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To guide a budget through, a little improvisation is key

This is the story of how the teachers’ unions overpowered Senate Republican Leader Dennis Hollingsworth, R-Murrieta, and how that led to the eventual decision to spare more than $1 billion in local government cuts. It highlights the Machiavellian art of California politics, and shows how personal feuds and the law of unintended consequences loom large in state policy making.

Conflicts between members of the Senate Republican caucus, between Democrats and Republicans, and between the Assembly and Senate all played a role in the strange sequence of events that led to the state abandoning an earlier budget agreement to take more than $1 billion in local gas tax revenues from the Highway Users Tax Account (HUTA).

It all began during last week’s marathon budget session that began Thursday night and didn’t end until well after sunrise Friday. At about 2:30 a.m. Friday, the Senate took up AB 4x 3, the measure that would guarantee schools are repaid $11.2 billion in lost revenues when the state’s economy recovers.

The California Teachers Association, which helped cut the deal with the Big 5 budget negotiators, wanted the bill to be passed as an urgency measure so it could take effect immediately upon the governor’s signature. The urgency in the bill, they felt, would make it harder for potential opponents to challenge the school repayment in court.

According to the choreography of the budget negotiations, the measure would be first put up as an urgency measure, meaning it would need approval from two-thirds of the Senate to pass.

Republicans were not expected to vote for the bill.

The plan was, after the bill was defeated, it would be broken into two separate bills, stripped of its urgency clause, and eliminate the two-thirds vote requirement to pass the measure.

“Is this the point in time where my line in the play is (to) ask if this is where the maintenance factor is?” Hollingsworth asked Sen. Denise Ducheny, D-San Diego, who was presenting the bill.

“Yes,” Ducheny replied.

“In that case, I would ask for a no vote on this one in favor of the majority vote bills that are … coming later,” Hollingsworth said.
But when it came time to vote, three Republican Senators  — Jeff Denham, R-Modesto; Abel Maldonado, R-Santa Maria; and Roy Ashburn, R-Bakersfield —  bucked their leadership and supported the bill.

After Hollingsworth’s quip, the bill was put up for a vote, and things seemed to be going according to plan. Denham voted against the bill, and Ashburn and Maldonado abstained. After Sen. Darrell Steinberg, D-Sacramento, held the vote open for about two minutes, Maldonado voted for the bill, but it was still two votes shy of the two-thirds required.

Steinberg placed the bill on call.

About 30 minutes later, the vote on the bill was reopened. Denham switched his vote from no to yes. The vote stayed open for another two minutes, and Ashburn finally cast the 27th and deciding vote to get the bill out of the Senate.

Ashburn, Denham and Maldonado have been backed by CTA in the past. All three have tangled with Hollingsworth.

“I don’t take orders from the Republican or Democrat Leader, period,” Denham said. “I vote for measures based on their merits.  I support our children getting quality education and this funding will help.”

Maldonado said he “talked to (CTA’s) Joe Nuñez that night, and he told me how important (the bill) was for education.”

For Denham, Ashburn and Maldonado it was a chance to cast a vote that would be considered a strong education vote, and thwart the script Hollingsworth had co-written with the governor and other legislative leaders.

Soon afterwards, some time around 6 a.m., the Senate adjourned and went into recess. That meant the bills were all going over to the Assembly, and the Assembly could not make any changes to those bills. The Assembly would have to approve the same education measure, with the two-thirds vote requirement.

That was a problem for Assembly Republican Leader Sam Blakeslee, R-San Luis Obispo. The Assembly had been in session for more than 10 hours. It was now well into Friday morning, and none of the members had slept.

Now, suddenly, the scripted budget that had been agreed to behind closed doors had been altered in the Senate.

Blakeslee had assured his caucus that they would not have to put up votes to repay schools, as other services like Corrections were being cut. Members of his caucus were also balking at the depth of the cuts to local government. Locals were taking a $2 billion hit under the provisions of Proposition 1A, an additional $1 billion taking of redevelopment agency money, and losing about $1 billion in funds for local roads out of HUTA.

When the bills arrived from the Senate, and Blakeslee saw the education bill now needed Republican votes, Assembly Republicans “had a meltdown,” said one Assemblymember.

(Blakeslee’s office said he was unreachable, and did not comment for this story.)

Blakeslee began offering some rewrites of his own. He had been placed in a position to reward the powerful teachers unions with a promise of a multi-billion payback, while the state raided billions from local government coffers. To say that was unpopular in the Assembly Republican Caucus would be an understatement.

By late morning, the entire budget deal was in a precarious position. Blakeslee was refusing to put up Republican votes to borrow the $2 billion from Proposition 1A. If the Proposition 1A borrowing was not approved, the entire budget plan was in jeopardy.

Blakeslee believed he had been double-crossed by the Senate, and that his colleague, Hollingsworth, was in on the betrayal.

Blakeslee gathered his caucus and called down to the governor’s office.  

The governor’s team, led by chief of staff Susan Kennedy and legislative director Michael Prosio, tried to smooth the problem over. Prosio engaged in a bit of shuttle diplomacy, running between the governor’s office and the room on the third floor where Republicans were huddled, trying to bring Assembly Republicans back into the fold.

Prosio and Kennedy suggested a compromise. Enough Republicans would vote for the education repayment and local government borrowing. In exchange, the borrowing from the HUTA account would die.

Minutes later, Speaker Karen Bass received a text message from Kennedy. The $1 billion take from local tax revenues was out. The governor would make up the missing $1 billion with line-item vetoes.

“Sam and the governor’s office took it off the table,” said Bass. “It didn’t have anything to do with there being trouble in my caucus. None of the Democrats wanted to vote for (the HUTA borrowing), but everybody was certainly willing to.”

That was just as well for Bass. The cuts to locals were also unpopular among Democrats, since so many lawmakers had come from city and county government. The HUTA bill only required a simple majority vote, and Democrats were faced with the prospect of putting up another vote that would not sit well with their local supervisors and mayors.

The education piece passed 56-20, with seven Republican votes. The Proposition 1A borrowing bill passed with the bare minimum 54 votes, including 9 Republican yes votes.

The irony is that by taking the HUTA money off the table, Republicans got deeper cuts in social services and welfare programs – cuts they had supported during the budget talks. Schwarzenegger used his blue-pencil
to trim an additional $389 million in social services programs from the budget Tuesday to help offset the money lost when the HUTA bill went down.

Democrats are now challenging the governor’s authority to make those cuts.

None of those cuts would have happened if the California Teachers Association had not been able to successfully overpower Hollingsworth on the Senate floor, getting his own members to unravel the backroom deal Hollingsworth had cut with other legislative leaders and Gov. Schwarzenegger.

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