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Can lawmakers be trusted with money?

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POSTED August 5, 2012 10:21 p.m.

SACRAMENTO  (AP) — The Legislature resumes its session this week after a monthlong summer recess, giving the Democratic majority one last chance to persuade voters that a statewide tax increase is needed and that lawmakers can be trusted to handle the extra money wisely.

Revelations of hidden cash, raises for legislative staff and the authorization for massively expensive public works projects while lawmakers were away will make that task more difficult.

The budget lawmakers passed in June relies on voters approving a November ballot initiative to raise state sales and income taxes, but the recent developments have given voters new reasons to be skeptical.

Investigators found that the state parks department was hiding nearly $54 million in two special accounts even as officials threatened to close 70 parks this summer because of budget cuts.

About the same time, it was revealed that lawmakers gave raises to more than 1,000 legislative employees in the last year while they made deep budget cuts and reduced pay for other state workers.

Meanwhile, Gov. Jerry Brown authorized two major infrastructure projects totaling $92 billion despite California’s ongoing fiscal crisis. The Democratic governor unveiled a $24 billion plan to build massive tunnels to transfer water from the Sacramento-San Joaquin Delta to Central Valley farms and Southern California cities. He also signed off on the first payment toward a $68 billion high-speed rail project despite polls showing it is increasingly unpopular.

Finally, lawmakers left the Capitol despite failing to reach agreement with the Democratic governor on fundamental reforms to the state’s pension system. The state’s two largest public pension funds, for government workers and teachers, have reported a total unfunded liability of $150 billion, but some experts say the gap is actually much wider.

Lawmakers have until Aug. 31 to consider the 855 bills pending in both houses.

“We are on the road to a very productive legislative session,” said Senate President Pro Tem Darrell Steinberg. “I think pension reform is going to be a key element to round that out.”

Yet the recent developments have given opponents of Brown’s tax initiative — Proposition 30 on the November ballot — plenty of ammunition to claim that lawmakers would waste any additional tax money.

All are examples of “waste, fraud and abuse” of the sort that resonate with voters in opponents’ focus groups, said Jon Coupal, president of the Howard Jarvis Taxpayers Association.

“Even people who were very much in favor of bigger government just didn’t think the money was being spent well,” Coupal said. “That’s the problem they’ve got to overcome.”

His association aired radio ads calling high-speed rail “the largest boondoggle in American history,” while the “No on 30” coalition of Republicans and tax opponents seized on the pay raises and parks scandal.

Proposition 30, Brown’s November ballot proposal, would raise an estimated $8.5 billion by temporarily increasing the state sales tax and income tax for individuals with incomes greater than $250,000 a year, with the money going to the state general fund, schools and public safety. If voters reject the tax hikes, some $6 billion in cuts will take place automatically. Those could include shorter school years, less money for law enforcement and fee increases at state universities.

Assembly Minority Leader Connie Conway, R-Tulare, said Democratic lawmakers violated voters’ trust by basing the budget on uncertain tax hikes while pushing through big budget projects at a time of fiscal crisis.

“Californians are just like, ‘Seriously, you have money for trains, you have money for water pipes, but in the budget we’re told we’re $16 billion in debt and it’s based on taxes that may or may not happen?’” she said.

Steinberg, D-Sacramento, said opponents will grab any opportunity to support their distaste for higher taxes.

“What gets lost is this state government has made billions of dollars in cuts in every area of its responsibility,” he said. “In the end, I trust the voters to say that they don’t want education, higher education or public safety to be cut anymore.”

He acknowledged that lawmakers “have taken a hit,” particularly by giving some top Assembly and Senate staffers raises as high as 10 percent, with more than 110 of the 1,090 raises going to employees with salaries above $100,000.

But the raises merely bring legislative employees in line with other state employees who received merit raises in recent years while legislative salaries were frozen, he said. Steinberg also plans to freeze Senate pay increases for the coming year, although Assembly Speaker John Perez, D-Los Angeles, has made no similar promise.

In the parks scandal, lawmakers say the hidden money is not enough to solve the parks departments’ long-term budget problems, although they hope to use some of the surplus money to help keep parks open in the short run. They also plan to authorize an independent audit of the Department of Parks and Recreation, while oversight committees investigate how much money is available in all 560 special funds scattered throughout state government.

Legislators spent the first six months of the year showing that they can act responsibly, Steinberg said. That includes passing a budget on time, cutting the state deficit and enacting new protections for homeowners facing foreclosures.

Limiting pension abuse in the final four weeks is “vital” to persuading voters to support higher taxes, he said, yet lawmakers also must keep enough incentives to retain good public employees. Brown proposed a detailed pension-reform plan earlier this year that won praise from Republicans, but Democratic lawmakers have been cool to most of his proposals.

The Assembly also will consider a bill by Steinberg and Sen. Kevin de Leon, D-Los Angeles, that would create a guaranteed, government-run retirement savings program intended to benefit nearly 7 million California private-sector workers who don’t have access to a workplace retirement plan.

Steinberg is promoting bills that would make it cheaper to buy college textbooks, change the way high schools educate and evaluate students, and limit lawsuits against small businesses for violating the Americans with Disabilities Act.

Perez is proposing to cut tuition at the University of California and California State University by two-thirds for students whose families make less than $150,000 but earn too much to qualify for financial aid. However, funding for the program depends on $1 billion from eliminating a corporate tax break, and so far Perez lacks the support he needs from Republican lawmakers.

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