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California Gov.-elect Jerry Brown talks to reporters following a public discussion of the state budget on the campus of UCLA in Los Angeles Tuesday, Dec. 14, 2010. (AP Photo)

SACRAMENTO -- As Gov.-elect Jerry Brown prepared over the past two months to make his return to the office he last occupied 28 years ago, he set a workmanlike tone designed to match the gravity of the times.

He declined a White House invitation to all newly elected governors. He has refused interview requests from national and international news outlets. And he staged two sobering public sessions on the budget, in which he laid out a bleak picture of the state's ability to provide services while it remains in an economic funk.

Even his inaugural celebrations for Monday are muted. While other incoming governors are spending millions of dollars on parades and balls, Brown will attend a free "people's party" on the Capitol grounds and a modest reception at the California Railroad Museum, at a cost of less than $100,000.

He will amplify his message of hard realities in his inaugural speech with a vow to make harsh budget choices while avoiding gimmicky solutions to close the $28.1 billion deficit, according to sources in the Brown transition team. Brown will likely avoid the notion of raising taxes in his speech, but sources say he intends to go to voters in June seeking an extension of sales and income taxes that would otherwise expire July 1.

"He's going to have to gain the trust of voters that what he's telling them is realistic and in their best interests," said David Low, a lobbyist for the California School Employees Association. "He has to convince them that government will spend their money wisely. It's a tough lift."


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It is an irony of the times: At a moment of deep public cynicism toward government and politicians, Californians are turning to a former two-term governor, inveterate presidential candidate, two-term mayor of Oakland, and state attorney general to lead the way out of the state's fiscal and economic mess.

It was his campaign mantra -- that he was willing to take on the job "at this stage of my life" -- that conveyed the impression that Brown, 72, would cast aside personal political ambition to do what's right for the state, said Barbara O'Connor, director emeritus at the Institute for the Study of Politics and the Media who served in a previous Brown administration.

That has earned him "unprecedented goodwill and hope," O'Connor said. "He has a great deal of support to do things differently."

Still, there are political realities. Republican legislative leaders are insisting they will not go along with tax increases. Republican state party Chairman Ron Nehring said he is looking forward to defeating any tax proposal that gets on the ballot.

"It's disappointing, but not surprising, to see Jerry Brown positioning to waste his political capital on a tax increase -- one already voted down by voters -- right as he comes into office," Nehring said.

Even Democrats might find themselves pushing back against a budget that cuts too wide a swath through the working and middle classes, said Josh Pulliam, a Democratic consultant.

"Jerry has an opportunity to show he's on their side, that he listens and he's willing to take on powerful special, corporate interests who've been getting all the breaks for the last seven years," Pulliam said.

"Everybody has a chance to blow this up," said Steve Glazer, an adviser to Brown. "The real challenge is to get them out of their corners and find common ground."

If Brown is to preside over a breakthrough term, it will be because he deciphers such vexing puzzles as California's tax system, growing pension liabilities, prison costs, water reform, and the relationship between state and local governments.

"But it all starts with passing a budget, no matter how tough, in March," said Richie Ross, a veteran Democratic political consultant. "If he makes that happen, the rest gets easier, not harder. He knows this. And he is clearly on track in making others understand it."

Brown's target of passing a budget within 60 days was made easier by a new law approved by voters that allows the Legislature to approve it on simple majority votes. But there are a number of related issues that will make things, at the least, more complicated, such as:

Realignment: Brown and Senate Leader Darrell Steinberg, D-Sacramento, have spoken at length of their hopes to shift program responsibilities and taxing authority to local governments. They have said that realignment is the key to bringing the state's spending in line with revenues and also to maintain services that voters want.

Politically, Democrats believe that voters will be more amenable to taxes that are used to develop services in their communities, rather than out of Sacramento.

Republicans have warned that they don't want realignment to be a path to higher taxes. Some Democrats worry that returning taxing powers to locals could result in uneven services, such as disparities in school funding.

"It seems to me that Brown may be saying we have to restore the relationship between people, taxes and government," said Larry Gerston, a political-science professor at San Jose State.

"It's a different paradigm. The more we place responsibilities and opportunities on local governments and citizens, the more likely we are to see wide variations in what each community wants, needs and is prepared to tax and spend."

Pensions: Brown has to show he can make the tough calls on the state's burgeoning pension liabilities -- now between $100 billion and $500 billion -- at the expense of his most forceful allies, the state's public employee labor unions. In his campaign plans, he outlined reform that would include some belt-tightening -- an end to pension spiking, requiring newly hired state employees to retire later and requiring all employees to contribute more to their pension funds.

He also has proposed extending vesting periods for state workers to qualify for retiree health care and requiring larger employee contributions to retirement health plans.

Taxes, Proposition 13: Proposition 13, the hallmark property tax reform of 1978, could come under scrutiny in Brown's administration, particularly as he and the Legislature seek revenues to fill the $28.1 billion budget shortfall.

Brown will likely avoid changing homeowners' property tax relief. But Democrats and liberal economists have long argued that the state needs to eliminate the tax loophole that allows commercial and industrial property owners to keep down their assessments by disguising ownership changes.

If the state were to institute a split roll tax assessing business property owners regularly, it would collect from $8 billion to $10 billion more a year, said Lenny Goldberg, executive director of the California Tax Reform Association.

The split-roll tax, however, would be a major battleground for Republicans and business interests, who argue shifting tax burdens onto businesses will hurt the economy. If Brown takes on Proposition 13, it will be a philosophical battle for the ages pitting the Republican anti-tax doctrine against the Democrats' pro-government principles.

Inaugural events
11 a.m.: Brown will take oath and give inaugural speech at Memorial Auditorium in Sacramento.
Noon-2 p.m.: A "people's party" with free hot dogs will be held at the Capitol Northwest lawn; Brown will speak.
2-4 p.m.: Brown will host a reception at the California Railroad Museum in Old Sacramento.
Television: California Channel will broadcast Brown's inaugural speech live at 11 a.m. It will also be streamed at www.calchannel.com.