However, by calling $9.3 billion in taxes, fees, Democrats hope the get around the State Constituion and pass them with a simple majority vote.
Here is the press release from Senate President pro Tem Darrell Steinberg:
Senate Democrats to Vote Tonight on Majority Vote Budget Plan
(SACRAMENTO) The State Senate will take up an $18 billion majority vote budget deficit reduction plan coupled with economic stimulus proposals Wednesday evening.
Specifically, the proposal increases general fund revenues by $9.3 billion, enacts $7.3 billion in cuts and finds $1.5 billion in other solutions.
Senate President pro Tem Darrell Steinberg and Assembly Speaker Karen Bass announced the new Democratic proposal today.
“Desperate times don’t call for desperate measures; desperate times call for creative thinking,” Steinberg said. “As the majority party, Democrats are responsible for governing the state – by solving $18 billion of the budget deficit we are showing Californians that we take that responsibility seriously.”
Senate session is scheduled for 5 p.m.
The plan is as follows:
The Democrats’ plan eliminates gasoline sales and excise taxes used for transportation purposes and replacing those taxes with a mix of taxes (sales, oil severance and personal income surcharge) that will be used to bolster the general fund. This action will bring $5.7 billion into the general fund.
To replace the transportation dollars, the Democratic plan institutes a “user fee” of 39 cents for gasoline consumption in California. The new fee would increase the amount of funds for the state highway account by $500 million annually and for local streets and roads by $643 million annually. In addition, the fee will be indexed o adjust with inflation. Because it is a user fee, the revenues have to be used or transportation purposes.
In addition, the Democratic plan reworks the “triple flip” enacted in 2004. The “triple flip” increased the state sales tax by a quarter cent, reduced local sales tax by a quarter cent and shifted property taxes from schools to local governments to make up for loss in local sales tax money. The state general fund backfilled schools for the loss of property tax money.
The Democratic proposal ends the local quarter cent local sales tax reduction, eliminating the need to shift property tax from schools to local governments, thereby ending the general fund obligation to backfill school funding. The result is an additional $1.5 billion to the general fund.
Additionally, the Democratic plan establishes new 3 percent income tax withholding requirements for independent contractors. Specifically, the plan requires businesses to withhold 3 percent of payments they make to independent contractors exceeding $600 each year, relieving businesses from having to file 1099 forms. This action generates $2 billion for 2009-10.
Current Year Reductions. Reduces Proposition 98 spending by the $2.5 billion level proposed y the Governor. However, this package of reductions does not follow the Governor’s proposal to cut school district revenue limits, and instead targets pecific programs that mitigate direct impacts on classroom instruction.
Settle-Up Solutions. Adopts a variation of the LAO’s proposal to count a portion of current year spending as “settle-up” dollars rather than Proposition 98 dollars. This does not reduce current year education spending, but does provide additional Proposition 98 flexibility in the budget year.
CSU and UC Reductions. Adopts the Governor’s proposal to cut $132 million from the UC and the CSU.
Health and Human Services Solutions:
SSI/SSP. Reduces SSI/SSP grants in 2009 back to the 2008 level and suspends the budget year state COLA. Together these actions will save about $177 million in the current year and about $500 million in the budget
year. However, this ultimately means that the state’s neediest elderly and disabled individuals will lose more than $700 per year (and couples more than $1,300).
CalWORKS. Suspends the budget year CalWORKS COLA to save about $100 million.
Regional Centers. Reduces, by three percent, certain payments for services delivered to individuals with developmental disabilities for the period from December 1, 2008 to June 30, 2010, as proposed by the Governor. This results in a reduction of $26 million General Fund for 2008-09 and $60 million in 2009-10.
Also reduces the Regional Center Operations’ budget by $3 million General Fund in 2008-09 and $12.2 million in 2009-10 by suspending certain case management ratios and administrative requirements.
Local Government Solutions:
Local Public Safety Programs. Approves the Governor’s proposal to eliminate General Fund support for various local law enforcement programs which saves approximately $189 million in the current year and $500 million in the budget year. These cuts are mitigated by reallocating Vehicle License Fee revenues ($92 million in the current year and $359 million in the budget year) to support these local programs.
Williamson Act Local Backfill. Approves the Governor’s proposal to eliminate the $34.7 million backfill to counties. This does not, however, make any changes to the underlying program to preserve agricultural land.
State Transit Assistance. Reduces annual funding for the State Transit Assistance (STA) from $306 million to $150 million. The Governor had proposed to eliminate the program entirely.
Fund Shifts. Achieves $185 million in General Fund solutions by shifting eligible Motor Vehicle Account funds and Tribal Compact revenues to the General Fund.
Various Other Solutions:
Judicial Branch Solutions. Achieves $91 million in solutions from the Judicial Branch with a reduction to the 2008-09 COLA for the trial courts and a one-time transfer from the Trial Court Improvement Fund to the eneral Fund.
Office of Emergency Services. Eliminates $30 million in funding for the gang initiative and various other programs.
Employee Compensation. Reduces funding for employee compensation by $240 million in the current year and $417 million in the budget year, however, the savings is required to be negotiated through the collective bargaining process.
As part of a real Economic Stimulus plan, Democrats are proposing to accelerate the availability of bond funds for “ready-to-go” infrastructure projects.
For every $1 billion of investment in public works infrastructure projects, the state creates 15,000 high-wage private sector jobs.
The total Democratic investment of bond funds is nearly $3 billion ($2.9 billion) to improve streets and roads, public transit, housing sites, parks, levees, water quality projects, and to bolster the “green” economy.