Cal. Budget Revised: Now With Blackmail Flavor!

May is usually the one time of year when legislative Democrats and Republicans can agree on something: They hate the governor’s revised budget. Today was no different.

Politicians from both sides of the aisle blasted the governor’s plan to close a $17 billion budget deficit with a mix of health and welfare cuts, a sketchy lottery “securitization” plan and a possible one-cent hike in the sales tax.

Courts escaped any additional cuts beyond the 10 percent hit they took in the January budget. The governor did propose taking a $6 million loan from the attorney general’s False Claims Act Fund — relative chump change from an account that collected hundreds of millions of dollars during former AG Bill Lockyer’s active tenure.

The few law firms in California that still operate as limited liability corporations would see a budget-related change next year under the governor’s plan. He wants LLCs to pay their 2010 fees, usually due in March, in June 2009. That would force LLCs to pay twice in 2009, generating an extra $360 million for the state.

But the real budget action for some lawyers may come in putting together – or challenging – the governor’s plan to soup up the state lottery. Gov. Arnold Schwarzenegger says he wants to enhance the games and trade the additional revenue they generate — maybe an additional $3 billion or $4 billion a year — for an immediate payment from investors of $15 billion or so. The governor wants to put the plan before voters in November with an additional caveat: if they don’t approve it, he’ll trigger a temporary one-cent increase to the sales tax in 2009.

Don’t call it budget blackmail, Schwarzenegger told reporters. It’s just a creative way to enhance state revenues, he said. But Senate President Pro Tem Don Perata, D-Oakland, called it “shameful.” Other lawmakers were just as critical.

We haven’t even weighed in on the governor’s plans to cut aid to immigrants, to eliminate the annual raise for SSI recipients and to siphon public transportation money to the general fund. But we’re sure that lawyers representing those groups will.

—  Cheryl Miller