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California Budget Talks Grind To A Halt

AP     First Posted: 03/29/11 10:00 PM ET   Updated: 05/29/11 06:12 AM ET

UPDATE: Shortly after declaring an end to budget negotiations with GOP lawmakers, Jerry Brown addressed the breakdown in a video posted on youtube. Watch his address below:

Original Story
SACRAMENTO, Calif. (AP)-- Gov. Jerry Brown ended budget negotiations Tuesday with Republican lawmakers, casting doubt over what steps he and the Legislature will take to close the rest of California's deficit.

Brown issued a statement saying he had halted talks days after GOP leaders released a list of 53 demands they said had to be met in exchange for their support for a special election.

The Democratic governor and majority Democrats wanted to ask California voters in June to extend temporary tax increases enacted two years ago as part of their solution to close the deficit but were unable to get the Republican support needed for a ballot measure.

Brown said he supports some of the reforms sought by Republican lawmakers, including a state spending cap, changes to the pension system for public employees and streamlining business regulations.

But he said after progress was made on those issues, the Republicans issued a much longer wish list that included items not related to the state budget debate and corporate tax breaks that would cost the state billions of dollars a year. The governor concluded that further talks would be fruitless.

"Each and every Republican legislator I've spoken to believes that voters should not have this right to vote unless I agree to an ever-changing list of collateral demands," Brown said in his statement.

State Sen. Anthony Cannella, one of five Republicans who had been talking with Brown in recent weeks, responded by saying he also does not see a path to compromise.

Cannella, R-Ceres, blamed public employee unions, trial attorneys and other Democratic Party supporters for their "refusal to challenge the status quo" on GOP priorities that include pension reforms, a hard cap on state spending and measures to promote job creation.

The Democratic leaders of the Assembly and Senate showed their frustration with the breakdown in negotiations. The Legislature had reduced the $26.6 billion deficit by about $14 billion through spending cuts and fund transfers – actions that were taken primarily by Democrats.

Republicans did not even vote for most of the spending cuts.

Assembly Speaker John Perez, D-Los Angeles, said Republicans were showing that their true priority was demanding tax cuts for corporations. That was in apparent reference to Republican demands that Brown maintain a corporate tax break referred to as "single sales factor," in which out-of-state companies are allowed to choose their preferred rate of taxation.

Brown and Democratic lawmakers said it amounts to a billion-dollar tax break that takes money from schools, universities and public safety.

Senate President Pro Tem Darrell Steinberg, D-Sacramento, said the Republican demands do not reflect the desires of the vast majority of Californians. He also criticized Republican lawmakers for not engaging in budget talks for weeks before coming forward with a list of more than 50 demands, many of which he said have nothing to do with closing the immediate deficit.

"The only thing missing from this list is a pony," Steinberg told reporters. "And we'd give them a pony if they'd give the people the opportunity to cast a vote."

Under a ballot initiative passed last year, Democrats can pass the budget – but not tax or fee increases – with a simple majority vote. Steinberg and Perez said they would do that by the constitutional deadline of June 15, but would not say what such a budget would include.

Two Republican votes in each house of the Legislature are needed to place a ballot measure before voters. Brown had been negotiating with five Republican state senators during the past few weeks, but the talks deteriorated over the weekend after the Senate GOP leadership offered its list of demands.

In ending the talks, Brown said he will focus his efforts in the coming weeks on "speaking directly to Californians and coming up with honest and real solutions to our budget crisis." His office did not immediately return a telephone call or emails seeking more information.

Democrats have floated the idea of trying to press forward with a special election on a majority vote rather than the two-thirds, but that would almost certainly be challenged in court. They also have discussed an initiative drive for a special election so voters could consider the tax extensions this fall.

The increases to the personal income, sales and vehicle taxes enacted two years ago are scheduled to expire by July 1.

"You know we're going to consider every option, and we're going to stand up for school kids and teachers and higher education and public safety," Steinberg said. "We've gotten through terrible deficit numbers before; we'll get through this."

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Filed by Billy Silverman  |