The Legislature will consider unresolved budget and pension issues when members reconvene this week.

By Patrick McGreevy, Los Angeles Times

January 2, 2012

Reporting from Sacramento—- When state lawmakers convene again Jan. 4, their plates will be filled with leftovers.

Their agenda is expected to be dominated by issues that have been unresolved in the last few years: state budget problems, pension reform, a new water supply system and legalizing poker on the Internet.

But lawmakers face a huge distraction: The 2012 elections will be the first since their districts were redrawn to make them more competitive. Many officeholders face an uncertain political future.

The backdrop for those anxieties is the state’s persistently grim financial situation. The deficit is expected to be nearly $13 billion for the new fiscal year that starts July 1.

“That is the big issue of the year, how we continue to grapple with the economic crisis,” said Assembly Speaker John A. Pérez (D-Los Angeles).

So officials are revisiting earlier ideas for raising money — besides increasing taxes, which Gov. Jerry Brown hopes voters will do on the November ballot.

One revenue-spinner could be Internet gambling. Lawmakers held hearings in 2011 on a proposal that the state sanction certain websites for poker and other gambling, with a cut of the action going to the treasury. The matter was postponed until this year amid opposition from some Indian tribes that see such games as competition for their brick-and-mortar casinos.

Now, Senate President Pro Tem Darrell Steinberg (D-Sacramento) has brought the two sides together in hopes of forging a compromise that lawmakers will pass, according to Mark Hedlund, a spokesman for the leader. Steinberg wants to regulate cyber-gambling “while providing revenue — hopefully hundreds of millions of dollars — to help us reinvest in public schools, higher education and public safety,” Hedlund said.

Both Steinberg and Pérez said their priorities include making California’s universities more affordable after years of tuition and fee increases. Leaders of the minority Republicans said theirs include job creation, a cap on state spending and an overhaul of the public pension system.

“Reforms will bring jobs,” said Sen. Bob Dutton (R-Rancho Cucamonga), who is expected to step down as Senate minority leader.

Sen. Bob Huff (R-Diamond Bar), competing to succeed Dutton, said he wants to reduce bureaucratic red tape to help spur economic recovery.

Brown wants to put before voters a measure to raise taxes by nearly $7 billion, and lawmakers will be under pressure to get the state’s financial house in order first, according to Raphael Sonenshein, a political scientist at Cal State Fullerton.

“That way, a better case can be made by the Legislature that voters can trust them with their money.” Sonenshein said.

One way they may try to do that is to change the public pension program so the state can afford its future obligations — an issue left over from 2011. California’s retirement system is underfunded by tens of billions of dollars.

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