SACRAMENTO — When asked last week about what kind of fight he expected from Democrats over their proposed tax increases, Gov. Arnold Schwarzenegger smiled and said with a slight wink and nod, "Well, what is being said and what is being done, as you know, are sometimes two different things."
Schwarzenegger was suggesting that Democrats were posturing on their $2.1 billion in tax proposals, putting on what he calls Kabuki theater for their constituents before he expected them to relent to the reality that Republicans will never agree to taxes as part of the solutions lawmakers must find to close the $24.3 billion deficit.
Democrats are seeking $830 million in a new oil severance tax, $1 billion in tobacco taxes, $76 million in fire fees, $125 million in vehicle license fee increases for state park passes and $80 million in corporate loopholes.
Without four Republican votes in the Assembly and two in the Senate — or the governor's signature — their only option may be to put on a show while setting their sights on the fight to keep program cuts to a minimum.
"The oil tax and tobacco tax poll good, we can show our constituents we put up a fight and go from there," said one Democrat who asked not to be identified.
Democrats have pared down Schwarzenegger's proposed cuts — from $16 billion to about $11.4 billion — while proposing an additional $9.7 billion in solutions that essentially mirrored Schwarzenegger's, such as accelerating withholdings on personal and corporate incomes and on independent contractors.
But the cuts could be less damaging if Democrats put up an authentic fight on taxes, said advocates for the poor and elderly.
"Democrats can say they've worked to protect them, and we appreciate the effort," said Gary Passmore, the director of the Congress of California Seniors. "But we supported a more balanced approach between new revenues and cuts. If you don't recognize we have a crisis of fairness in our tax burden, when do you go back and rethink where we are if not now?"
A $10 million program for Alzheimer services, for instance, staved off elimination, and instead faces a 40 percent reduction in the Democratic proposal. But the impacts will still be devastating, Passmore said.
Jean Ross, director of the California Budget Project, said Democrats should have considered raising tax rates on high-income earners and rescinding more tax cuts and loopholes such as Enterprise Zone credits — which the Public Policy Institute of California said was a failure in a study released last week.
"It was a missed opportunity to restore some cuts," she said, noting the $1.4 billion in cuts to University of California and California State University budgets that remain. "It's unfortunate. There is a role for more revenues than the conference committee provides."
Democrats say they've done the best they could under the extreme fiscal conditions — considering the constitutional two-thirds vote on taxes that requires Republican support.
In a letter, state Democratic Party Chairman John Burton thanked Senate Leader Darrell Steinberg, D-Sacramento, and Assembly Speaker Karen Bass, D-Los Angeles, for "pushing back against the governor's plans to eviscerate state programs that protect the poor, the elderly, people with disabilities and students," and he applauded their efforts to "share the sacrifice" with taxes.
The Democratic plan preserves the health care program for poor children, the welfare to work program, Cal Grants, and In Home Supportive Services — all of which would have been completely eliminated under Schwarzenegger's plan. Still, there will be hundreds of thousands of people who will lose services or see grants or payments slashed.
"Should (Democrats) have fought for more revenues?" asked Frank Mecca, executive director of the County Welfare Directors Association. "That's a good question. It's not clear if there was a push for fewer cuts and greater revenues if that would have ultimately proved to be successful."
The question may be academic, Mecca said, if the real battle proves to be over preserving Democrats' proposed cuts.
That's clearly the turf that Steinberg and Bass are preparing to defend.
"We have acted responsibly in paring down the size of government," Steinberg said at a news conference last week. "You don't want to raise taxes. We hear that. But we're not going to cut the safety net in the way you propose."
At the least, said Willie Pelote, deputy political director for the state American Federation of State and County Municipal Employees, Democrats should "stay on the floor for long hours and make every member show where they are in providing revenues or if they're about protecting corporate greed."
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