SACRAMENTO -- Using the power of a majority vote that the electorate handed them last fall, Democrats on Tuesday muscled through the final touches to an $86 billion budget that ended six months of haggling over reforms and taxes that ultimately were left on the cutting room floor.
The Democratic-controlled Legislature approved the budget with two days to spare before the end of the fiscal year, a rarity in a process that for years has been dogged by lengthy budget delays. But it was a budget filled with spending cuts that will transmit pain throughout the state, said Senate Leader Darrell Steinberg, D-Sacramento.
"Tonight, we passed a budget that gives me very mixed feelings," Steinberg said. "We don't celebrate tonight, but we take satisfaction in getting the job done."
It was a second try at a budget after Brown had vetoed the Democrats' first attempt nearly two weeks ago, saying it had violated his pledge to put forward an honest budget that was absent of gimmicks.
The deal was a near certainty after Brown, Steinberg and Assembly Speaker John Perez, D-Los Angeles, announced an agreement a day earlier.
But, they had to rely on rosy forecasting-- $4 billion in projected revenues -- and further cuts to close the remaining $9.6 billion deficit.
Dating back to March, legislators had to produce $26.6 billion in deficit reduction work -- including $15 billion in cuts.
Still, Democrats expressed frustration that they had
"Yes, voters gave the majority party the authority to pass a budget, but one hand is still tied behind our back," said Sen. Mark Leno, D-San Francisco, the budget chairman.
Brown said he would likely get behind an initiative campaign to place tax extensions on the November 2012 ballot because a structural deficit of at least $5 billion remains for next year and beyond.
Republicans did not provide a single vote, criticizing Democrats for failing to include reforms they had been pushing for in negotiations with the governor.
Sen. Bob Huff, R-Diamond Bar, the ranking Republican member on the budget committee, wondered why Democrats were still calling for taxes if indeed they were scoring more than $11 billion in new revenues.
"If we now have the revenue that we needed at the beginning of the year, why is it we keep going back to the voters and asking for yet more?" Huff asked.
Steinberg later criticized Republicans for allowing the chance at reforms to slip through their hands.
"It was right there," he said. "The only thing that prevented them from doing it was the fact that they don't just sit on their hands, they sit on their pledge. The repercussions apparently for voting for even a four-month bridge is too much."
A key to the deal was a trigger bill that will require $2.5 billion in cuts if the revenues do not materialize by the end of the year.
If revenues are between $2 billion and $3 billion, an additional cut of $600 million would have to be made. If there are less than $2 billion in tax receipts, another $1.9 billion would be cut -- $1.5 billion of which would come from K-12 schools, which would be authorized to eliminate as many as seven days from the school year.
By the end of the year, the Finance Department and the Legislative Analyst's Office will check incoming receipts to see if the projections are correct.
Republicans said the trigger was cold comfort for a state that is still reeling from a tough economy, though income tax receipts from the wealthy are coming in at a healthy rate.
"Reductions should be made now with the idea that they'd get restored if the revenues come in," said Senate GOP Leader Bob Dutton, R-Rancho Cucamonga.
A strong endorsement of the budget deal, however, came Tuesday from Treasurer Bill Lockyer, who called it "financeable" in a letter to Brown, Steinberg and Perez.
The deal eliminates "significant litigation risk," Lockyer said, and the backup plan to trigger as much as $2.5 billion in further cuts if revenues do not materialize "provides sufficient assurance" the state will have enough cash on hand.
For the first time in years, Lockyer said, the Legislature "honestly and clearly balances revenues and spending" and makes "substantial progress toward eliminating California's large and chronic structural deficit."
Brown had hoped to convince four Republicans -- two in the Senate and two in the Assembly -- to allow a special election on tax extensions to avoid cuts beyond the $12 billion Democrats had made in March.
But, Republican demands for rollbacks on pensions, regulations and a spending cap proved too much for Brown, Democrats and labor unions.
Without a deal to go the ballot for an extension on sales, income and car taxes, Brown and Democrats decided to rely on the projected revenues. But they also increased the pain for many who had already suffered through budget cuts.
Democrats added more cuts to higher education: the University of California and California State University had already taken $500 million each in cuts, and were each dealt another $150 million in cuts.
The courts and justice department are to take hits of $100 million more, as well, drawing howls of outrage from all corners.
Democrats learned the hard way that passing a majority budget had to pass muster with the executive branch, even if they are from the same party. Brown vetoed their first budget June 15, and Controller John Chiang quickly deemed the budget unbalanced and refused to pay legislators.
Earlier Tuesday, five Republican Assembly members signed a letter to Attorney General Kamala Harris asking her to determine whether Chiang has the authority to dock their pay. Legislators had lost about $4,830 in pay over the 12 days Chiang had withheld their checks.
Republicans said the optimistic revenue projections are proof that Brown never needed the tax bridge to hold a special election in September as he had insisted in negotiations.
"Today's #cabudget (is the) third plan we've seen w/o bridge tax, proving yet again it was just a diversion from the real problem," tweeted Sen. Anthony Cannella, R-Ceres, one of the four Republicans who remained in discussions with Brown until last weekend.
A stalemate over the main budget bill ended just before 9:30 p.m., following nearly an hour of talks with a small group of Senate Democrats who apparently were seeking changes in legislation that essentially eliminates the state's 400-plus redevelopment agencies.
Steinberg met individually with Sens. Ted Lieu, D-Torrance, and Alan Lowenthal, D-Long Beach, on the redevelopment issue. They eventually provided the final votes the main budget bill needed after Steinberg reassured them that fiscal analyses would be done on the agencies as they downsize.
Brown was expected to sign the legislation Tuesday night.
If Brown does sign the redevelopment agencies out of existence, agency supporters vow to sue the state on grounds that eliminating them is unconstitutional after voters in November passed Proposition 22, which they say prevents this type of state raid of local funds.
In the Legislature's new plan, agencies that agree to divert a certain amount of property taxes to schools, fire protection and transit districts can continue to exist as agencies.
For fiscal year 2011-12, which starts Friday, an agency would have to pay its portion of the $1.7 billion, and then starting in 2012-13, its part of $400 million annually.
Bay Area News Group reporter Tracy Seipel contributed to this story.