The Senate followed the Assembly today by passing a majority-vote budget, mostly along party lines, that solves the entire current deficit and includes a large reserve.  The Governor has vowed to veto the package.  CDP Chair John Burton is asking for grassroots action to force the Governor into compliance, which I consider unlikely, but it’s worth reposting some of the letter for the perspective of Burton:

Late last night, Assembly Democrats passed a spending plan that minimizes the cruel cuts advocated by the governor by raising $2 billion in new revenue. Just a few minutes ago, Senate Democrats followed suit, passing a plan that requires Big Tobacco and Big Oil to share in the state budget sacrifice.

Speaker Karen Bass, President Pro Tem Darrell Steinberg and their caucuses should be commended for standing firm against the governor’s Draconian cuts.

In order to pass the plan, legislative leaders structured it to require a majority vote. That’s because Republicans have repeatedly refused to provide the handful of votes necessary to pass the plan with two-thirds support.

Disappointingly, Gov. Arnold Schwarzenegger has vowed to veto the Democrats’ budget plan, preferring to play a game of chicken with the budget. He and Legislative Republicans would rather strip health care from nearly one million children and close 220 state parks than ask corporate special interests to pay their fair share.

Now, the onus is on the governor and Republican lawmakers to explain to Californians why they would rather drive the state over a cliff than agree to a budget with a mix of cuts and new revenue.

Please, call Governor Schwarzenegger’s office today at (916) 445-2841 or (213) 897-0322. Ask the governor to sign this budget plan, which minimizes the cuts by sharing the sacrifice.

Echoing the theme, Sen. Steinberg said today, “Shutting down the govt is not the answer to solving CA’s problems.”  He also called on the Governor to “release the Senate GOP” and allow for a bipartisan vote on stop-gap measures, the same that passed the Assembly, to allow for continued negotiations after the June 30 deadline.

What is now at risk, in addition to the distribution of IOUs, are $3 billion in savings from the current fiscal year, savings that will essentially be lost with no deal by midnight tomorrow.

In a nutshell: the deficit solutions pitched by both Governor Schwarzenegger and Democratic legislators rely on a spending reduction of about $3.3 billion in the 2008-2009 fiscal year that ends on June 30.

That’s tomorrow at midnight. Once the new fiscal year begins, those savings are effectively gone.

$3 billion of those savings would come from K-12 and higher education. They are not popular spending cutbacks in education circles, but reflect the larger ‘all options are bad’ narrative that you’ve heard in all circles for the past several weeks. The final $300 million or so of current year savings come from a plan to transfer money away from local redevlopment agencies.

Budget staffers say it matters which budget year to which these spending reductions are attributed (2008-09 vs. 2009-10) — in large part because additional cutbacks in 2009-10 could complicate the already delicate issue of eligibility for federal stimulus dollars.

Immediate savings are important for another reason: they provide some breathing room for the cash-depleted state coffers and might lower or eliminate the need for Controller John Chiang to issue IOUs by week’s end.

With no stopgap, essentially lawmakers will have to find an additional $3.3 billion in the 2009-10 FY budget, on top of everything they’re already doing.  So the Governor not only threatens a government shutdown with his intransigence, he wastes the state an additional $3 billion dollars, in effect.

California’s senior Senator has heard the talk, has heard the voices of her constituents, and basically doesn’t care.

“We are getting to the point if people aren’t going to respond to the patience and openness of Senator Baucus, we should begin to make a different plan,” said Andrew Stern, president of the 2 million-member SEIU.

Stern said his organization issued a release chastising Feinstein last week, because she should “put her foot on the gas, not the brake” on health reform.

“The gas pedal to go where?” Feinstein replied, explaining she has questions about how a broad expansion of health coverage will be paid for.

“I do not think this is helpful. It doesn’t move me one whit,” she said. “They are spending a lot of money on something that is not productive.”

What we have here is a difference of opinion over the nature of representative democracy.  Are politicians elected to reflect the will of their constituents, or are they elected to provide their own enlightened opinion on public affairs and public policy?  Sen. Feinstein has already given her perspective before.  She acknowledged that public opinion in California was sharply against authorizing the war in Iraq, but she voted for it anyway, arguing that she knew things her constituents didn’t know (namely, hundreds of lies told by the Bush Administration).  On health care, she has the same perspective; we, the citizens of California, had an “accountability moment” in 2006, Feinstein was elected, and now we can all STFU as she applies her own reasoning and belief on health care and other topics.

Needless to say, I don’t agree with her perspective.  It sounds to me like something that a member of the House of Lords would say rather than a politician in this country.  Not to mention the fact that it cuts completely against the trend of participatory democracy that has energized the Democratic side of the aisle since Howard Dean’s campaign in 2003-04.  Dianne Feinstein thinks your role as a citizen is to vote for her and then keep quiet for six years and she bequeaths her wisdom.

If you don’t agree with her, contact her office.  I’m sure her staff will file that away somewhere.

In case you weren’t following along in the middle of the night, Assembly Democrats passed a majority vote budget that solves the entire $24 billion dollar deficit, as the Governor requested.  Through a maneuver found legal and Constitutional by the nonpartisan Legislative Analyst, the Assembly added a $1.50 per pack cigarette tax, a 9.9% oil severance tax on producers, and a $15 surcharge in the vehicle license fee to fund state parks, in addition to the homeowner insurance fee to fund emergency response systems, which was included in the Governor’s initial budget revision.  The new taxes amount to $2 billion of the $24 billion solution.  The majority of actions in this alternative budget remain cuts.  And according to Noreen Evans, the Senate will take up this majority-vote budget later today.

The majority approach was not our first choice. We spent weeks in Conference Committee pursuing a bipartisan budget solution. But we have hit a wall. And, we cannot afford to wait any longer. We are 48 hours away from the state plunging into financial ruin. The Legislature has a duty to act with or without Republicans for the good of California […]

As the old saying goes: lead, follow, or get out of the way. By voting against cuts and revenues tonight, the basis of any budget, Republicans ran from their responsibility to govern.

We gave legislative Republicans a chance to lead with us through a month of public hearings in the Conference Committee. That was the opportunity to present alternative budget proposals. Republicans squandered this opportunity.

If the Senate passes this and puts it on the Governor’s desk within 24 hours of the deadline to stop the state from issuing IOUs, he will have a simple choice to make.  Will he shut down the government because he failed to get everything he wanted from the legislature?  I suspect he will, actually.  And indeed, he has issued a statement to this effect, saying that he wants a “budget that solves our entire deficit without raising taxes.”

That’s the short-term state of affairs.  Going forward, the process itself is fundamentally broken, a fact that the state’s political media class has decided to notice in a boomlet of “How to fix California” articles over the past week.  I look forward to those debates.  If the Governor vetoes this budget, he will be shutting down the government and forestalling the effort to finally reform the process.

…more from the Governor, as he vows to veto this bill, calling it “illegal,” which is pretty far.  It is worth noting that, since most of this budget revision would not take effect for 90 days because none of them received a 2/3 vote, it is true that such a solution would not completely impact the immediate cash-flow problem.  Although, you could argue that putting such a solution in place would allow the state to borrow from investors.

I certainly don’t remember this hand being tipped anywhere prior to tonight, but there’s some activity going on in the Assembly with the budget.  Democrats appear poised to pass a majority-vote solution on about $2 billion or so in taxes, using some tax swaps and fee increases to pass the taxes on oil severance and tobacco, among other things.  Added to the other $21.5 billion that could conceivably be passed under a majority vote, that would fulfill the Governor’s requirement that all $24 billion be included in whatever solution gets reached.  The expectation would be that the Governor veto this majority-vote fee increase.  However, with the IOUs at the ready and the tax increases so small relative to the total budget, one wonders if Schwarzenegger can get away with such a veto.  If on the off chance that Arnold does sign this budget, the whole thing would probably head to the courts.

It’s unclear if the Senate will follow suit tonight.  And all of this is happening in the midst of negotiating sessions with the Governor, called a “stick-and-carrot approach” by the SacBee (I always thought it was carrot and stick, but there you are).  The Governor, for his part, continues inserting unrelated items into the deal, like pension changes for state employees that even he acknowledges would not impact the current budget year.

…for those late to the party, a bit of an explainer on how the majority vote process works:

Sunday night’s package included a 9.9 percent tax on oil production, a $1.50-per-package tax on cigarettes, and a $15 per vehicle registration fee.

While tax hikes normally require a two-thirds’ approval, Democrats argued that by eliminating an 18-cent-per-gallon excusive tax on gasoline, the net revenue to the state becomes zero and thus doesn’t represent a tax hike. Sunday’s bills would then replace the excise tax with an equivalent fee, which Democrats argue does not require a two-thirds’ vote.

Perfectly legal, according to the nonpartisan Legislative Counsel.

…The Assembly passed the tax increase 44-30, with 6 not voting.  I’m assuming that the 30 no votes were the 29 Republicans and independent Juan Arambula, who announced that he would not support this part of the budget bill earlier in the night.  The Senate has adjourned but the Assembly appears to be plowing through their entire budget.  Interesting.

…You can watch the Assembly proceedings on Cal Channel, by the way.

The Governor’s shock-doctrine approach to the current budget crisis became very apparent this week, as he engineered rejections of bipartisan stop-gap measures and solutions that would cover $21.5 billion of a $24 billion dollar deficit.  He clearly would rather essentially shut down the state government than participate in the normal political process of compromise and negotiation.  This is his chance to be a dictator, and he is banking on the desire of Democrats not to watch the lights go out in Sacramento to push through his agenda.

Gov. Arnold Schwarzenegger, seeking to conquer what could be the last budget crisis of his tenure, is engaged in a high-stakes negotiating strategy with lawmakers that could force him to preside over a meltdown of state government.

As legislators have scrambled to stop the state from postponing payment of its bills and issuing IOUs starting next week, the governor has vowed to veto any measure that fails to close the state’s entire $24-billion deficit […]

The governor readily admits that he sees the crisis as a chance to make big changes to government — to “reform the system,” he said Friday — with proposals he has struggled to advance in the past.

Among them: reorganizing state bureaucracy, eliminating patronage boards and curbing fraud in social services that Democrats have traditionally protected. The governor also would like to move past the budget crisis to reach a deal on California’s water problems that has so far eluded him.

By agreeing to a partial budget solution such as one the Assembly approved Thursday, the governor would lose leverage to accomplish many of those things. Without the pressure of imminent insolvency, Democrats might be less likely to agree to his demands.

This is a dangerous strategy – not for Schwarzenegger himself, but for the hundreds of thousands of Californians who depend on a functioning state government every day.  Contrary to popular belief, the recipients of these IOUs would not be debtholders or vendors, but the most vulnerable people in society – families on welfare, the elderly, the blind, the disabled, and poor college students with state aid grants.  These are the pawns in the game Arnold has been playing.

The Governor has brought back to the table long-sought goals that he wishes to implement over the protests of a majority of the legislature.  Some of them are described in his weekly radio address.  The LA Times has a good synopsis here:

Back on the governor’s demand list is a plan to cut the pensions received by state workers, which unions have stymied before but which he thinks may gain traction with a cash-strapped public. Schwarzenegger also views this as an ideal time to once again target growth and fraud in the state’s multibillion-dollar in-home healthcare program, which employs 300,000 unionized workers.

His agenda includes anti-fraud efforts and tougher enrollment requirements for the state’s food stamp programs, efforts that advocates for the poor say are designed to discourage people from participating. In his radio address, he said the state and counties could get by with a “fraction” of the 27,000 workers now handling eligibility for Medi-Cal and food stamps by using Web-based enrollment.

Schwarzenegger has revived plans to allow local school districts to contract out for services like school bus transportation and lawn maintenance, a proposal favored by the GOP but despised by school employee unions.

Arnold has basically taken the lesson of the GOP, holding the budget hostage for pet projects like privatization and purging state services rolls of the dependent (I’m sure a lot of the desperately poor have Web access to fill out their forms).

One wonders if this will finally color the local coverage of the Governor, which throughout his tenure has been fawning, even in the face of near-historic unpopularity.  Some reporters seem to be coming around.

The Department of Health and Human Services released a report on the current state of health care in California, and the numbers are striking.  It also can help us understand a bit about our budget woes.

19% of all Californians are uninsured, and of those, 71% are in families with at least one full-time worker.  Employer-based coverage has dipped to just 54%, meaning the rest have to either go to the individual insurance market, qualify for a public coverage plan like Medicare or Medicaid, or go without.  The top two insurance providers in California account for 44% of the health insurance market, and such a duopoly make it easy to just jack up rates year over year.  The average family premium has increased 114 percent since 2000.  And this causes families to drop coverage due to a lack of affordability.  This nugget appears in the report:

“California businesses and families shoulder a hidden health tax of roughly $1,400 per year on premiums as a direct result of subsidizing the costs of the uninsured.”

But one other entity suffers from that hidden tax: the state budget.  Health care spending by the state has increased well above the CPI, and Medicare and Medi-Cal spending have ballooned because the cost of health care has ballooned.  Growing ranks of the uninsured and unemployed increase the numbers eligible for coverage under state programs, and one political party, at least, would rather offer those services instead of watching people die in the street.  We hear at the federal level that health reform is entitlement reform; that’s just as true at the state level, as bending the cost curve will put state budgets in a better position for the future.

All of this adds up to create a sense of urgency in doing something about overhauling the broken health care system this year.  This could have been the narrative that Dianne Feinstein brought forward in public statements, not hand-wringing about the difficulty of getting something done in Washington.

The past couple days on Calitics, we’ve had Jason Rosenbaum detail grassroots efforts over Dianne Feinstein’s confusing comments about and reticence to sign on to comprehensive health care reform.  First he highlighted Health Care for America Now’s petition urging Feinstein to get on board with health care reform.  Then he deconstructed Feinstein’s official statement on health care, which was unsatisfactory.

Feinstein is an important part of this debate.  She doesn’t sit on any of the relevant committees, but she has cachet in Washington, and with real health care reform coming down to just a handful of votes, her views will be crucial to the debate going forward.  At a time when 85 percent of respondents to a Field Poll support a public health insurance option to compete with private industry, Feinstein must not be allowed to ignore the will of her constituents, as she did in her vote to authorize the war in Iraq.

Fortunately, practically every progressive organization in the state and even the country is hammering Feinstein for her naysaying, and demanding that she stay true to the principles she laid out, including controlling costs, expanding coverage and stopping the bad practices of the insurance industry, by endorsing a public health insurance option as part of any reform package.  In addition to Health Care For America Now, MoveOn created an ad and drove phone calls to Feinstein’s office.  Today CREDO Mobile joined the fray with a petition asking her to support the public plan, and the return receipt after you sign offers a one-click retweet of a Twitter message to spread the word, which is innovative.  The Courage Campaign also has a letter calling on DiFi to stand with the President and support a public option.  Courage Campaign also offers one-click forwarding of the message to Twitter, Facebook and MySpace (MySpace still exists?).

Health care reform is the make-or-break issue of this year, and Dianne Feinstein needs to hear from every one of her constituents about it.

(In addition, Firedoglake is whipping the public option in the House, with the goal of finding 40 Democrats who will commit to opposing any bill that DOESN’T have a strong public option contained in it.  Presuming that all Republicans will vote against any health care reform, this would have the effect of changing the incentives in Congress, currently tilted toward what the most conservative elements of the Democratic coalition would accept, and move them instead toward what the liberal base of the coalition will demand in exchange for their vote.  There are lots of California Democratic House members on their list, so head over and get to the phones!)

So the Senate Republicans voted en masse against $11 billion in cuts as part of the budget proposal put forward by the Democrats today.  Lou Correa and Leland Yee voted no as well, and the final vote was 22-16.  Technically, I believe the bill could go to the Assembly, and after passage to the Governor, but Arnold has vowed a veto, so that’s probably out.  Meanwhile, California will start to use the reserve fund to pay bills for the next week or so, and failing a solution after that, will resort to IOUs, which basically was the deal back in February as well.  Yes, the Democratic proposal has its share of gimmickry, but no more than the Governor’s own plan, and considering the Yacht Party refuses to write a plan, ALL OF THEIRS is gimmickry, as is their entire ideology.  But the Yacht Party smells blood in the water, the Democrats have pulled their tax proposals off the table, and the future is incredibly uncertain.  

I cannot disagree with Greg Lucas’ analysis.

Examining the Senate’s budgetary actions of June 24 from a political rather than a policy perspective, the majority party Democrats may not have achieved their objectives […]

Judging from the remarks of Senate President Pro Tempore Darrell Steinberg, a Sacramento Democrat, the intent of the exercise was to illustrate that Democrats are unwilling to cut as deeply into social programs as Gov. Arnold Schwarzenegger and to portray Republican lawmakers as obstructionist or hypocritical or both for not backing the cuts embraced by Democrats.

“Democrats are asking Republicans to vote for billions of dollars in cuts and apparently your answer today is ‘no,’ Steinberg said. “Why won’t you cut? Why won’t you cut?” […]

In a purely political sense, the “bad” vote is the one cast by Democrats, ostensibly champions of public education, who – if the February budget they backed is included – have chosen to reduce state support of schools by more than $12 billion over a two-year period.

Republicans can portray their “no” vote as a refusal to cut nearly $5 billion more from public schools.

Perhaps a more effective illustration of support for what Democrats call the safety net would be to bring several of the GOP governor’s more draconian proposals to a vote.

It seems unlikely Schwarzenegger’s call to eliminate California’s welfare program would garner the votes necessary for passage. Nor would the governor’s proposal to end state grants to lower-income high school students to help them attend college.

After rejecting those and possibly other gubernatorial proposals then a vote on the more modest – more humane – measure with $11 billion in cuts might more satisfactorily frame the issue.

I would argue that making these “symbolic” votes doesn’t do a ton of good unless you’re willing to use them in the context of the 2010 campaign (and I don’t remember votes coming into play in key districts in 2008) or in a coordinated and widespread media campaign immediately.  To the latter point, we don’t have any such media in California.  It’s a good argument in search of a broadcaster, and that goes for Lucas’ alternative solution.

The real problem is that Democrats don’t appear to have an endgame strategy, and haven’t for years.  The words “two-thirds majority” hasn’t exited anyone’s lips in quite a while.  This is a process problem, and only a process solution will suffice, and teachable moments like these have been wasted for 30 years.  

In the upside-down world of the California budget mess, the Senate President Pro Tem is now criticizing Republicans for their refusal to vote for cuts.

Senate Leader Darrell Steinberg wants to put Republicans on record today on two political questions: whether they can accept $11.4 billion in cuts that Democrats are proposing, and whether they will vote on $2 billion in new taxes.

On taxes, Steinberg conceded he is unlikely to win a single Republican vote when the Senate takes up the Democrats’ $23.3 billion deficit reduction plan. But that, he said, shouldn’t stop them from supporting his package of cuts, which will be voted on separately.

“If they’re going to stand on the argument that cuts are not deep enough and thereby not vote for $11 billion in cuts, then we have some issues,” Steinberg said at a news briefing next to his Capitol office. “It’s interesting. I’m getting a sense that Republicans are getting shy about voting for cuts. That would be an odd headline: Democrats urging Republicans to vote for cuts.”

Actually, it’s not an odd headline.  It’s the inevitable consequence of a broken political system where you need a simple majority to make cuts and a 2/3 majority to raise taxes.  Period.  

In this case, Steinberg can pass the whole budget, save $2 billion in oil and cigarette taxes, by majority vote, because this is not a budget enactment, but a revision.  If he doesn’t muster 2/3 for the cuts, however, the revision will be delayed 90 days, reducing the effectiveness of the cuts by roughly 1/4, and forcing additional solutions to fill the deficit later.  Even when mostly cuts are on the table, Republicans are using the leverage of undemocratic supermajorities to force more cuts.

Here’s Zed Hollingsworth playing dumb that all he wants is a comprehensive solution.

“We’re willing to vote for the cuts that provide for a complete solution,” said Republican leader Dennis Hollingsworth, R-Temecula. “We’re not willing to vote for a partial solution that has us coming back in the spring having to find more revenues when another calamity hits. We’re not interested in political gamesmanship.”

No, the Yacht Party would NEVER be interested in political gamesmanship, perish the thought.  They’d never want to try to send the state into bankruptcy to make a political point or anything.  By the way, Zed, news flash: you’ll be back in the spring.  The projections from the Legislative Analyst have consistently fallen short of reality, and no matter how big a budget reserve gets baked into this new budget, you can bet dollars to donuts it won’t be enough, especially considering the potentially accelerated Depression that additional cuts to the social services net will force.  The Anderson Forecast estimates 64,000 government jobs lost from this round of budget cuts.  Even in Dan Walters’ world, that’s a significant chunk.

My problem with the Democrats on this is mainly their insistence on working within a broken system.  They miss every opportunity to put the failed governmental structure on trial.  Something as absurd as Republicans voting against program cuts – to ensure MORE program cuts – defies belief without an explanation of how it’s a symbol for a bad process that must be fixed.  The goal of this budget, which was never going to be pretty regardless of the May 19 election, should have been to heighten that reality.