Can California Republicans Stand Tough and Cut Spending?

3 Republicans in the Senate caused the Great American Capitalist system to fall into Socialism last week.  Back in 1995, the contract with America Republicans missed passing a balanced budget for the US by one vote.  Spending and giveaways to stay in power verses doing what is right for America is now a cause championed by the Republican Party.  The Bush Republicans started this mess by turning their backs on the principals that got them elected, lets see if California Republicans a minority in both houses can stand tough and show the country that cutting spending is the way out of this fiscal crisis.  All Americans are cutting spending why not the states!

California Lawmakers Reconvene, Remain Apart on Solving Budget

California’s Legislature reconvened today, after a marathon budget session ended last night with a $40 billion package of tax increases, spending cuts and borrowing falling one vote short amid a record deficit.

Bleary-eyed lawmakers were sent home at 9 p.m. Sacramento time after spending 28 hours in a session that ended with the proposal’s prospects in doubt. Republican Governor Arnold Schwarzenegger and legislative leaders worked through the day and night without success to secure an additional Republican vote in the Senate. Democrats control the Assembly and Senate, with a two-thirds supermajority needed for passage of tax increases and budgets.

“We are just searching for that one more vote that we need in order to get that budget done,” Schwarzenegger told reporters last night after he made surprise appearances at closed-door party caucuses to encourage lawmakers to keep working. “What is most important is that they hang in there. They should not leave. They should continue with the fight.”

Failure of the package would prolong a four-month stalemate over how to counter a record $42 billion deficit that drained California of cash, left it with the lowest credit rating among U.S. states, forced officials to delay paying bills totaling $3.7 billion and halted $3.8 billion of bond-financed construction on schools, roads and other public works.

The draft bills include plans to raise the state sales-tax rate to 8.25 percent from 7.25 percent; boost vehicle license fees to 1.15 percent from 0.65 percent of the value of an automobile; add 12 cents to the per-gallon gasoline tax; reduce the dependant-care tax credit to $100 from $300 and impose a surcharge on income taxes of up to 5 percent.

Voting Impasse

To gain the two-thirds margin, three Republican votes are required in the 80-member Assembly and another three in the 40- seat Senate. Lawmakers have said there are enough Republicans in Assembly for the package of 27 bills to get the 54 votes required for passage. In the Senate, 27 in favor are needed for approval. Republicans have blocked previous attempts to raise taxes to close the deficit.

Senate President Pro-Tem Darrell Steinberg of Sacramento said Republican holdouts are causing the impasse.

“The majority of the group of senators are stuck with an ideology that says that under no circumstances, no matter how bad the national and international economic crisis is, they will never increase revenue, and that’s untenable,” Steinberg said.

Combined, the measures would raise taxes and fees by $14 billion, cut spending $16 billion and add $10 billion to the state’s debt. Another $2 billion in reserves would be created from funds moved on balance sheets.

‘Counter-Intuitive’

“It’s counter-intuitive to think that you can solve this budget problem in this economy with tax increases,” said Senator Dave Cox, a Sacramento-area Republican who Democrats had counted on to vote for the package. Democrats control both legislative chambers.

Standard & Poor’s cut $46 billion of California’s full- faith-and-credit debt to A from A+ on Feb. 2, making the U.S.’s largest tax-exempt borrower the lowest-rated state. California’s 10-year general-obligation bonds already pay a record 1.23 percentage points in yield above benchmark municipal debt, according to Bloomberg indexes.

Failure of the package would mean the state can’t sell any municipal bonds. State Treasurer Bill Lockyer has halted state debt offerings, saying investors won’t lend California money at affordable rates until the deficit and cash crisis are resolved. The state hasn’t issued general obligation bonds since June and has depleted most funds in its construction account.

The state controller has said more payments to vendors and to counties for health and human services will be delayed and he may begin paying bills with IOUs in April if the impasse isn’t quickly resolved.