California Lawmakers Reach ‘Framework’ on Budget Deal

[I AM NOT THAT GUY 5,715]

By Michael B. Marois and William Selway

Feb. 11 (Bloomberg) -- California Governor Arnold Schwarzenegger and legislative leaders are nearing an agreement to close a record budget deficit with tax and fee increases on items including gasoline and retail sales.

Lawmakers have a "common framework" in place, Senate President Pro Tem Darrell Steinberg, a Democrat from Sacramento, told reporters today.

Under consideration are proposals to raise the state's sales tax rate to 8.25 percent from 7.25 percent; increase the vehicle license fee to 1.15 percent from 0.65 percent of the value of the automobile; a 12-cent per-gallon excise tax on gasoline and a 0.25 percent surcharge on income taxes, according to a lawmaker briefed by party leaders who asked not to be identified because the presentation was confidential.

"There is no deal until all of the loose ends are worked out and until there is a thorough review of what is very complex legislative language," Steinberg said. "That said we have the framework for an agreement."

Schwarzenegger, a Republican, and legislative leaders have met behind closed doors almost daily amid a four-month impasse over how to close California's $42 billion deficit. The stalemate has forced the most-populous U.S. state to cut off funding for more than 5,000 public works projects, left it with the lowest credit rating among U.S. states, and required officials to delay paying $3.7 billion of bills, including tax refunds.

Schwarzenegger's office said it won't discuss details of what is being negotiated. Steinberg and Assembly Speaker Karen Bass of Sacramento said they hope lawmakers can vote on on the budget by Feb. 12.

'Making Progress'

"We are making progress and we are closing in on a few key issues, but at this point there is no agreement," Schwarzenegger's press secretary Aaron McLear said.

Combined, the measures under consideration would raise taxes and fees and other revenue by $14 billion and are coupled with $16 billion in spending cuts and $10 billion in new state debt, the lawmaker said. The tax increases would be temporary, lasting from two to five years.

An agreement has so far proven elusive. Republicans have blocked tax-increase proposals advanced by Schwarzenegger and the Democrats who hold a majority in the Legislature. Democrats can't raise taxes or pass a budget without Republican support because they lack the two-thirds majority needed to do so.

Spending Cap

The higher taxes and fees are coupled with a proposal that must go before voters. It would limit spending increases each year to a formula tied to inflation and would require lawmakers to set aside a portion of any excess revenue in good years into a rainy day fund that could be used when the economy sours and revenue declines. Republicans have insisted that their support for tax increases is contingent upon Democrats agreeing to a spending cap.

Citing the legislative impasse, Standard & Poor's cut $46 billion of California's full-faith-and-credit debt to A from A+ on Feb. 2, making the U.S.'s largest tax-exempt borrower the lowest rated state, behind Louisiana. California's 10-year general obligation bonds already pay a record 1.23 percentage points in yield above benchmark municipal debt, according to Bloomberg indexes.

The deficit and the impasse has left the state without enough money to pay all its monthly bills. To conserve cash, state Controller John Chiang this month delayed making $3.3 billion of payments, including income-tax refunds and welfare payments to counties.

In December, Schwarzenegger ordered more than 200,000 state workers to take two unpaid days and he has said he plans to send notices to 20,000 workers informing them they may lose their jobs.

http://www.bloomberg.com/apps/news?pid=206...&refer=home

[Peikko 1,575]

By Michael B. Marois and William Selway

Feb. 11 (Bloomberg) -- California Governor Arnold Schwarzenegger and legislative leaders are nearing an agreement to close a record budget deficit with tax and fee increases on items including gasoline and retail sales.

Lawmakers have a "common framework" in place, Senate President Pro Tem Darrell Steinberg, a Democrat from Sacramento, told reporters today.

Under consideration are proposals to raise the state's sales tax rate to 8.25 percent from 7.25 percent; increase the vehicle license fee to 1.15 percent from 0.65 percent of the value of the automobile; a 12-cent per-gallon excise tax on gasoline and a 0.25 percent surcharge on income taxes, according to a lawmaker briefed by party leaders who asked not to be identified because the presentation was confidential.

"There is no deal until all of the loose ends are worked out and until there is a thorough review of what is very complex legislative language," Steinberg said. "That said we have the framework for an agreement."

Schwarzenegger, a Republican, and legislative leaders have met behind closed doors almost daily amid a four-month impasse over how to close California's $42 billion deficit. The stalemate has forced the most-populous U.S. state to cut off funding for more than 5,000 public works projects, left it with the lowest credit rating among U.S. states, and required officials to delay paying $3.7 billion of bills, including tax refunds.

Schwarzenegger's office said it won't discuss details of what is being negotiated. Steinberg and Assembly Speaker Karen Bass of Sacramento said they hope lawmakers can vote on on the budget by Feb. 12.

'Making Progress'

"We are making progress and we are closing in on a few key issues, but at this point there is no agreement," Schwarzenegger's press secretary Aaron McLear said.

Combined, the measures under consideration would raise taxes and fees and other revenue by $14 billion and are coupled with $16 billion in spending cuts and $10 billion in new state debt, the lawmaker said. The tax increases would be temporary, lasting from two to five years.

An agreement has so far proven elusive. Republicans have blocked tax-increase proposals advanced by Schwarzenegger and the Democrats who hold a majority in the Legislature. Democrats can't raise taxes or pass a budget without Republican support because they lack the two-thirds majority needed to do so.

Spending Cap

The higher taxes and fees are coupled with a proposal that must go before voters. It would limit spending increases each year to a formula tied to inflation and would require lawmakers to set aside a portion of any excess revenue in good years into a rainy day fund that could be used when the economy sours and revenue declines. Republicans have insisted that their support for tax increases is contingent upon Democrats agreeing to a spending cap.

Citing the legislative impasse, Standard & Poor's cut $46 billion of California's full-faith-and-credit debt to A from A+ on Feb. 2, making the U.S.'s largest tax-exempt borrower the lowest rated state, behind Louisiana. California's 10-year general obligation bonds already pay a record 1.23 percentage points in yield above benchmark municipal debt, according to Bloomberg indexes.

The deficit and the impasse has left the state without enough money to pay all its monthly bills. To conserve cash, state Controller John Chiang this month delayed making $3.3 billion of payments, including income-tax refunds and welfare payments to counties.

In December, Schwarzenegger ordered more than 200,000 state workers to take two unpaid days and he has said he plans to send notices to 20,000 workers informing them they may lose their jobs.

http://www.bloomberg.com/apps/news?pid=206...&refer=home

Good, I hope they succeed in getting this through. The cuts are more than the tax increase, what else can they do apart from keep increasing the debt?

[Jasman0717 9]

Well at least the counties will have an idea of what to work with. I just assume will will continue our furloughs like the state. The gov made theirs for 18 months. Ugh!

I didn't see anything on the golf tax

[Ban Hammer 13,332]

I didn't see anything on the golf tax

you better get playing while the playing is good.

[Jasman0717 9]

I didn't see anything on the golf tax

you better get playing while the playing is good.

If it would save jobs I wouldn't mind a golf tax but the politicians would probably just blow the money on booze, girls and drugs, kind of like what they did with the Lotto

[I AM NOT THAT GUY 5,715]

How about the extra $O.15 a gallon that they are going to add to finance the hookers, the booze, and the drugs?

[veronicavonn 7]

I have seen this crisis first hand and I sincerely hope that the budget gets fixed/approved soon.

In re: the FURLOUGHS -

I worked for Tehama County (in California) prior to moving to Germany. I have many friends who work for the county, including my MOTHER.

It looks like I left at just the right time..

This month is the first month that the county departments who are funded by the "general fund" (which comes directly from the state) will be REQUIRED to take FURLOUGH days (a day off of work without pay). The first furlough day for Tehama County employees is THIS Friday..

I have been corresponding with some dear friends who work with the county.. one of which has been told "if she does not take the furlough days, she will be the first person laid off."

My mother, on the other hand, works for Tehama County Social Services. This department has their own UNION... The county had a meeting with their Union to try and require them to take the furlough days as well, but the Union said NOPE.

My mother got lucky...

Not so much everyone else I know "back home"...

[Mr. Big Dog 10,747]

The tax increases would be temporary, lasting from two to five years.

Good Luck with that.

[almaty 19]

How about the extra $O.15 a gallon that they are going to add to finance the hookers, the booze, and the drugs?

and excellent way to spend the .15...i am all for that

[Jasman0717 9]

How about the extra $O.15 a gallon that they are going to add to finance the hookers, the booze, and the drugs?

and excellent way to spend the .15...i am all for that

they have to have their entertainment so I'm with you Dean

[almaty 19]

they work much better after getting drunk..high on sweet lucy and banged by sweet connie

[Jasman0717 9]

they work much better after getting drunk..high on sweet lucy and banged by sweet connie

I can't see the government being run any worse so maybe they were drunk

[I AM NOT THAT GUY 5,715]

they work much better after getting drunk..high on sweet lucy and banged by sweet connie

Only in California, Connie might just be short for Conrad!

[Peikko 1,575]

Which is funny because of course, only Californians have gays in the community.

[I AM NOT THAT GUY 5,715]

Which is funny because of course, only Californians have gays in the community.

Jealous? We have plenty to spare?