By Jim Christie
SAN FRANCISCO (Reuters) - California's Legislature on Friday approved the main bill in a state budget plan advanced by Democratic lawmakers to close a $15.7 billion shortfall despite opposition from Democratic Governor Jerry Brown.
The votes by the Assembly and state Senate on the $92 billion spending plan followed vows by their Democratic leaders they would meet the Legislature's midnight deadline for a budget plan.
The bill now goes to Brown, who is at odds with top Democratic lawmakers over spending cuts aimed at programs providing services to the state's neediest.
Democratic leaders say Brown's proposed cuts are too severe and they intend to press on with talks on those and other matters to reach a budget agreement he can sign before the start of the state's next fiscal year on July 1.
The two sides are in agreement on many other moves to balance the state's books, including asking voters in November to approve a ballot measure to raise revenue by increasing the state's sales tax and income tax rates on wealthy taxpayers.
The measure would raise more than $8 billion to help close the budget gap in the nation's most populous state and put its finances on a stronger footing in coming years. Brown said last month the shortfall would swell to $15.7 billion from a $9.2 billion projected in January, due largely to the state's uneven economic recovery.
Brown said more than $8 billion in spending cuts would be needed to respond to the bigger shortfall and that they could be followed by an additional $6 billion in cuts later this year if voters reject the tax measure.
Brown spokesman Gil Duran said the governor and the Legislature's top Democrats needed to narrow their differences. "We're still not there," he said.
"We're not talking about radical differences in priorities," Jack Pitney, a professor of government at Claremont McKenna College, said, referring to Brown and Democratic lawmakers.
Pitney said the two sides were engaging in political theater - Democratic lawmakers demonstrating concern for a key political constituency and Brown aiming to show the broad electorate he is willing to make draconian spending cuts to win their backing for tax increases.
"Each side has an incentive to make a strong public statement, but in private there is a great deal of opportunity for splitting the difference," Pitney said.
'REPUBLICANS JUST SPECTATORS'
As of now, "Republicans are just spectators," Pitney said.
Assembly and Senate Republicans voted against the budget bill. They oppose its proposed tax increases and have complained they were excluded from budget talks in recent weeks. They also say the bill is full of accounting gimmicks - a charge Brown leveled at a budget plan advanced by Democrats last June.
He vetoed that plan, saying it was not a truly balanced budget. The two sides resolved their differences, allowing the governor to sign the state budget before the start of the current fiscal year.
California's governor is technically required to sign a plan balancing the budget before the start of the new fiscal year, but the state has a long history of its leaders engaging in protracted battles and missing deadlines for spending plans.
To remedy that, voters in 2010 endorsed a ballot measure allowing the Legislature to approve budgets that do not include tax increases by a simple majority vote - compared with a previous two-thirds vote requirement. That effectively empowers Democrats to approve budgets on their own.
The measure also provided for suspending lawmakers' pay if they do not approve a budget by their June 15 deadline. They will keep receiving their pay for meeting Friday's deadline even if Brown vetoes the budget plan.
Credit rating analysts have said they will take a close look at California's budget, which, when signed, will allow the state to sell short-term debt in the form of revenue anticipation notes to raise proceeds for its short-term cash needs.
Having a budget in place also allows California to sell its general obligation bonds, which are popular with municipal debt investors despite the state's low credit rating.
Standard & Poor's has said its A-minus rating and positive outlook for the state could change if the Legislature approves a budget filled with gimmicks. Moody's Investors Service has said its A1 rating, with a stable outlook, could be lowered depending on how state leaders plug the budget shortfall.
(Reporting by Jim Christie; Editing by Peter Cooney)