Pension talks holding up state budget, says Schwarzenegger spokesman

Democrats’ unwillingness to change state employee pension benefits is delaying a vote on the state budget, according to a spokesman for Gov. Arnold Schwarzenegger.

Schwarzenegger spokesman Aaron McLear said Tuesday that “the main sticking point is pension reform… Democrats are unwilling to stand up to the union bosses.”

Alicia Trost, a spokeswoman for state Senate President Pro Tem Darrell Steinberg said McLear’s assessment was “not correct. There are a number of issues that remain unresolved.”
Democrats close to the discussions said one of those issues is a series of new tax breaks being pushed by Republican lawmakers.

Leaders have apparently come to an agreement on some kind of budget reform, but no details were available. The issue of changing the state’s tax system, another Schwarzenegger demand, is apparently unresolved and may not be a part of this budget.

“We offered up an intelligent tax-reform proposal, and it doesn’t appear they are interested in it,” Trost said.

Budget negotiations remain unresolved as the state enters the second quarter of the fiscal year without a spending plan in place. The 92-day standoff is already the longest in state history.

Last week, lawmakers said they had reached a framework for a budget proposal and were hoping to have a budget vote as early as this week. But since a meeting of legislative leaders and Gov. Schwarzenegger Monday, the five leaders have not met to discuss the outstanding issues.

The draft agreement reported includes spending cuts of about $8 billion, far less than the $12 billion the governor had proposed. It also includes a two-year delay in a scheduled tax break for corporations on their operating losses that would save the state about $1.4 billion.

Contract negotiations continue between the Schwarzenegger administration and Service Employee International Union Local 1000, the largest state employee union, representing more than 90,000 workers. If a deal can be reached through the collective-bargaining process, that would pave the way for a budget deal, McLear said.

The other large bargaining unit is the state prison guards union. The prison guards are not currently negotiating with the administration, but Capitol sources indicate there may be a plan in the works to impose new furloughs on the guards. Presumably, the union would then take their chances with a new governor – either Meg Whitman or Jerry Brown, who they endorsed last week.

But all of this is contingent upon SEIU Local 1000 cutting a deal. Capitol sources indicate Democratic leaders having been urging the union to cut a deal, but those talks have not yet born fruit.

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