California Lawmakers Tackle $12 Billion Budget Deficit

By Chris Rizo | July 7, 2008 | 8:28 PM EDT

Sacramento ( - State lawmakers in four states drop the gavel Monday and begin legislative sessions focusing on budget deficits, public safety and the cost of energy. In no state will the challenges be as daunting or the issues as diverse as California.

Other proposals being considered in the Golden State are those to boost welfare spending, improve anti-terror defenses, and allow homosexual marriage.

Last year, California's energy crisis crowded out much of the other legislation. In 2002, falling tax revenues, which have fueled a $12.4 billion budget shortfall, are expected to dominate the agenda in Sacramento.

Republican State Assemblyman Phil Wyman said if the Legislature had been more conservative during last year's budget negotiations, California's fiscal woes would be more manageable.

"This is not all because of the tragedies on Sept. 11," Wyman said. "This is because of a lack of fiscal discipline."

Fellow Republican Assemblyman Bob Pacheco said this year he expects few spending bills to get through the Legislature, given California's bleak financial forecast.

Like the rest of the nation, California's economy is lagging since the Sept. 11 terrorist attacks, a problem made worse by skimpy Wall Street dividends, which in the past had rained down upon California. To help make up for the anticipated budget shortfall, Davis is proposing to cut current year spending by $2.2 billion.

Although Democratic Assemblyman Ed Chavez said program cuts are inevitable, he fears the combination of a faltering economy and dwindling state revenues could leave social welfare programs in ruin.

"Even before the terrorist attacks, California was hurting. Now lawmakers need to stand up and protect the people that need our help the most," Chavez said.

Some Democrats are even floating the idea of raising the state sales tax to help cushion state revenue losses, but Republican Assemblyman Dennis Mountjoy said that would be tantamount to battering an already bruised economy.

"Raising taxes is unacceptable. Not only to me, but also to the millions of Californians who work hard every day to provide for their families," Mountjoy said, adding that Republicans warned Davis of the looming economic troubles last year, as the state spent billions buying over-priced electricity on the spot market to keep the state's lights burning.

Further complicating the Legislature's delicate political climate this session are GOP efforts to unseat Davis, who is seeking a second term in November.

In December, the California Republican Party spent over $50,000 in radio ads assailing Davis for approving last year's $103 billion spending plan knowing the budget would leave scant reserves and trigger a quarter-cent sales tax hike in 2002.

Democrats say the idea of a $1.2 billion tax increase actually derives from a formula approved by former Republican Gov. Pete Wilson. The formula directs the state sales tax to fluctuate with state budget reserves. When state reserves are high the tax goes down. It goes back up when reserves shrink to specified amounts.

Davis is expected to defend the 2001-2002 budget and offer his plan to close this year's budget gap Tuesday during his State of the State address.

State legislatures in Idaho, Indiana and Wisconsin also get back to business Monday. Nine states follow on Tuesday and nine more on Wednesday. In all, 44 state legislatures will meet in 2002.

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