By Kevin Yamamura
kyamamura@sacbee.com
Published: Tuesday, Mar. 15, 2011 – 12:00 am | Page 3A

Hopes of reaching a budget agreement this week dimmed after several Republicans said Monday that discussions with Gov. Jerry Brown had stalled.

Brown has been negotiating with a bloc of deal-minded senators that dubbed itself the “GOP 5” in an effort to put tax extensions on the ballot.

But one of the five, Sen. Tom Harman of Huntington Beach, said talks went awry because of fundamental differences over whether to place pension cuts and a permanent spending cap on the ballot.

Asked what it would take to resume negotiations, Harman said, “It would certainly require some movement on behalf of the governor and his administration.”

Democrats denied that talks had collapsed. Brown spokesman Gil Duran said the governor continued budget discussions Monday, though he would not specify who was involved.

“It seems to me that some people are urgently trying to exaggerate and spread this other story,” Duran said, “but that is not our understanding of the situation.”

Senate President Pro Tem Darrell Steinberg, D-Sacramento, insisted he will hold a floor vote on the budget this week, with or without a bipartisan agreement. Steinberg said the only plan up for consideration would be Brown’s proposal.

“It is certainly the most unorthodox negotiation that I’ve witnessed since I’ve been here,” Steinberg said, referring to the fact that GOP legislative leaders have stayed away from budget talks.

One of them, Assembly Republican Leader Connie Conway, sparked concerns Monday when she told Fresno-based KMJ radio that discussions were “done and over” and that the GOP 5 had “walked away from the table.”

Joe Justin, spokesman for Sen. Bill Emmerson, R-Hemet, one of the GOP 5, confirmed Conway’s description as accurate. He said the lawmakers felt Brown was too constrained by public employee labor unions.

But four hours later, another of the GOP 5, Sen. Anthony Cannella, said he wants to negotiate.

“I am still willing to talk,” said Cannella, a Ceres Republican. “I’m going to ask for what I think is important.”

If Republicans don’t agree to place broad-based tax extensions on the ballot, Democrats say, the door may be open for targeted tax hikes on products like oil and tobacco, as well as on upper-income earners. Education advocates proposed a ballot initiative Monday that would impose a 15 percent severance tax on each barrel of oil extracted from California, raising $3.6 billion a year.

“I don’t know that there’s anything we could do legislatively, but I think that would be a natural, spontaneous response from the voting public,” said Sen. Mark Leno, D-San Francisco. “Not a day goes by that I don’t hear from a constituent saying, ‘Why aren’t you asking for a severance tax, why aren’t you restoring the Ronald Reagan personal income tax rates on the top 1 percent?”

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