Democrats' budget ploy could shake up balance of power in Sacramento
Posted: 12/21/2008 12:00:00 AM PST
SACRAMENTO — One longtime Capitol observer called it the legislative equivalent of the nuclear option.
When legislative Democrats last week unveiled a risky gambit to raise billions in new revenue by exploiting a loophole in the state Constitution, it was more than just a bid to prop up the sagging general fund. The move threatened to realign the balance of power in Sacramento — and strip Republicans of their most important source of political influence, the ability to block tax increases.
"We're going to govern, with or without our Republican colleagues," new Senate President Pro Tem Darrell Steinberg warned repeatedly in recent weeks as negotiations over the state's massive, $40 billion deficit remained deadlocked.
Whether Democrats can get away with that is another matter. Their proposal attempts to do an end-run on one of the most ingrained assumptions of state governance: That any tax increase must be approved by a two-thirds majority, and thus needs at least some Republican votes.
The Democrats' complicated plan would essentially replace taxes with fees, which need only a majority vote. It would generate $18 billion, slightly more than half in new revenue.
But although the plan cleared both legislative houses on near party-line votes, it faces legal and political hurdles, including a threatened veto by Gov. Arnold Schwarzenegger. In one promising early sign for Democrats, the governor did not take issue with the tax proposal itself; instead, he said the plan does not do enough to cut spending and stimulate the economy.
If the governor eventually gets on board, taxpayer groups have promised to sue and go to the ballot to overturn the deal. Steinberg, who took over as Senate leader just this month, said the Legislature's lawyers have assured him the plan will hold up in court, but the matter is hardly clear cut.
One legal expert likened the proposal to an accountant finding clever ways to reduce a client's tax bill.
"The line between tax planning and tax evasion is often paper-thin," said Floyd Feeney, a professor at UC-Davis School of Law. "Whether this is good enough to fit into the tax planning category or is over the line is not an easy question to answer."
Tony Quinn, a Republican political analyst who has worked in and around the Legislature for four decades, predicted courts would not intervene to stop the plan. "They are very leery of getting involved in how the Legislature and governor pass laws," he said.
If courts do give the green light, the political ramifications could be sweeping. Republicans fret this would be the first of many Democratic attempts to raise new revenues by replacing taxes with fees.
"There will be tax after tax after tax," said Sen. George Runner, R-Antelope Valley. "Californians should be scared."
Steinberg has as much as conceded that Democrats will use the tactic again if it proves successful. And GOP legislators would be powerless to stop it.
Quinn said Republicans made a serious strategic mistake by not engaging with Democrats on taxes. Instead, they proposed a budget heavily dependent on spending cuts while refusing to consider tax hikes.
That prompted the Democratic majority to pursue what Quinn called "the nuclear option." If successful, it would leave Republicans powerless to push through any of the government reforms they want.
"Republicans are reaching the point," he said, "where they will not be relevant to the political process."
Indeed, when budget negotiations resume, legislative Republicans will find themselves on the outside looking in as Democrats and Schwarzenegger work to resolve their differences.
GOP legislative leaders seemed almost resigned to that fact. But they suggested at the same time that if the courts fail to step in, voters would have the last say, as they often do in California. Conservative interest groups are already gearing up for an initiative battle to invalidate the Democrats' move.
Said Senate Republican Leader Dave Cogdill: "People like the checks and balances that are in place now"
However it turns out, the Democratic proposal certainly shook up what had become a paralyzing debate in Sacramento.
"There hasn't been a really interesting idea in the budget discussions for a long time," said Phil Isenberg, a former Democratic state legislator and Sacramento mayor. "This is very interesting, and I mean that sincerely."
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