The legislative budget committee working on closing the deficit responded to Governor Schwarzenegger’s demands for “efficiency” in state government by cutting his own staff.  This is quite an opening salvo, and basically a giant middle finger in the Governor’s face.  And both sides of the aisle were all too happy to do it.

A legislative budget committee voted unanimously Wednesday to eliminate state agencies altogether, taking dead aim at an administrative layer of gubernatorial bureaucracy that oversees most of the state’s departments.

The 10-member panel — six Democrats and four Republicans — also voted to eliminate the Office of the Secretary of Education, which lawmakers said is unnecessary because the state already has an elected Superintendent of Public Instruction and a State Board of Education.

Gov. Arnold Schwarzenegger recommended last month that lawmakers consolidate more than a dozen boards and commissions to save $50 million. Schwarzenegger also began laying off 5,000 rank-and-file state workers.The Legislature’s move Wednesday appeared to be a sharp retort directed at higher-paid administrative appointees who oversee the departments that provide direct state services.

I really like what they did with respect to the Integrated Waste Management Board, which costs the state no money at all.

Schwarzenegger told lawmakers Tuesday that they should eliminate the Integrated Waste Management Board as a first matter of course before making any other cuts. The board would save the state no general fund dollars, but it has become an easy target because it contains ex-legislators who earn six-figure salaries while serving on the board.

The budget conference committee on Tuesday instead recommended that the state eliminate the Department of Conservation and the Department of Toxics Control while moving their functions to the Integrated Waste Management Board. The committee also recommended that the Integrated Waste Management Board members become part-time and take reduced pay.

The Governor’s spokesman Aaron McLear smiled through gritted teeth in response to all this, saying that he’s “thrilled” the legislature is joining the effort to make government more efficient, but saying he would not support eliminating any of his OWN authority, of course.  He would only support eliminating the Secretary of Education, for example, if the Department of Education (now under the State Superintendent of Public Instruction) were moved into the executive branch.

None of this means that the Legislature will suddenly get religion and reject all of Arnold’s bad cuts.  The Obama Administration okayed $6 billion in education cuts without threatening stimulus funding, and you can bet the Governor will take him up on the offer.  And Democratic leaders, at least, appear in agreement on a number of cuts.

But this is the first example of the Legislature really pushing back at the Governor, and letting him know he doesn’t rule California by fiat, nor does he get to unilaterally decide to run it into the ground.  In addition, the more public disclosure of the billions in corporate tax cuts in recent budget deals while the programs for the poor get slashed brings a disconnect to the process on which perhaps some progressive lawmakers can capitalize.

The tax loopholes made it through the Legislature with no public hearings and little analysis of the effect, said Jean Ross, executive director for the California Budget Project, a research group that studies the effects of policies on the poor.

“The problem with dark-of-night deals is that you never get a chance to get a debate over value choices,” she said. “These three tax breaks represent a reduction of one-third the income taxes paid by California corporations…. They really represent a stark contrast in values and what kind of future we want to see for Californians.”

The tax breaks will cost the state $640 million for the rest of this fiscal year and for the 2010-11 budget year as lawmakers search for ways to close a $24.3 billion deficit, according to Ross’s report, “To Have and Have Not.” By the time they are fully implemented in 2014-15, the tax breaks could cost nearly $2.5 billion a year, she said.

Corporations are LYING, by the way, when they say that this makes the state more competitive.  See this paper or this one showing that state enactments have had little effect on economic development.  Big business simply wants to lighten their tax burden.

The legislative revolt against Schwarzenegger could be directed into sensible options for closing the budget gap, like repealing the corporate tax cuts, restoring the Reagan/Wilson tax brackets in between $47,500 and $1,000,000 imposing an oil severance tax, extending the sales tax to services while lowering the overall percentage, boosting enforcement of tax cheats, and more.  Right now, we have to settle for signals.  And this is a particularly good one.