Davis and Democrats Savor Moment; GOP Hopes to Make Them Pay Later

SACRAMENTO —  In signing California’s new spending plan Thursday, Gov. Gray Davis strengthened his political standing and solidified a hard-fought victory by Democrats who succeeded in fending off GOP demands to extend a sales tax cut.

But victory in this case is a mixed bag. Republicans glimpsed the problems that could lie in store for the state’s minority party on issues such as legislative redistricting, but they also may have grabbed a time-tested issue--opposition to tax increases--to wield against their counterparts next year.

By defeating Republicans in the battle over an extension of a quarter-cent cut of the state sales tax, Democrats won themselves a pass--preserving millions of dollars in programs that matter to them. They also headed off a similar fight over extending the cut next year, when legislators and the governor face reelection.

For Davis, meanwhile, the budget victory is the latest in a series of good breaks. He won approval of the budget without making major concessions to the Republican leadership, and so far has managed to escape much of the predicted fallout from the state’s energy crisis.

Even the weather has smiled on the governor, delivering California a mild summer that has reduced power demands up and down the state.

“I think Gray Davis has to be one of the luckiest politicians in California if not the United States,” said Dick Rosengarten, the publisher of California political news weekly CalPEEK. “Republicans showed they couldn’t hold their ranks on the budget, and the energy crisis, while still very serious, is looking a lot better.”

The budget also reflects on the deal-making skills of legislators, and Democratic leaders emerge from the talks emboldened by their ability to break Republican ranks and supplement the deal in ways that fit their agendas.

Indeed, Davis drew criticism by some lawmakers for his hands-off approach to resolving budget conflicts, instead leaving much of the deal-making to his aides. Consequently, the spending plan allowed Democratic legislative leaders, who played a lead role in negotiating the document with Republicans, to experience moments of pride.

Budget talks in the upper house enabled Senate leader John Burton, the San Francisco Democrat, to bolster by $75 million a program dear to his heart: a housing tax credit for the disabled and poor seniors.

In the lower house, Assembly Speaker Bob Hertzberg, a Sherman Oaks Democrat, emphasized that the budget crafted by the Legislature and Davis sets aside a healthy reserve while preserving education spending.

Those victories did not come easily, however.

Republicans blocked passage of the spending package for more than three weeks as they sought to extend the quarter-cent sales tax cut on behalf of consumers. Republican leaders worked hard to hold their ranks and force Democrats to continue the tax cut.

Instead, Democrats enlisted farmers, sheriffs and a host of others with a big stake in the budget to lobby individual Republican lawmakers.

They succeeded at achieving their goal of gaining the necessary two-thirds approval of the spending plan in both houses of the Legislature. Their success, according to observers, bodes poorly for California’s Republican Party as the Legislature prepares to take up what is predicted to be its next big political fight later this year: redistricting.

“If they were broken over the budget, it implies they could be broken over reapportionment,” said Tony Quinn, co-editor of the California Target Book. “Reapportionment is about 10 times more important than the budget because the next 10 years of budgets are going to be decided by legislators who will be elected based on districts drawn this year.”

Republican leaders concede that it will be a difficult task holding their members together when it comes to the redrawing of legislative districts. That process tests the political power of both parties, as majority lawmakers use it to attempt to bolster their hold on state government and minority members try to limit the damage that can be inflicted on their fortunes.

GOP Likely to Decry Tax Hike

While Republicans face the challenge of merely holding their ground, they do emerge from the current debate with some talking points for the coming year. In January, the state sales tax will tick back up a quarter-cent (to 5 cents on the dollar), an event that Republicans can be expected to loudly decry on behalf of California taxpayers.

“It is 1.2 billion additional dollars that will be taken out of taxpayers’ pockets and given to the government,” Senate Republican leader Jim Brulte of Rancho Cucamonga said. “They are clearly the losers.”

In addition, Republicans picked up bits and pieces in the budget debate that they will trumpet as evidence of their relevance.

The gains include, for instance, securing $40 million to make funding for urban and rural schools more equal and getting Democrats to agree to allow voters to decide whether sales taxes paid on gasoline should be permanently dedicated to transportation.

In yet another nod to their GOP counterparts, Democrats also readjusted the trigger that activates the quarter-cent cut of the state sales tax, presumably to make easier for a future cut to kick in.

Jean Ross, executive director of the California Budget Project, a liberal nonprofit group, described some of the last-minute concessions as “unfortunate.”

She warned that readjusting the sales tax trigger will prevent lawmakers from building prudent reserves. She also took issue with allowing voters to decide how gasoline sales taxes should be spent.

Both actions, according to Ross, threaten to limit the state’s ability to respond to an economic downturn by tying up potentially billions of dollars in revenue to fund transportation and tax breaks.

With elections looming next year, both sides are bracing for a contest that could be dominated by the economy and its possible slowdown. For their part, Republicans are preparing to blame Democrats by tying them to the quarter-cent sales tax increase, which they contend will kill jobs.

“There are Democrats who went up five times on a tax increase,” said Assembly Republican Leader Dave Cox of Fair Oaks on the five budget votes taken in the lower house. “There are some members who campaigned and won their initial seats in the Legislature based on a promise to reduce sales taxes.”