Snap Analysis: California Democrats control reform agenda

SAN FRANCISCO Mon Jun 27, 2011 10:02pm EDT

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SAN FRANCISCO (Reuters) - A budget deal between California's governor and fellow Democrats in control of the state legislature on Monday has left Republicans with little role to play in major reforms.

Governor Jerry Brown and Democratic legislative leaders unveiled their plan on Monday.

Republicans who could have won political capital on the budget issue left the bargaining table with only the satisfaction of having blocked tax extensions.

DEMOCRATS TO RUN REFORM SHOW

* Brown need only negotiate with Democrats from this point forward on major issues that require only majority votes. The Republicans did not earn a 'chit' from Brown by agreeing to his tax plan, which they were able to block because tax increases require a two-thirds vote of the legislature.

* Rhetoric from the governor's camp has grown increasingly harsh. Brown, who early this year stressed bipartisanship, on Monday referred to "religious reluctance" among Republicans against taxes. His spokesman Gil Duran told KPCC radio last week, "The Republicans in Sacramento are basically moronic."

REPUBLICANS WIN ON NO TAXES

* Proposition 25, passed last year, allowed a budget without tax hikes to be passed by a simple majority. The Republican minority had been able to block any spending plan; now they can only stop one with tax increases.

* Republicans won a small victory in this budget round. The state party congratulated itself for "standing firm" against taxes and denying Brown votes needed to put a tax hike referendum in front of voters.

* But since the austerity budget will be passed by Democrats, it is not clear which party will get most credit.

* Brown and Democrats clearly are planning a ballot initiative to get the tax hikes that Brown wants. Whether it gets on the ballot or is passed is far from certain, but passage would gut the Republican's source of pride.

MORE ROOM ON PENSION REFORM

* Brown says the state still faces a "wall of debt". During budget talks with Republicans he endorsed the idea of a spending cap that would channel excess revenue to pay down debt. It is not clear if he has support among Democrats for that plan.

* Democrats have more room on pension changes. Estimates of California's unfunded pension liability range from hundreds of millions of dollars to tens of billions. Brown and Republicans had discussed linking pension changes to a budget agreement. The Democrats, whose major financial supporters include labor unions, now can pass reform by themselves.

(Editing by Jim Christie and Anthony Boadle)

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