State officials debate budget solutions

California will run out of cash in less than 90 days without some spending cuts or new revenues, analysts predict, but local legislators say there’s no compromise in sight. And given the unprecedented nature of the crisis, they say they don’t really know what is going to happen, but one thing is for sure: The future will hold no new taxes as long as the Republican delegation has anything to say about it.

“It seems to me that this isn’t going to go away in the foreseeable future. I wish I did have a crystal ball and could see what’s going on, but there are a lot of moving parts here,” said Assemblyman Chuck DeVore.

Although the Democrats have a heavy majority in both houses, they need a handful of Republican votes to authorize any fiscal changes, and so far the Republican delegations have held fast on refusing any tax increases with nobody crossing party lines.

Conversely, Democrats, along with Gov. Arnold Schwarzenegger and the nonpartisan legislative analyst, all say it’s impossible to responsibly balance the budget with no new taxes, and refuse Republican overtures to do it through spending cuts alone.

So if a solution that is part spending cuts and part taxes is impossible, what might a tenable proposal look like and when might it happen?

Frankly, it might not be pretty, said Assemblyman Van Tran.

“The end game is that the state will go bankrupt and that’s when the doomsday scenario comes in and either we’re going to have to find money quickly or lay off people and cut expenditures drastically,” Tran said.

DeVore, Tran and Sen. Tom Harman all have their own visions for a solution.

DeVore is pushing hard for a proposal that he put forward to open up oil leases less than three miles off the California coast for slant drilling. He says that as the financial situation gets more and more desperate, more and more legislators are looking at his plan, which is opposed by environmentalists.

By bundling the future royalties from the oil companies into securities and selling them now, the state could get more than $6 million in the next couple of years, DeVore estimates.

Tran is sold on the idea. Harman has opposed some offshore drilling in the past for environmental reasons, and is still on the fence, but he thinks it shows some promise.

“It’s not a bad idea. I’m representing a district that has seven offshore platforms off Seal Beach and Huntington Beach. Historically I’ve been opposed to more drilling but maybe the time has come,” Harman said.

Harman and Tran also think that the government should start selling off land owned by the state to private interests to make some money. It’s only a one-time gain, but the land would garner a lot of money, Harman said.

Another possibility for the state is to try for federal bailout money. Tran, DeVore and Harman all dislike the idea, but DeVore thinks it’s not an unlikely solution.

“The state can ask for a bailout, which is politically embarrassing. But the state running out of money and going bankrupt is also a political embarrassment,” Tran said.

Negotiations are stalled slightly at the moment while the newly elected members of both houses get situated and new committee assignments are made, but Harman expects the negotiations to pick up steam again next week.

ALAN BLANK may be reached at (714) 966-4623 or at alan.blank@latimes.com.