LOS ANGELES - The California Assembly yesterday approved a basic budget agreement, setting the stage for a potential final flurry of budget bills over the next couple of days.
The state Senate was scheduled yesterday afternoon to consider the basic agreement. If the Senate approved the plan, it appeared the Legislature would begin working last night on so-called trailer bills, which provide the enabling authority to put all the pieces of the budget puzzle together.
On Sunday, Gov. Pete Wilson and Democratic and Republican legislative leaders announced that they had reached a compromise budget accord. In one breakthrough, the political leaders agreed to let voters decide in November whether to extend permanently a statewide temporary sales tax; surcharge.
The fate of the surcharge, which raises about $1.4 billion annually, has been the focus of a tug-of-war between Wilson, a Republican, and the Democrat-controlled Legislature.
Prior to Sunday, Wilson had said he would support a six-month extension of the surcharge past its June 30 expiration date. He said counties should decide on their own whether to impose local sales tax increases during a special election in November.
Wilson said the local tax increases could help offset his proposed $2.6 billion shift of property tax revenues from counties, cities, special districts, and redevelopment agencies. These funds would instead go to schools, thereby helping the state balance its budget for the fiscal year beginning July 1.
By contrast, a Democrat-controlled legislative budget conference committee last week voted to extend the sales tax surcharge for three years to help address a state deficit of almost $3 billion.
In the compromise unveiled Sunday, Wilson and other state leaders said they would let voters statewide decide whether to leave the surcharge in place.
Local governments would still face the $2.6 billion tax transfer under the compromise plan, but proceeds from the sales tax surcharge would be directed to the local level to help offset the loss of local revenue.
If the revenue from the surcharge instead stayed at the state level, officials observed that much of the money would have to be diverted to school purposes under a constitutional funding guarantee for education, commonly known as Proposition 98.
Details of the basic agreement, which was approved at about 5 a.m. yesterday by the Assembly - remained sketchy yesterday.
Generally, it appeared that Wilson accepted certain health and welfare cuts that were not as deep as he initially proposed in his $38.2 billion general fund budget. But Wilson was able to retain the $2.6 billion transfer of local property tax revenues envisioned in his budget; the legislative conference committee had proposed bringing that shift down t6 $1.2 billion by extending the sales tax surcharge and keeping the revenues at the state level.
The overall net effect of the $2.6 billion tax transfer could be offset if voters approve keeping the sales tax surcharge in place.
County officials have been most concerned about the loss of local tax dollars because they have little revenue-raising flexibility, and they were already worried yesterday over the need for potentially drastic steps in the event voters rejected the sales tax surcharge in November.
It was uncertain, though, if any single group could derail the general budget agreement at this point.
For one thing, some lawmakers seem hesitant to engage in another stalemate similar to the one that occurred last year, when a budget was not approved until early September.
Also, lawmakers faced a deadline to make some sort of decision on the temporary sales tax surcharge. The executive director of the state Board of Equalization cautioned last week that his agency needed time to notify retailers that the surcharge would expire on June 30. Accordingly, he said lawmakers needed to act on any extension by roughly June 20.
One rating agency official said yesterday that many questions remain, including exact details on how the local tax shift would be allocated among various counties. The budget trailer bills, which often contain much of the flesh of a budget skeleton, also will require examination if they pass, the official added.
At best California lawmakers could approve most of the final budget bills by midweek, a state observer said yesterday.
Other state officials were cautiously optimistic that a final plan will be in place in coming days, primarily on the strength of the accord between Wilson and the legislative leadership. Having that broad agreement among leaders could help to overcome broad-based opposition from individual lawmakers, they said.