SAN FRANCISCO — California lawmakers have passed a series of bills in a special session called to address the budget deficit, though they have left some big loose ends.
Gov. Arnold Schwarzenegger proclaimed a budget emergency in early January, triggering a special session that gave lawmakers 45 days to address the immediate budget deficit.
The 45 days ended Monday, when the Assembly passed several budget bills, though the most complex and controversial proposals remain up in the air.
All that was required of lawmakers in response to the governor’s emergency declaration was passage of at least one bill within the 45 days, according to a
Senate Budget Committee analysis.
That was accomplished, though several pieces of the budget package remained undecided as of Tuesday.
Among the bills left hanging was one designed to give budget and finance officials more flexibility in managing payments for various state programs.
That would give California more flexibility in managing its cash flow, something Treasurer Bill Lockyer has said investors will want to see as the state makes plans to issue about $4 billion of general obligation bonds during March.
The Senate approved the bill easily, but it was not taken up in the Assembly Monday.
In his January budget address, Schwarzenegger pegged the size of the budget deficit at $6.6 billion for the current fiscal year, and $12.6 billion for fiscal 2011, which begins July 1.
The Democratic majorities in the Legislature have taken a more modest approach. According to the Senate’s budget committee report, the Democrats’ plan would trim about $5 billion from the deficit, of which only $2.1 billion is spending cuts.
That figure includes bills that have yet to be decided.
The most prominent is a proposal to swap the state’s existing sales tax on gasoline and motor fuels for an excise tax.
The Republican governor proposed the swap in January, as a way of getting around court rulings that blocked his earlier plans to strip fuel sales tax revenue from transit agencies to close the general fund deficit.
Democrats altered the plan by retaining the sales tax on diesel fuel to preserve some funding for transit.
Because the entire proposal is revenue neutral, Democrats believe it can pass on a majority vote, as opposed to the two-thirds vote required for a tax increase.
But they reportedly held back the fuel tax swap legislation after a Schwarzenegger veto threat.
Republicans in the Assembly criticized the Democrats’ approach.
“Democrats have bypassed Republicans to push through a package of gimmicks, tax increases, and phantom spending reductions that do next to nothing to address our state’s fiscal crisis,” Assembly Republican Leader Martin Garrick said in a news release.
The budget bills that cleared the Assembly Monday did so on party-line votes, according to published reports.
That may hold a clue to the reason the Assembly didn’t take up cash-flow legislation Monday — it needs to take effect immediately, making it an urgency bill that requires a two-thirds vote.
“In spite of all the talk of transparency, these bills have never been heard in an Assembly committee, negotiated across the aisle, or subjected to public comment,” Garrick said in his news release.
California GOs have underlying ratings of BBB from Fitch Ratings, Baa1 from Moody’s Investors Service, and A-minus from Standard & Poor’s, the lowest for any state.
The state’s cash-flow problems were highlighted in the summer of 2009, when the controller’s office issued more than $2 billion of IOUs to a variety of creditors to preserve cash for other creditors with higher legal and constitutional protections, such as bondholders.
They were eventually redeemed.
