SACRAMENTO -- Nearly two weeks after being rebuked on their first try, Democrats will vote on a budget Tuesday that Gov. Jerry Brown is sure to sign this time.
Brown and the two legislative leaders, Senate President Pro Tem Darrell Steinberg, D-Sacramento, and Assembly Speaker John Perez, D-Los Angeles, announced an agreement Monday on a budget that closes a $9.6 billion deficit with $4 billion in newly projected revenues and more cuts.
After monthslong talks with a handful of Republicans proved fruitless, Brown is ditching his plan for a special election on taxes he had hoped to extend before they expire Thursday. Instead, he said he will push for an initiative during the November 2012 presidential election, precisely when many Democrats and their labor allies had said would offer more ideal conditions to win on taxes.
"We've come to some very important conclusions after a series of tough talks," Brown said in a news conference in his office with Steinberg and Perez at his side.
"It's a good budget, but it's not the budget I started with in January and that Democratic leadership wanted -- and that was a budget that had revenues," Brown said. "We still have our wall of debt hanging out there. We still have work to do, and given the fact that so far I can't get any Republican support ... we're going to have to look very seriously at an initiative to generate the revenue to create economic stability."
If the new revenues don't materialize by early next year, a trigger would automatically force $2.5 billion in further cuts to universities, welfare, and schools, said budget staffers and finance officials in a briefing.
The budget is also premised on $2.8 billion in deferrals to K-12 schools and community colleges and $1.7 billion in a controversial plan to extract funds from redevelopment agencies. The University of California and California State University would be cut by another $150 million each, as would state courts. Another $650 million in new revenues would come from enforcement of sales taxes collected by online merchants, rural fire fees, and a $12 car registration fee.
"This budget is the most austere fiscal blueprint California has seen in more than a generation," Steinberg said.
If both houses approve the deal Tuesday and Brown signs it immediately, as is expected, legislators would begin to receive their paychecks for the first time since June 15 -- a factor that undoubtedly hastened the deal.
Controller John Chiang, who ruled legislators could not be paid because the constitution requires an on-time, balanced budget, has said the governor's finance department will have final say on whether it is balanced.
Brown said a text message he received Sunday night from one of the Republicans convinced him to finally drop his hoped-for special election on tax extensions. Republicans had sought pension and regulatory rollbacks, as well as a spending cap, and have blamed public employee labor unions for blocking a deal. But Brown said such was not the case.
"At the end of the day, there was just not a willingness to sign on to extensions, no matter what we did," Brown said. "I thought we were getting close, but as I look back on it, there is an almost religious reluctance to ever deal with the state budget in a way that requires new revenues."
Steinberg added: "I'm a little tired of talking about the gang that chooses not to govern. They've had every opportunity to choose to govern in a fair, balanced and responsible way for the last six months."
Perez said Republicans "stonewalled the process for months," running out the clock so Democrats could not have a special election on extensions this year.
The four Republicans who had been in talks with Brown -- Sens. Tom Harman, R-Huntington Beach; Anthony Cannella, R-Ceres; Bill Emmerson, R-Hemet; and Tom Berryhill, R-Stockton -- released a joint statement criticizing Brown for allowing unions to block a deal.
"We are deeply disappointed that yet again the governor and legislative Democrats have capitulated to those fighting to preserve the status quo," they said.
Senate Leader Bob Dutton, R-Rancho Cucamonga, said the budget does "nothing to change government as usual.
"The Democrats have said no to all of the Republican reforms that Californians are demanding, including pension reform, a spending cap and job creation," Dutton said.
Assembly GOP Leader Connie Conway, R-Visalia, said Republicans did their job by refusing to agree to tax extensions.
"We honored the commitment we made to the people of California to stay out of their wallets," Conway said.
In all, the budget for the 2011-2012 fiscal year, which begins Friday, will have cut $14.6 billion from a $26.5 billion deficit. Another $7.9 billion in other solutions, such as revenue transfers between agencies, $672 million in special fund revenues, and $1.9 billion in revenues were all counted toward closing the deficit.
The state still faces an ongoing $5 billion structural deficit that Brown said must be resolved with new revenues.
The state would have to make additional cuts if the expected $4 billion does not materialize. But it would be done in two tiers, depending on how much revenue comes in:
Tier 1: About $500 million in cuts would be imposed if the additonal revenues are between $2 billion and $3 billion. University of California, California State University, and the Department of Corrections each would take $100 million hits; Health and Human Services would get cut by $200 million.
Tier 2: The state would have to make $2 billion in cuts if the revenues come in under $2 billion. Of those cuts, schools would take a $1.5 billion hit, an equivalent of seven fewer classroom days. The other $500 million in cuts in Tier 1 would also be made.
No cuts would be made if the state gets between $3 billion and $4 billion. The balance would be pushed into the 2012-13 budget year.