*Senate Republicans block Brown's budget plan

Not a huge surprise. Democrats haven't been able to snag the few GOP senators needed for a two-thirds vote to extend taxes until a special election is held. Thing is, the extension would last a full year, so even if voters turned down the measure in September, which is a distinct possibility, the state would still be collecting taxes for another nine months - outrageous in the view of the Republican minority. They say that the $10 billion funding gap could be closed through one-time solutions, like selling state buildings or borrowing more from state mental health and preschool programs - outrageous in the view of the Democratic majority. "There are no Republican votes for the taxes," said Senator Bob Huff, vice chairman of the Budget Committee. Senate President Pro Tem Darrell Steinberg plans to keep the chamber open through the weekend; the budget deadline is June 15. Cold cuts anyone? From Bloomberg:

Controller John Chiang, a Democrat, has repeatedly warned Brown and lawmakers that California may run out of money if there's no budget in place by July 1, forcing the state to issue IOUs, as it did in 2009. That's because the state likely won't be able to go to Wall Street for short-term cash borrowing until it has a spending plan that accounts for how it will be repaid. "Without some link of the tax extension to an election, we have deep concerns about our ability to go out to the private market" to cover short-term needs, said Michael Cohen, Brown's deputy budget director. "Without that ability, then you end up back in the situation with payment deferrals and IOUs."

*Capitol Alert says that Brown is pushing a six-month tax bridge, not the 12-month extension that was turned down in the Senate..

The governor's fiscal aides believe six months of higher taxes would be enough for the state to follow through with its normal short-term cash borrowing. In such a scenario, the Legislature may not have to approve cuts that "trigger" if the ballot measure fails. "The Governor has said that he wants to extend taxes until the election," said Brown spokeswoman Elizabeth Ashford in an e-mail. "There are ongoing discussions with many different ideas going back and forth. It would be destructive to comment further at this delicate stage of negotiations."

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Mark Lacter
Mark Lacter created the LA Biz Observed blog in 2006. He posted until the day before his death on Nov. 13, 2013.
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