06/29/2011 11:38 am ET | Updated Aug 29, 2011

Jerry Brown Finds A California Budget That Flies, For Now

The latest round of California's chronic budget crisis is finally coming to an end. It's a significantly better end than in the past. But it's not an ending with finality.

Governor Jerry Brown finally acceded to the probable on Monday, dropping his months-long quest to get four Republican legislators to vote to place tax extensions on the ballot to match the big budget cuts already enacted this year and solve the budget crisis. Instead, he and Democratic legislative leaders announced a deal on a better version of the budget he vetoed on June 16th.

That's because Republican legislators preferred to run out the clock rather than take part in Brown's long-sought grand budget compromise of big cuts, revenues, and some fiscal and regulatory reforms.

Governor Jerry Brown appeared with Democratic legislative leaders Darrell Steinberg and John Perez to outline the compromise California budget plan.

Instead, Brown appeared in his faculty lounge-like Cabinet Room with Democratic legislative leaders Darrell Steinberg, the state senate president, and John Perez, the assembly speaker, to announce another sort of compromise. This one between his historic veto of their state budget cobbled together on the very deadline for continued legislative pay and the reality that few from either party would vote for an all-cuts budget to drive home the points Brown wants to impress upon voters who have only the vaguest and most contradictory sense of the state's budget.

What this means is fewer gimmicks, some additional cuts now, and an increased assumption of revenues going forward. If those revenues do not emerge, that will trigger additional mid-course cuts. It also means a gutting of redevelopment agencies, with tax revenues redirected to basic services amidst predictable threats of lawsuits. Details are still emerging, but plenty of them are here.

Brown has not succeeded in his fiercely clutched goal of wiping out, in one fell swoop, a state budget deficit estimated at $25 to $26 billion when he entered office. But he and the legislators who have worked with him -- and let's be clear that most Republicans wouldn't even vote for the cuts they claimed they wanted in theory -- are on the verge of having succeeded in clearing upwards of 75% of the deficit in only half a year.

All this sets up a big electoral showdown, probably in November 2012, only the outlines of which are clear at the moment but include more potential revenue for the state. Republicans, having failed to negotiate any new fiscal and regulatory reforms, in large part because they would not vote for tax extensions, may try to push those at the ballot box.

But any conservative electoral move of that nature that would coincide with Republican attempts to hang on to what they have in the new non-gerrymandered legislative and congressional districts. And it would coincide with the re-election run of President Barack Obama, who will win easily in California.

The reality is that Brown may be quite fortunate that he did not get his hoped-for special election this year. Because very little groundwork had been laid to properly frame the election from a conceptual standpoint, or to build a multifaceted organization to promote it.

As a result of Brown's uncharacteristic reticence -- most every morning on New West Notes, I write that Brown has "no scheduled public events as of this morning" -- the storyline slid to a question of taxes or no taxes, with most voters seemingly quite unaware of the big budget cuts already enacted, or that Brown was attempting to negotiate more systemic reforms. That's not a position you want to start out in at the beginning of a short campaign in an off-year special election.

But California Republicans proved most obliging in blocking the public from having an opportunity to vote.

I have real doubt about how serious the supposed pragmatists talking with Brown actually were. They kept pushing for the most stringent versions of their reforms, especially as the deal was supposed to go down. They may have been trying to have their cake and eat it, too, i.e., avoid getting blasted by the far-right cultists for backing tax extensions but be able to claim to moderate and independent voters that they were carrying the flag of reason and reform.

On June 16th, Brown issued the first veto of a California state budget in history.

Private polling shows Brown's June 16th veto of the budget to be, not surprisingly, quite popular. And Controller John Chiang's decision to cut off paychecks and expense payments for state legislators after they produced a budget that, as he pointed out on June 21st, didn't add up, was also very popular.

A political star is born, despite resentment from legislative circles. Or perhaps because of it. What legislators never quite get, since they have been elected from gerrymandered districts, is that they're not at all popular. Which is why they need to avoid passing budgets on the very day on which their pay would otherwise stop. They are all-too-easy targets who don't understand the need to avoid making themselves even easier targets.

Some said this was a fight of Brown vs. the Democrats. But that was wrong. It was a tussle of the statewide Democrats -- Brown, Chiang, and State Treasurer Bill Lockyer (the former attorney general and state senate leader) -- against legislative Democrats. The statewide Dems simply have to take a broader perspective than legislative Dems.

Unfortunately, what this budget does is rely on windfall revenue, repeating the pattern of the unsustainable budgets of the late '90s and early noughties that got the state government in trouble in the first place.

One of the reasons why the legislature was able to move so swiftly on big budget cuts earlier this year is it had spent all of last year contemplating such cuts. But legislators refused to enact the big budget cuts proposed by then-Governor Arnold Schwarzenegger.

Why did they wait? So that Jerry Brown could take "credit" for the cuts? That's not how Democratic legislators see this process. You'll note that neither they nor Brown have been taking bows for the huge budget cuts they've enacted. These budget cuts are far too unpopular with too many of their voters, many of whom are hurt by the budget.

Was it that they didn't want Schwarzenegger to get the credit for what Brown would have to do anyway? Or was it that they hoped against hope, and against all available evidence last year, that there would be some way, somehow, to avoid the budget cuts?

Last year, every time there was the slightest hint of hope on revenues, Democrats focused on that instead of cuts. They spun up many scenarios to circumvent the unusual two-thirds vote requirement for raising taxes. And perhaps they heard what they wanted to hear from Brown, though it's hard to imagine that they could.

State Controller John Chiang rocked California politics by denying pay checks and expense payments to state legislators.

Brown is affected by the same laws of political gravity as Schwarzenegger and everyone else. He had no magic wand to wave to create fresh sources of revenue out of whole cloth.

And he was making it very clear in his campaign that big budget cuts, to very real programs, were in store under his governorship.

He made that far more clear than did his Republican opponent, billionaire Meg Whitman. Her program was sheer fantastical nonsense. She would solve the budget crisis by eliminating the capital gains tax, which of course would actually have torn an even bigger hole in the budget. And by using new computers. And by rooting out mythological levels of "waste, fraud, and abuse."

Brown entered this week still looking for four Republican votes. But the reality was that Brown had run up against the same intractable and dysfunctional state capitol dynamics that bedeviled Schwarzenegger during his last few years in office. Things worked well enough in California's budgeting, cobbled together as it was after Prop 13, until the late '90s and early noughties, when pols pushed through program expansions and tax cuts based on a dot-com bubble that went bust.

So Brown and the state move forward, with most of the budget problem solved but big questions still remaining.

And what of the Republicans? Well, they're still figuring out preliminary district maps from the Schwarzenegger-initiative-created citizens redistricting commission, which most of the experts I talk to believe will give Democrats a serious shot at winning a two-thirds super-majority in the state legislature and more seats in Congress.

Meanwhile, their attention is turned, as it so often is these days, inward. Termed-out state Senate Minority Leader Bob Dutton's plan to try to stay in public office by running for the assembly is spurring a brewing leadership fight between ultra-conservative GOP caucus chairman Bob Huff (the redevelopment agencies' champion) and ultra-conservative freshman Joel Anderson (champion of home schooling).

You can check things during the day on my site, New West Notes.

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