Brown halts budget talks with GOP lawmakers - CBS News 8 - San Diego, CA News Station - KFMB Channel 8

Brown halts budget talks with GOP lawmakers

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State Senate Minority Leader Bob Dutton, R-Rancho Cucamonga, left, talks with GOP lawmakers, Sen. Tony Strickland, R-Thousand Oaks, center, and Mark Wyland, R-Solana Beach during the debate over Gov. Jerry Brown's state budget plan at the Capitol. State Senate Minority Leader Bob Dutton, R-Rancho Cucamonga, left, talks with GOP lawmakers, Sen. Tony Strickland, R-Thousand Oaks, center, and Mark Wyland, R-Solana Beach during the debate over Gov. Jerry Brown's state budget plan at the Capitol.

SACRAMENTO, Calif. (AP) — Gov. Jerry Brown cut off budget negotiations Tuesday with Republican lawmakers, effectively ending his plan to ask Californians to vote on tax extensions in a June special election and creating uncertainty about 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 were seeking 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.

Those tax renewals were part of a plan that included a roughly equal amount in spending cuts to higher education, welfare, in-home support services, Medi-Cal and other programs.

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.

Republicans wanted ballot measures on pension restructuring and a spending cap to appear alongside a question on tax extensions. They also sought to limit the tax extensions to 18 months rather than the five years Brown had proposed.

GOP legislators and Brown reached agreement "to a great extent" on pension reform, but couldn't overcome resistance by public employee unions to some details of a spending cap, said Joe Justin, chief of staff for Sen. Bill Emmerson, R-Hemet, one of five Republicans who met with the governor repeatedly.

"We think the people do have a right to vote on taxes. We think they have a right to vote on pension reform. We think they have a right to vote on a spending cap," Justin said.

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.

Assembly Speaker John Perez, D-Los Angeles, said Republicans showed 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.

Brown acknowledged in a letter to Senate Minority Leader Bob Dutton, R-Rancho Cucamonga, dated Friday, that the two sides had made progress on pensions, spending and regulatory reform, but said Dutton's new wish list added "almost two dozen new topics, including obscure aspects of labor law and shifting the presidential primary to March."

Dutton defended the Republican priorities, saying the GOP was unwilling to go along with the renewal of the tax increases without long-term reforms that he said would stabilize the budget in the future.

"While compromise is needed to avoid an all-cuts budget, it involves more than the Republicans going along with the first, last and only solution of higher taxes offered by the majority party during this budget debate," he said.

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 declined to elaborate further on his next steps, saying only that the governor was weighing "the best way forward to let voters decide between deeper cuts and extending existing taxes."

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."

Meanwhile, Sacramento's budget gridlock prompted well-heeled interest groups to take to the airwaves.

The California Teachers Association launched television ads urging lawmakers to let California voters weigh in on whether they want to extend the taxes or face further deep cuts to state programs, including billions of dollars to public schools.

The conservative group Americans for Prosperity launched radio ads targeting two Central Valley lawmakers who previously were negotiating with Brown on a possible budget deal, Sens. Tom Berryhill, R-Modesto, and Anthony Cannella, R-Ceres.

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Associated Press writers Don Thompson and Adam Weintraub contributed to this report.

Copyright 2011 The Associated Press.

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