Assembly Dems Budget Bonds

The Assembly’s Democratic majority Tuesday announced its plan for the state’s fiscal 2011 budget — and it includes $8.7 billion in bond borrowing to get through the year.

The plan, announced by Assembly Speaker John Perez, is a response to Republican Gov. Arnold Schwarzenegger’s budget proposal earlier this month, which called for eliminating the state’s welfare program and child-care subsidies for low-income workers, among many unpopular cuts, to close a budget gap of $17.9 billion, including a $7.7 billion deficit carried over from the current fiscal year.

The Assembly Democrats’ budget keeps intact the programs Schwarzenegger wants to cut, while also funneling more money to K-12 schools than the governor proposed.

“How do we pay for this? Our plan securitizes the beverage container recycling fund revenues -- but we do so in a manner that doesn’t increase our overall bonded indebtedness,” budget committee chair Bob Blumenfield, D-Woodland Hills, said in a statement.

The plan calls for borrowing $8.7 billion from the container fund, plus about $500 million from the state’s disability insurance fund. It also calls for imposing a severance tax on oil extraction.

Revenue from the severance tax, estimated at about $900 million annually, would be used to backfill the beverage container fund, and it would all be mixed up with a shift in sales tax revenue from state to local governments that, according to Assembly Democrats, would make it all a revenue-neutral proposition that could pass with a majority vote.

The Assembly’s minority Republicans disagree. Some GOP votes would be needed to obtain the two-thirds majority ordinarily needed for a tax hike, and will be needed to obtain the two-thirds vote to pass a budget.

Assembly Republican Leader Martin Garrick issued a statement slamming the Democratic proposal.

“New taxes on oil or any other segment of the economy will further delay our state’s recovery and are off the table.”

The spokesman for Schwarzenegger, whose signature would be needed even for a majority-vote plan, also criticized the proposal, according to published reports.

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