California legislators on Wednesday passed the main bill of a budget package that would rely on an Internet sales tax, spending cuts and fee hikes, and a host of rosy forecasts to close a $10 billion shortfall.
Democrats, who control the state Assembly and Senate and can pass a bill that does not raise taxes without Republican support, aim to pass the entire package of bills before a deadline at midnight. If they do approve a budget by then the state controller would start to dock their pay.
Governor Jerry Brown, who had promised to avoid smoke and mirrors in the budget, has not indicated whether he would sign his fellow Democrats' legislation, though he has indicated he is open to some expediency on a spending plan.
This is a solid budget, state Senate President Darrell Steinberg told reporters.
California voters last year changed budget rules to allow lawmakers to approve a state budget by a simple majority -- which Democrats have -- so long as taxes are not raised.
That set the grounds for the biggest municipal debt issuer, whose financial heft is enough to influence the entire U.S. economy, to work a near-miracle in state history -- to have an on-time budget.
Democrats are pressing their budget package to meet the legislature's June 15 deadline to approve a spending plan after the state controller said he would not pay lawmakers if they missed it and because Republicans had been withholding votes Governor Brown needed for his plan to put a tax hike extension to a statewide vote.
The Democrat's budget plan involves requiring online retailers like Amazon.com to collect sales tax to provide a $200 million boost for the state's revenue, and it would allow the local sales tax to rise by 0.25 percent, which requires only a majority vote.
Democrats also proposed spending cuts along with billions of dollars in delayed payments for education and rosy revenue assumptions, including revenue from the sale of state buildings opposed by Brown.
Brown wants temporary tax extensions and has said he would not sign a budget with one-time moves that state leaders have routinely employed over the past decade to balance the state's books.
But this week he suggested he may be open to an expedient budget.
(Editing by Peter Henderson, Dan Grebler and Diane Craft)