Democratic committee defeats budget spending cap proposal

After three hours of debate over its merits, the state Assembly Budget Committee killed on a party-line vote Friday a Republican proposal to put both a spending cap and rainy-day fund budget reforms into future state budgets.

Such reforms would go before voters in November, provided a state budget for 2008-09 could be completed and approved within the next few days.

Budget Chairman John Laird (D-Santa Cruz) said after the 13-10 vote against the bill - with all "aye" votes cast by Republicans and all "nay" votes cast by Democrats - that the measure's merits deserve reconsideration at a later date.

If approved, the measure would cap state spending on an annual basis, with growth from the previous year's budget based on population growth and inflation. In years where the state took in more money than necessary to meet that cap, the excess would be put into a rainy-day fund for use in deficit budget years.

Budget Vice Chairman Roger Niello (R-Fair Oaks), who introduced the bill, ACA 19, said implementing such reforms would help the state budget avoid a feast-or-famine pattern in the future.

"The ultimate insult to people who require assistance from government is to give them that assistance one year, and then because of a budget situation, yank the rug out from under them another year," said Niello.

Republicans want to tie budget reform to approval of this year's budget, though that process has been equally stymied by partisan disagreement.

But Laird and other Democratic committee members said an annual limit could force unsavory policy choices into each year's budget making, and set up the potential for larger problems if the state's monies took a hit from an unexpected quarter.

Laird used as an example the announcement this week by federal prison receiver J. Clark Kelso of his intention to get a court order for $8 billion from the state to build prison health care facilities. That would mean an additional $3 billion for the budget deficit in this year, already at more than $17 billion.

"We would have to go back into the budget and cut all the rest in order to meet that cap," Laird said of such a situation.

Republican committee members, though, pointed out that with a cap and spending limits, legislators could make more responsible choices over time and avoid surprises like Kelso's.

After the vote, Assembly Republican Leader Mike Villines (R-Clovis), who authored ACA 19, released a statement saying Democrats would rather raise taxes than have the state operate sensibly.

"Without reform, we will continue to see years of reckless overspending by the liberal majority, essential public services jeopardized and the never-ending threat of higher taxes on Californians," Villines said in the statement.

But Democratic Assembly Caucus Chair Noreen Evans (D-Santa Rosa) said the defeat would help move legislators into more serious budget discussions.

"I hope that my Republican colleagues take this vote as a sign that they need to talk about dollars and cents instead of extremist policy proposals out of step with California values," Evans said in a statement.

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