http://www.latimes.com/news/local/la-me-budget17-2009feb17,0,1851008.story?page=2

Legislature adjourns with no budget; governor prepares to lay off 10,000

By Jordan Rau and Eric Bailey

February 17, 2009

Reporting from Sacramento — With lawmakers still unable to deliver a budget after three days of intense negotiations, Gov. Arnold Schwarzenegger prepared to lay off 10,000 government workers and his administration said it would halt the last 275 state-funded public works projects still in operation.

The projects, which cost $3.8 billion and include upgrades to 18 bridges and roads in Los Angeles County to protect them from collapsing in earthquakes, had been allowed to continue as others were suspended because the state was running out of cash.

The projects to be suspended today had been exempted from a November stop order because of the significant financial cost of canceling contracts, the expense of resuming them or the public-health or public-safety ramifications. The list also includes work to eliminate arsenic in the Central Valley town of Live Oak and half-built highway construction projects.

Schwarzenegger had delayed sending out pink slips since Friday, hoping that lawmakers would soon approve a budget. But they failed Monday to find a third GOP vote in the state Senate to achieve the two-thirds majority needed to pass a budget -- a requirement that essentially gives the minority Republicans veto power. A spokesman for Schwarzenegger said layoff notices would go out today.

Late Monday evening, both houses of the Legislature adjourned and Senate President Pro Tem Darrell Steinberg (D-Sacramento) ordered senators back to the chamber at 10 a.m. today, saying they would stay until a budget passed.

"Bring a toothbrush," he said. "I will not allow anyone to go home to resume their lives or any kind of normal business."

State Sen. Abel Maldonado (R-Santa Maria) was viewed as the most likely candidate to provide the final vote, but by Monday evening legislative leaders had not agreed to his demands. The dominant Democrats need three Republican votes in each house to pass the budget; leaders in the Assembly said the votes were available in the lower house.

Assemblyman Mike Villines of Clovis and Sen. Dave Cogdill of Modesto, the two GOP leaders in the Legislature, told their members last week that the deal they helped forge was the strongest Republicans could get. But most GOP lawmakers have taken an antitax pledge, and the package relies on $14.4 billion in tax hikes to plug a nearly $42-billion budget hole.

The challenge of rounding up the handful of Republican votes has shown how strong the resistance to taxes remains in California politics.

In the Assembly, Republicans Roger Niello of Fair Oaks and Anthony Adams of Hesperia have agreed to join Villines in supporting the higher sales, income and gas taxes that are part of the package, legislators said. The move carries significant political risk.

Niello, who worked in his family's Sacramento County auto dealership before entering politics, will be forced from the Assembly next year by term limits. He is seeking to run for one of the most conservative state Senate districts, and faces a primary against a fellow assemblyman who would undoubtedly bludgeon Niello as being in favor of taxes.

Niello refused to publicly commit his vote, saying simply that it "will be based on the total package -- and right now, not all the details are nailed down."

Legislative leaders said Niello agreed to support the package because he is the senior Republican on the Assembly budget panel. By political custom, lawmakers in such positions vote for budgets that their leaders recommend.

Adams, a bearded 37-year-old who was elected in 2006 after working for San Bernardino County as its legislative liaison to Sacramento and Washington, has said he would provide the Assembly's third GOP vote.

"It's unconscionable that we let this state go over the cliff," Adams said in an interview. "My job is to get the best possible deal for Republicans."

Adams faces reelection next year, and his support for the budget package has antitax advocates interested in lining up a challenger in the GOP primary. And because he represents a swing district, Adams must also worry about a general-election challenge from a Democrat.Adams said he had not asked for specific concessions for his vote, or for assurances that he would get assistance to fend off election challenges.

"I'm not trying to find some soft landing," he said, "although my wife is going to kill me if she hears that."

The political repercussions for Villines are the least intimidating. A gregarious former Capitol staffer and public relations man, he easily brushed back a weekend attempt to topple him as leader of the Assembly's 29 Republicans. He is in his last term in the Assembly, and the state Senate and Congress seats he may be eyeing are held by incumbents with no immediate plans to vacate them.

Like Cogdill, his Senate counterpart, Villines has argued that Republicans extracted substantial concessions as they negotiated the budget package. Those include $15.1 billion in cuts to government services, tax breaks for corporations and a greater role for private contractors in state building projects.

The GOP leaders also won agreement from Democrats to place on the May 19 ballot a measure to limit future lawmakers from splurging the next time the state's treasury becomes plump, as they did during the dot-com and housing booms.

Cogdill, a taciturn former real estate appraiser from a conservative Central Valley area, has had difficulty winning over two of the other 14 GOP senators. That small caucus has gone through repeated internal power battles in recent years, and the ambitions of some of its members toward statewide offices has made it hard to find volunteers to break the party's antitax mantra.

"The Senate is just a bit more independently minded than the Assembly," said Kevin Eckery, a former press secretary for then-Gov. Pete Wilson, who like Schwarzenegger reluctantly agreed to raise taxes. "These are guys who, given their own set of personal convictions, just cannot justify a large tax increase during the worst recession in 35 years."

GOP Sen. Roy Ashburn of Bakersfield has agreed to vote for the package, according to legislative officials. This is Ashburn's last term in the Legislature, so he does not have to worry about reelection. And he has voted for tax increases before, during his 12 years as a Kern County supervisor.

Ashburn wrangled from legislative leaders a new tax credit intended to help home builders. It would allow people buying newly constructed homes a state tax credit of 5% of the purchase price or $10,000, whichever is lower. The credit would be spread over three tax years and be given out on a first-come basis until the state had parted with $100 million.

Ashburn declined Monday to confirm that he would vote for the budget package but said the state was in "an extraordinarily difficult situation" and "there are no easy answers."

Leaders had initially wooed Sen. Dave Cox of Fair Oaks as the final Republican vote. He had publicly declared, as recently as last week, "We cannot close this budget gap with cuts alone."

At 70 years old and in his last term, he presumably does not have to worry about political retribution. And his district includes sections of Sacramento, where many state workers face the prospect of layoffs.

But Cox announced Saturday that he would not vote for the package, and negotiators turned much of their attention to Maldonado. The GOP's only Latino senator, Maldonado, like Adams, represents a swing district and voted for the state budget in 2007.

On Monday, Maldonado said he would "take a look at" voting for the budget package if it included financial penalties for future legislators who fail to pass state budgets on time or drive the state into deficit. And Maldonado, who lost a 2006 bid for state controller to a more conservative challenger, said he wants future California primary elections to be "open," allowing voters to cross party lines to cast a ballot.

Though widely believed to want to run again for statewide office, Maldonado said in an interview: "An open primary is for the people of California, it's not for me. I don't want anything in this budget that's for me. I'm not for sale."

jordan.rau@latimes.com

eric.bailey@latimes.com

Times staff writer Michael Rothfeld contributed to this report.