Republicans Want to Institute Spending Cap in Sacramento

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The state budget is a month-and-a-half late. That's what happens when lawmakers try to soak up $15 billion of red ink. But the big deficit is only one reason the budget is so late. Republicans in Sacramento are the other reason. KPCC's Julie Small reports they're leveraging the budget standoff in an effort to get what they call "real budget reform."

Julie Small: Unless you're a political junkie, you may not remember that during last year's budget impasse, Governor Schwarzenegger and the four legislative leaders vowed to convene a special committee to reform the budget process. Those talks quickly fell apart once the budget passed. Assembly Minority Leader Mike Villines says that's one reason Republicans won't budge this year until Democrats agree to a strict spending cap.

Mike Villines: All they want is taxes; no government reform, no reform in the fastest growing pieces of government, and they want nine billion in taxes. That is not a compromise and that is not even responsible.

Small: Republicans want to limit the growth of state spending to the rate of inflation, with the increase in population factored in. It works out to about five percent a year. Governor Schwarzenegger has said he'll sign the budget only if it includes major spending reform. The governor's press secretary Aaron McLear says the type of reform Schwarzenegger will agree to is under negotiation, but...

Aaron McLear: It needs to be something that once and for all addresses the ongoing budget problems that we have, the reason that we're always in this situation every year where we're saying, "We don't have enough money to pay this or that."

Small: Democrats have argued a spending cap wouldn't solve the problem but it would put the legislature in a straightjacket. Senate President pro Tem Don Perata says the one budget reform Democrats would consider is strengthening the state's "rainy day" fund. The legislature was supposed to use that fund to set aside extra revenue in boom times for times when revenues drop – like now.

Don Perata: It was passed three or four years ago. And we were told at that time this would correct all the ills and evils of the California budget. It fell a little bit short. But we're looking again. If the governor's got some ways of improving upon that or fixing that, we're not opposed to it.

Small: Democrats have tried to define the "rainy day" fund as a de facto spending cap: by saving more, the state has less to spend. In recent days, rumors have flown around the State Capitol that Governor Schwarzenegger might be willing to accept that concept. But Republican Assemblyman Mike Villines called it "a phony cap" that he would not support.

Note: The State Assembly will hold a hearing Friday on the Republican spending cap proposal.