Republicans Get Their Pound of Flesh in Budget Deal

At 4 am this morning the Assembly passed the budget. The Senate is hearing it right now, and is expected to pass it, though not without some rancor. The budget was passed mostly on the backs of cuts to transit funding, the poor and teachers. The Democrats appear to have caved on most issues, but not to the extent that the Republicans and Arnold wanted.

Let's run down a few details as to the actual program cuts.

• The Republicans wanted $2 billion in cuts. They got $1.4 billion
• The government will pay $2.5 billion in bond obligations. That is $1 billion more than required. Arnold had proposed $1.6 billion in early payments originally.
• $1.257 billion in gas taxes, which were intended to go to public transportation have been rerouted to the general fund. This is a one time shift. It has led many people to say that the budget has been passed at the expense of transit, which will lead to increased pollution and traffic. This may cause LA to put off plans for expanding the Expo light rail line. BART may have to delay expanding the line to the Oakland Airport.
• The Democrats had declared that eliminating the cost of living increases for the Supplemental Security Income/State Supplemental Payment (SSI/SSP) was unacceptable. They have agreed to suspend the increase for four or five months. This along with CalWORKS cuts saves $247 million.
• They have cut $25 million intended to treat drug offenders from Prop 36 funding.

For more see this run-down on CPR.

Education has been fully funded to the Prop 98 requirements and the budget also includes a cost of living adjustment. That is the good news. The bad news is that the legislature agreed to go along with the governor and eliminate a tax credit for teachers. It was intended to help off-set the money teachers spend on out-of-pocket classroom supplies. Teachers routinely spend hundreds of dollars a years on supplies for their classroom that their districts can't afford to provide. This would have allowed them to deduct the expenses from their taxes. It's a little thing that makes all the difference for our hard working teachers.

The elimination of this tax credit is all the more disheartening with the news that the Assembly has agreed to go along with $600 million in tax breaks for corporations and movie studios. Senator Perata was steamed this morning and sent a letter to Speaker Nunez.

Dear Mr. Speaker:

I am alarmed and dismayed by rumors that you are considering a half a billion dollars in tax breaks for special interests.

As you and I well know, Democrats have sacrificed funding for education, have postponed a meager cost-of-living increase for the state’s most vulnerable disabled residents – the aged, blind and disabled, and have barely thwarted deeper cuts to education and higher education. Even the increases we proposed to the state’s Prop 36 program – aimed at keeping non-violent drug offenders out of prison and putting them into treatment programs – has fallen victim to concerns about the state’s long-term deficit.

But most ironic, we have surrendered $185m in teacher tax credits to balance the budget!!! How could you now throw them over for Hollywood movie moguls and multi-national corporations???

Our out-year budget problem is already $5.5 billion dollars. We cannot continue to fund education, higher education and crucial human services issues, such as the in-home supportive services program, childcare, or funding for the aged, blind and disabled by providing tax giveaways.

I am deeply disappointed and saddened by your actions – and hope you will reconsider.

The Senate is taking up the budget right now. SpeakOut and Calitics are calling on people to contact their legislators and encourage the Senate to take a stand against these tax credits and budget cuts. The tax credits were passed in stand-alone bills, not part of the main budget. They could be rejected by the Senate, without dooming the entire budget.

Let me take this opportunity to rant a bit about this AP story:

The state Assembly on Friday ended a stalemate over California's overdue budget with a surprise deal to give tax credits to movie studios, tech firms and other companies.

The tax-relief package — the state's first since 2001 — emerged as the key piece of legislation that prompted Assembly Republicans to end a standoff over a spending plan worth $145 billion. It now goes to the Senate, which was scheduled to meet later Friday.

The budget deal, approved 56-23 shortly after 4 a.m., was made possible by the compromise on tax credits, a separate move that was assailed by the Senate leader.

Excuse me...tax-relief?! How about tax credits, tax cuts, tax reductions. Anything but the politically loaded term tax-relief. That implies that taxes are a burden from which we deserve to be relieved. It is a complete right-wing frame that does not deserve to be in an AP story. I would expect the conservatives to get upset if tax giveaway was used instead. There is no cause for this language to be used in a straight news story.

Expect to hear more on the budget as the day progresses and the Senate takes up the budget. Given the tone of Perata's letter, it will not go smoothly.

UPDATE 12:15 Who knows if my post had anything to do with it, but the AP story has now been edited. "The tax-relief package" is now "The tax package". Wow. Notice that the WaPo still has "tax-relief" in its story. That means that the Chron deliberately edited it.