger pension measure on the ballot. But there are growing questions about whether they could find the money to gather signatures and run an expensive campaign. Pension measures lack the special-interest financier that successful initiatives typically require, said Rob Stutzman, a GOP strategist who recently examined funding potential.

Republicans and Brown could find themselves negotiating again next spring, since Democrats still want tax measures on the November 2012 ballot.

But that negotiation likely would occur with labor unions holding petitions for tax initiatives over Republicans' heads, leverage for Democrats that didn't exist this year.

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Call Kevin Yamamura, Bee Capitol Bureau, (916) 326-5548. Paresh Dave of The Bee's Capitol Bureau contributed to this report.

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