State budget deal reached; vote expected today

SACRAMENTO — Nearly two weeks after being rebuked on their first try, Democratic legislators will vote on a budget today that Gov. Jerry Brown is sure to sign this time.

Brown and the two legislative leaders, Senate President Pro Tem Darrell Steinberg and Assembly Speaker John Perez, announced an agreement Monday on a budget that closes a $9.6 billion deficit with $4 billion in newly projected revenues and more cuts.

After months-long talks with a handful of Republicans proved fruitless, Brown is ditching his plan for a special election on taxes he had hoped to extend before they expire Thursday. Instead, he said he will push for an initiative during the November 2012 presidential election, precisely when many Democrats and their labor allies had said would offer more ideal conditions to win on taxes.

"We've come to some very important conclusions after a series of tough talks," Brown said in a news conference in his office with Steinberg and Perez at his side.

"It's a good budget, but it's not the budget I started with in January and that Democratic leadership wanted — and that was a budget that had revenues," Brown said. "We still have our wall of debt hanging out there. We still have work to do, and given the fact that so far I can't get any Republican support ... we're going to have to look very seriously at an initiative to generate the revenue to create economic stability."

If the new revenues don't materialize by early next year, a trigger would automatically force $2.5 billion in further cuts to universities, welfare and schools, said budget staffers and finance officials in a briefing.

The budget is also premised on $2.8 billion in deferrals to K-12 schools and community colleges and $1.7 billion in a controversial plan to extract funds from redevelopment agencies. The University of California and California State University systems would be cut by another $150 million each, as would state courts. Another $650 million in new revenues would come from enforcement of sales taxes collected by online merchants, rural fire fees and a $12 car registration fee.

"This budget is the most austere fiscal blueprint California has seen in more than a generation," Steinberg said.

If both houses approve the deal Tuesday and Brown signs it immediately, as is expected, legislators would begin to receive their paychecks for the first time since June 15 — a factor that undoubtedly hastened the deal.

State Controller John Chiang, who ruled legislators could not be paid because the constitution requires an on-time, balanced budget, has said the governor's finance department will have final say on whether it is balanced.

Brown said a text message he received Sunday night from one of the Republicans convinced him to finally drop his hoped-for special election on tax extensions. Republicans had sought pension and regulatory rollbacks, as well as a spending cap, and have blamed public employee labor unions for blocking a deal. But Brown said such was not the case.

"At the end of the day, there was just not a willingness to sign on to extensions, no matter what we did," Brown said. "I thought we were getting close, but as I look back on it, there is an almost religious reluctance to ever deal with the state budget in a way that requires new revenues."

Steinberg added: "I'm a little tired of talking about the gang that chooses not to govern. They've had every opportunity to choose to govern in a fair, balanced and responsible way for the last six months."

Perez said Republicans "stonewalled the process for months," running out the clock so Democrats could not have a special election on extensions this year.

The four Republicans who had been in talks with Brown — Sens. Tom Harman, Anthony Cannella, Bill Emmerson and Tom Berryhill — released a joint statement criticizing Brown for allowing unions to block a deal.

"We are deeply disappointed that yet again the governor and legislative Democrats have capitulated to those fighting to preserve the status quo," they said.

State Senate Leader Bob Dutton, a Republican, said the budget does "nothing to change government as usual."