The Issue: California Governor Arnold Schwarzenegger explained in a press conference today that he vetoed the majority budget proposal in order to bring Republicans back to the negotiating table with Democrats.  His hope is that both sides will be willing to make concessions in order to reach a budget solution before the state runs out of cash next month and 100,000 California public employees are laid off February 1st.  Despite his optimism, the Governor has an uphill battle ahead of him, and it is likely that the layoffs will go as scheduled and the state will run out of cash.

Read the Governor’s Budget Proposal Here.

Read the Governor’s Veto Letter to Democrats Here.

The Governor certainly made a strong statement Tuesday by immediately vetoing the majority budget proposal produced by legislative Democrats last month and by asking party leaders to meet him in the ideological middle to negotiate.  The Governor also spoke in a press conference today of the “hope” he has that the Big 5 leadership will come to some agreement.  By forcing focus on next year’s budget Governor Schwarzenegger is looking forward into the year to come, rather than trying to settle last years problems.

[youtube=http://www.youtube.com/watch?v=1MLqlsVqkao]

Lawmakers are unlikely to come together

Just as was predicted would happen last November with the Governor’s 3 week post-election emergency session, the legislature isn’t going to come together and negotiate a solution to this problem.  The main reason– partisan ideology

Let’s start with the Democrats.  They are unlikely to consider serious cuts because their ideology (and special interest backing) supports public employee benefits and safety net services.  Conceding anything in this budget would be losing the budget battle.  Their campaign promises normally involve the preservation or improvement of healthcare and education, usually through budget maintenance or augmentation.  Voting for cuts to these budgets would create a political arsenal to challengers in their primaries.

The Republicans aren’t likely to shift either.  Their ideology supports limiting the waste, fraud and abuse that coincides with big government rather than throwing more money at the state’s problems through increased taxes, fees and fines.  If 100,000 workers were laid off, it would help their effort.  The result would be a reduction in the size of government, and the need to continue to meet the needs of the state.  Agencies would be required to run more efficiently and at less cost under those circumstances.  If Republicans voted for tax increases, they will also be threatened by challengers during the primary.

California will run out of cash

The situation is Deja Vu.  Just 2 months ago the former legislature was called back to Sacramento to solve the budget crisis and they stayed in their political corners and waited for the other side to flinch.  Nobody did anything and the budget crisis continued.  The same thing is going to happen this January.  Big 5 meetings may resume, but Minority Leader Dave Cogdill is probably not interested in talking about a sales tax increase and Assembly Speaker Karen Bass hasn’t moved on the Governor’s stimulus package particulars.

Arnold is smart.  By packaging the problem into the 2009-2010 budget, he can essentially fix the crisis through June 2010.  If he passed the majority budget package, he would still have to pass a budget bill by June 2009.  He is leveraging the impending cash crunch into passing a balanced budget for the next 18 months.  His idea is risky.  If the legislators come together and negotiate soon, they will be free of budget talks for more than a year.  If they cannot come up with a compromise, the state starts closing the doors to certain agencies.

Good Luck Governor.