CA lawmakers take up competing budget plans

SACRAMENTO, Calif. /*California*/ is two months into its 2010-11 fiscal year and still has no budget. Payments to schools and counties are being deferred, while some health clinics that serve Medi-Cal patients are struggling to pay their bills.

The Democrats who control the Assembly and Senate called for votes Tuesday on two different visions of how the state's new budget should look - one by their party and one by /*Republicans*/.

Neither option was expected to get the two-thirds vote needed to pass because the parties are at odds over the fix: Democrats want a combination of spending cuts and tax increases, while Republicans want only cuts.

Senate President Pro Tem Darrell Steinberg, D-Sacramento, said he hopes the votes - even if unsuccessful - would set the stage for serious negotiations in the weeks ahead.

The debate, he said, would be over "whether we are going to continue to invest in the institutions that helped make California great, or whether we are going to continue down a path of disinvesting in what made California great. There are choices here."

Among other steps, /*Democrats*/ want to lower the state sales tax while increasing the vehicle license fee and personal income tax. Because state income taxes and vehicle fees can be deducted from federal taxes, Democrats say Californians would actually pay less in taxes.

They also want to delay a series of corporate tax cuts and credits given last year, although the provisions were not part of the budget package Democrats presented Tuesday.

Republicans appeared in no mood to talk about higher taxes or fees. They presented a budget that relied on roughly the same level of spending that Republican Gov. Arnold Schwarzenegger proposed in May - about $84 billion.

Republicans want drastic cut, including elimination of California's welfare-to-work program. That would affect 1.4 million people, two-thirds of them children.

Senate Minority Leader Dennis Hollingsworth, R-Murrieta, said the Republican budget reflected economic reality in a state that continues to be pummeled by the recession, with an unemployment rate that has persisted above 12 percent for months.

California families and businesses cannot afford higher taxes after lawmakers and the governor agreed to temporary increases in the sales tax, personal income tax and vehicle fee last year, he said.

"What family in California is not making due with less in these times?" he asked.

Hollingsworth acknowledged the Republican budget proposal was tough but necessary.

"It spends what we have and no more, and it doesn't ask the people of California to spend more because we can't get our fiscal house in order," he told his colleagues as he opened debate on the competing proposals.

The debates in the Senate and Assembly came on the last day of the regular legislative session.

A handful of Republican votes were needed in each house to reach the two-thirds vote threshold needed for passage. Gov. Arnold Schwarzenegger has said he will not sign a budget unless lawmakers also agree to his separate demands for pension and tax reforms.

The budget proposal released in May by the governor called for general fund spending of $83.4 billion for the new fiscal year. The administration said that would bring government spending to 1998 levels after adjusting for population and inflation.

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