SAN FRANCISCO - California lawmakers remained deadlocked yesterday in their battle over the state's estimated two-year, $41.8 billion budget deficit.
Democrats yesterday rejected a Republican proposal, released Monday afternoon, that would have closed $22 billion of the gap without new taxes by making deep cuts in education and health care spending.
The Republican plan would have raised general fund revenue by $6.5 billion by tapping voter-approved special tax funds that are devoted to children's health and mental health programs. The plan would cut spending by $15.6 billion - including $10 billion in school funding, 5% in the Legislature, 10% in higher education, and various reductions to welfare and Medicaid programs.
"Ensuring the state spends no more than it takes in is the most responsible way to climb out of this massive shortfall," said Senate Republican Leader Dave Cogdill, R-Modesto.
The plan, which would have required voter approval, was a non-starter for Democrats, who control both houses of the Legislature, because of the depth of the spending cuts and the lack of new tax dollars, but it was the GOP's first concrete proposal to address the budget deficit.
California faces a $14.8 billion deficit in its $103.4 billion fiscal 2008-2009 budget, and budget officials expect the gap to grow to as much as $25 billion next year.
Finance officials, including Treasurer Bill Lockyer and Controller John Chiang, have told lawmakers who are meeting in special emergency session that they must balance the budget soon or the state could run out of cash to pay incoming bills by March.
California's constitution requires two-thirds majorities to pass budgets and tax increases, forcing the parties to agree on budget measures. Republicans last month defeated a $16.2 billion Democratic plan to reduce the budget gap with equal amounts of spending cuts and tax increases.
Republicans said their plan would both boost the economy by cutting regulations on businesses and would address California's recurring budget deficits by cutting and capping spending growth.
"Republicans obviously don't think the time for ideology and posturing is over," said Senate President pro tempore Darrell Steinberg, D-Sacramento. "Instead of a serious proposal for serious times, the Republican plan relies on phantom revenue that may never materialize to the general fund."
School districts would face the biggest cuts under the GOP plan. Republicans said schools could absorb the proposed cuts because their plan would remove many of the strings that come attached to school funding.
Representatives of educational organizations such as the California Teachers Association, the Los Angeles Unified School District, and the California School Boards Association testified against the plan to the Assembly Budget Committee.
The cuts to education spending would "devastate school districts," said Debra Brown, a lobbyist for the School Boards Association.
The LAUSD estimated that the plan would force the district to cut $400 million from spending in the current fiscal year alone.
Groups such as the California Association of Counties and the California Nurses Association decried the cuts to health care.
These groups have also opposed cuts proposed by Democratic lawmakers and Gov. Arnold Schwarzenegger.
Schwarzenegger, a Republican, last month proposed $4.7 billion of tax increases and $4.4 billion of program cuts to address this year's budget gap. The size of the gap has grown since his Nov. 5 proposal, as tax revenues continued to decline. Schwarzenegger called a special session of the Legislature on Dec. 1.
Republicans said they oppose new taxes because they would hurt an economy that is already in deep decline.
According to Cogdill, "State revenues flourish when we have a robust economy - that's precisely why we must focus on job creation instead of further burdening taxpayers who are concerned about losing their jobs and their homes."
Assembly Speaker Karen Bass, D-Los Angeles, said its time for Cogdill and his colleagues to discard the "no-tax" pledges they signed when they ran for office and faulted Republicans for including business-supported changes to labor and environmental laws in the budget plan.
Democrats "have broken their pledges that they made before being elected to office, and they are going to have to propose deep cuts to education, health and human services," Bass said. "I am hoping that my colleagues on the other side of the aisle will reconsider their pledges and look for revenue that we can use" to solve the budget crisis.
Legislative staffers said lawmakers planned to continue to meet on the budget crisis past press time yesterday, but they said a quick solution appeared unlikely.
Bass has publicly told lawmakers they should start planning to spend Christmas in the capitol.