California’s Democratic-controlled Legislature passed a $92 billion budget on deadline, allowing lawmakers to be paid even though they put off supporting measures needed to implement the spending plan.
The bill relies on money from a November ballot initiative that would boost income taxes on top earners to the highest in the nation and raise the state sales levy, which already exceeds all others. If voters reject the increases, the budget calls for $6 billion in reductions, mostly from schools.
“Balancing a budget is second-grade arithmetic,” said Senator Mark Leno, a San Francisco Democrat. “It’s simple addition and subtraction. This budget is not only balanced and honest, it’s projected to remain balanced for four more years.”
Governor Jerry Brown and his fellow Democrats are still at odds over the level of cuts he proposed in welfare and other programs for the poor to help erase a $15.7 billion deficit. Those cuts are among the bills not taken up on deadline.
The plan approved today is subject to Brown’s approval. He vetoed the first version of last year’s budget, forcing lawmakers to make changes. The constitution gives Brown until July 1 to sign a spending plan.
The budget measure is a “smoke-and-mirrors, gimmick-filled fraud,” Republican Senator Tom Berryhill said. “It is a train wreck waiting to happen.”
Legislative leaders said passage of the main budget bill permits lawmakers to continue to be paid. After years of budget delays, voters in 2010 passed an initiative stripping legislators of their pay for every day past the June 15 deadline.
That measure also lowered the vote threshold to pass a spending plan to a simple majority from two-thirds. The change makes it possible for Democrats, who hold majorities in both chambers, to pass a spending plan without Republican votes.
The world’s ninth-biggest economy is rated A- by Standard & Poor’s, six levels below AAA and the lowest of any state. The yield penalty on California issuers relative to top-rated bonds rose as much as 16 percent in the past month, the steepest jump since March, Bloomberg Fair Value data show. S&P raised its outlook to positive in February.
Brown’s budget counts on reducing state employee costs by 5 percent, mainly by cutting workers’ hours. While the savings are written into the plan, unions still must agree to the change.
Brown also wants to slice $1.2 billion from health care for the poor, $1.1 billion from welfare and in-home help for the elderly and disabled, and $500 million from courts.
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