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Sacramento Budget Mess

Sacramento Budget Mess
A budget, on time in California it had to be too good to be true. We'll find out the latest from Sacramento and, what does the redevelopment bill mean for San Diego?

Governor Brown's Veto Letter
California Governor Jerry Brown sent this letter to state legislators on June 16, 2011 to veto the budget passed on June 15, 2011.
To view PDF files, download Acrobat Reader.

California Governor Jerry Brown has vetoed the budget Democratic lawmakers approved only yesterday. Brown says the state is in too much financial trouble to rely on what he calls gimmicks. There's turmoil in Sacramento and we'll talk about it. Meanwhile, the state legislature votes to change redevelopment agencies across the state, by forcing them to give back property taxes to school districts.



Leo McElroy, non-partisan Sacramento political consultant and contributor to Morning Edition on KPBS.

Katie Orr, KPBS Metro Reporter

Budget Veto

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This is a rush transcript created by a contractor for KPBS to improve accessibility for the deaf and hard-of-hearing. Please refer to the media file as the formal record of this interview. Opinions expressed by guests during interviews reflect the guest’s individual views and do not necessarily represent those of KPBS staff, members or its sponsors.

MAUREEN CAVANAUGH: A budget on time in California? It had to be too good to be true. This is KPBS Midday Edition. Gov. Jerry Brown has vetoed the budget Democratic lawmakers approved only yesterday. Brown says the state is in too much financial trouble to rely on what he calls gimmicks. There is turmoil in Sacramento and we will talk about it. And then if you aren't familiar with the name Gustav Stickley, stay tuned. He's got a lot to do with the look of San Diego. Then on the weekend preview a tribute to the Fab four. I'm Maureen Cavanaugh. KPBS Midday Edition is next. First the news. Gov. Jerry Brown gives a thumbs down to the proposal for a new budget and money for stadiums may now go to schools. Is that a bad thing? This is KPBS Midday Edition. I'm Maureen Cavanaugh. It's Thursday, June 16. Later this hour we'll explore a major new exhibit at the San Diego Museum of Art and get you up-to-date on the weekend preview but we start with the big news this hour out of Sacramento. A budget deal crafted and approved by majority party Democrats have submitted to Gov. Jerry Brown turns out to have been dead on arrival. Gov. Brown vetoed the budget package this morning and here's what he had to say.

GOV. JERRY BROWN (pre-recorded): Today I have vetoed the California state budget reluctantly but with clear purpose. For decades a can has been kicked down the road and that has piled up. In January I presented a balanced budget solution of deep spending cuts and a proposal to let the people of California vote as to whether to extend some taxes on a temporary basis. Unfortunately the Republicans said no they didn't want the people of California to have the right to vote. The Democrats on the other hand made some very deep cuts in the budget that I received today and there was more positive work. Unfortunately it doesn't go far enough. California is facing a fiscal crisis and very strong medicine must be taken. So I am vetoing today because I don't want to see more billions of borrowing, illegal maneuvers that are questionable and a budget that will not stand the test of time.


MAUREEN CAVANAUGH: That is Gov. Jerry Brown. Joining me now is a frequent guest on KPBS our analyst nonpartisan Sacramento political consultant, Leo McElroy. Hi Leo.

LEO McELROY: Hi, Maureen, how are you doing?

MAUREEN CAVANAUGH: It's quite a day in Sacramento and around California. In the clip from the governor he hasn't been too specific about what he doesn't like about the budget. Do you have any idea about the specific elements that led to the veto?

LEO McELROY: Yeah but we would need about an hour. There are so many holes in this thing, it's a Swiss cheese of a budget. It kicks the can down the road as the governor says by taking moves to cut funds from other programs which are under legal challenge already. He's taking money from the first five commission of state authority, being sued on that. They're going to take another billion from them they were going to take money from redevelopment agencies. (Inaudible) also threatened there although the governor would like to close those agencies. And at least eight measures that I can count on there that are absolutely faced with present or future legal challenges. There are instances where the Legislature on a majority vote raised fees. They're certainly going to be a legal challenge to that on the basis that it requires a two thirds vote to raise vehicle fees for instance, registration fees. Fees on rural homeowners for fair protection. Just a scad of programs that are faced with legal challenges. However it solved one big problem for the Legislature. They did pass a budget, however bad, however unbalanced, however full of holes it was a budget and now they qualify to get their paycheck unless comptroller John Chiang tries to invoke a claim that this really wasn't a serious budget.

MAUREEN CAVANAUGH: Right, there was much made of the fact yesterday that the budget was made on time one of the reasons speculated was because a new law says legislators don't get a paycheck unless they vote on and approve a budget but what happens with the veto? Do they start getting their paychecks even though California doesn't have a budget?

LEO McELROY: We forgot to say anything in the bill, I think we can people of California about the budget having to be approved by the California governor. The legislators did their job to pass the budget by a majority vote and therefore they have met the terms of the proposition and theoretically qualify for their paycheck no matter how bad the budget was, not matter how full of gimmicks it was. No matter how legally challenge-able it was. They passed something and it went to the governors so the paychecks will probably continue to flow

MAUREEN CAVANAUGH: This was the Democratic budget and one of the changes is that the majority party itself can now pass a budget. Was it just Democrats vote for it?

LEO McELROY: And that was also total Republican sit down thumbs down on the budget and this gave the Republicans political cover. They can now sit there and say this was not our budget so as bad as it is it's all their fault it is not our fault. Of course they didn't do anything positive, that doesn't matter. They will still get their paychecks too.

MAUREEN CAVANAUGH: Is this veto likely to create a rift between the governor and his party?

LEO McELROY: No. I don't think so, actually. I would suspect that there are members of his party that thought let's just pass this thing, the governor will undoubtedly veto because it is a terrible budget he will veto it and we get our paychecks and we have time to settle down and try to negotiate some other sort of a deal.

MAUREEN CAVANAUGH: Another thing the governor mentioned was that he brought up the fact of his idea to extend taxes in order to supply some additional funds for the budget that he wants. Was that anywhere in the budget that he was presented?

LEO McELROY: No, not at all because it was going to require a two thirds vote to the tax extension and the Republicans just sat on their hands on that one, demanded (inaudible) reforms that the governor was not prepared to go with. It was a pretty big laundry list of Republican demands and so the governor and the legislature weren't going to go with it. The Republicans didn't have to vote for it. As a result there were no votes there to extend those taxes. There are still legal professors who say the Legislature could somehow torturously pass those extensions anyway on a majority vote. But also there's legal opinions who say they couldn't.

MAUREEN CAVANAUGH: Every single time the governor speaks about the budget he talks about the tax extensions, but even the idea of coming into fruition or becoming a reality seems to get farther away. Is there a disconnect or does he have a plan that we don't know about?

LEO McELROY: He's really clear that tax extensions the problem is he is clear in the fact that they would not go into effect unless they were voted on by the people and there were polls that indicate that there is a high probability that the public would not vote for those. Certainly if they are seen as new taxes rather than as extensions the public would be unlikely to vote for them and if they wait until September for election they would count as new taxes unless they've been extended and the Republicans will not do that.

MAUREEN CAVANAUGH: The second major story of the day was about the redevelopment agencies in the vote that the Legislature made yesterday presenting a bill to the governor basically cutting redevelopment agency funds, forcing him to give some of that money to school districts around the state. Where does that stand now? Has he vetoed those bills too?

LEO McELROY: So far as I know those separate bills have not been vetoed. The budget, which included a provision taking 1.7 billion from redevelopment agencies was vetoed, but I don't think he's exercised his veto of the redevelopment. He's put himself on record pretty strongly as thinking the redevelopment agencies should simply be closed also he's unlikely to do anything sympathetic to them.

MAUREEN CAVANAUGH: Just as a sidenote, Leo, yesterday while the budget was being hammered out and voted on it was a crazy day in Sacramento. I read that a fistfight broke out.

LEO McELROY: It wasn't really a fistfight but it was a pretty hearty shove by one of the members. A Republican got up and talking about the redevelopment issue, likened that to a mafia tactics of selling protection and an Italian-American legislator got up and presented on behalf of Italian-Americans. The lawmaker who had done this against the TV show the Sopranos was his reference said that he would apologize to Italian-Americans who were not members of the Mafia and who were not extortionists and several other members resented that. There was one brief shove and the members were separated and as usual it was much more talk than action.

MAUREEN CAVANAUGH: A crazy day. What happens now? Where does it stand now?

LEO McELROY: It seems as if the Legislators are going to get their paychecks and we don't have a budget. We are back to square one and we will go back to negotiating but we go back to the budget without the threat of losing paychecks.

MAUREEN CAVANAUGH: However we have lived too long and budget negotiations in California many times and state workers sometimes get their paychecks docked and so forth. You see this considering the majority can pass the budget, do you see this going on for a longer time?

LEO McELROY: I think it will. I think it will go on for a long period of time. This was a pro forma exercise of passing a budget that was not realistic that had tremendous holes in it, tremendous legal challenges. They've done their duty to assure the paycheck, now they can go about their leisurely ways and negotiate as they have in the past way past the deadline.

MAUREEN CAVANAUGH: I want to thank you. I've been speaking to nonpartisan Sacramento political consultant Leo McElroy. Thanks for being here.

LEO McELROY: All right, Maureen, bye-bye.

MAUREEN CAVANAUGH: Like I said to the major story of the day is about the redevelopment agencies around the state. The idea is to force them to give back some of their money to local school districts. The legislature passed two bills that would have done that. As far as we know they still remain on the governor's desk. We called on the governor's office to find out if the bills were part of the package that he vetoed it. We have not heard back so it remains unclear at that hour. KPBS Metro reporter Katie Orr is just back from a news conference downtown. What did Mayor Jerry Sanders say about the potential loss of funds for development?

KATIE ORR: The mayor is outraged about the potential limitation of redevelopment as many local officials are in San Diego. The mayor has been a fan of redevelopment project. You may remember last fall he and Nathan Fletcher did what some people called a back alley deal to raise the financial cap for CCDC to basically an unlimited amount. He believes in redevelopment, thinks it has done good things for the city and as Leo said the mayor believes that the legislature simply passed the budget in order to receive their paychecks.

NEW SPEAKER: We are tired of the state trying to raid the cities. We use that money for redevelopment monies for creating jobs for creating a tax increments which helps revitalize areas we would not see downtown like it is today, you wouldn't see many of the redevelopment areas producing housing and other benefits that we see and yet the state is so single-minded in its pursuit of stealing money from cities that they simply decided to take it they really don't care what people think.

KATIE ORR: As you said it's not clear what will happen with these bills. People that I've spoken to say that these were trailer bills they were not included in the big budget bill. They haven't been to the governor's desk yet so their fate is still up in the air on that bur also the governor has been clear that he is no fan of redevelopment.

MAUREEN CAVANAUGH: So if redevelopment agencies, if they have lots of their money taken out, the property tax that comes from San Diego, what this bill would do I believe is ask redevelopment agencies, force them to give a lot of the property tax back to school districts. But what projects might that affect if they don't have the money that they thought they were going to have?

KATIE ORR: Well I spoke for some and a spokesman for the Center City development Corp. of the downtown redevelopment arm today and he was saying it would affect everything. It is very unclear. The North Embarcadero visionary plan that was depending on redevelopment money. The convention center expansion depends on that, the Chargers stadium depends on it, although the CDC says that chargers stadium is the last thing on their mind right now. Of course affordable housing depends on it. So they believe all these projects would be in jeopardy and it is not clear that projects approved after January 1 would be able to go forward. They said they were not clear on whether or not those projects were effected, meaning they would have to be out and out canceled. It is estimated that the CDC would have to give about $40 million to the San Diego unified school District is (inaudible) going forward. That would go down in coming years because it's estimated they would only have a total of $40 million would go to schools in the future. But they said that could effectively put some redevelopment agencies out of business because they cannot afford to pay them money.

MAUREEN CAVANAUGH: As you mentioned there's a number of legal questions it seems that what this bill requires and what would the effect remains really unclear. Has the city attorney's, the San Diego city attorney said anything about this?

KATIE ORR: He released a statement saying that those who were in his office would mount a legal challenge to this on the state level. Legal redevelopment agencies have said that they were going to sue. They don't believe that this is legal. The bill was rushed through the statement saying that it wasn't vetted by the legislative analyst's office at all, the independent office of the site analyzes these bills because it was rushed through at the last minute they don't think it will stand prop 22 that was passed last November prevents the state from taking local funds to fill the hole and they believe as you heard the mayor say this is just an example of that and violates the California Constitution. Of course there are people who say that redevelopment has gotten out of control. It is too big and it's not really addressing the issues that it is supposed to do which is fixing urban blight and providing affordable housing and now it is a giveaway to developers. So there are a lot of people out there that think redevelopment either if not totally eliminated needs to be reigned in and reworked. But obviously there's a lot of opposition to that idea as well.

MAUREEN CAVANAUGH: And we don't even know whether or not it has been vetoed so we will have to check back on that. I've been speaking with KPBS Metro reporter Katie Orr. Thank you, Katie.

KATIE ORR: Thank you.