Democrats in the Senate are forging ahead with a budget plan. But they are doing so without the blessing of Gov. Schwarzenegger – and more notably without Assembly Democrats.

What’s unclear is whether the growing divisions between Democrats in the two houses reflects a simple difference in negotiating style between Senate leader Darrell Steinberg, D-Sacramento, and Assembly Speaker Karen Bass, D-Los Angeles, or whether the growing differences between the two reflect a wider ideological and tactical divide.

In recent days, Assembly Democrats on the budget conference committee balked at making millions in cuts to some state services – cuts that were supported by Democrats and Republicans in the Senate. Among them were decisions by Assembly Democrats to push back against the proposed elimination of money for the California Poison Control System and some cuts to rural hospitals.

Meanwhile, numerous Assembly Democratic sources confirm that the caucus has held three volatile and spirited meetings in the last week – the latest coming on Wednesday – in which members vented their frustrations about the budget, and the budget process. Their anger follows a nine-month, non-stop budget negotiation in which members have put up unpopular votes for spending plans that most had little role in crafting, or even had time to read.

In private, the tensions are beginning to boil over. Thursday’s caucus meeting was a four-hour affair, in which members discussed their ideas for getting out of the state’s budget mess. A number of members, including Berkeley Democrat Nancy Skinner, voiced frustration that the budget discussion seems focused on cuts without talk of new state revenues.

Assembly Democrats have broken into working groups to deal with various parts of the state budget process. Skinner is exploring possible new revenues; Mike Feuer, D-Los Angeles is looking into structural reforms and a possible constitutional revision commission’ and Manuel Perez, D-Los Angeles, is spearheading an effort to develop an “economic development strategy” for the state.

While the Assembly is dealing with internal strife, Steinberg plowed ahead Tuesday and sketched out a budget proposal in an effort to frame the parameters of the budget debate. Steinberg said his caucus would make $13 billion in budget cuts, and lower the governor’s proposed budget reserve by $4 billion.

Steinberg said his caucus would stand up against the elimination of social safety net programs like CalWORKS, the state’s welfare program and Healthy Families, which provides health insurance to about 1 million low-income children. Steinberg conceded there would be cuts in those programs, but that Democrats would ensure they continue to survive in some capacity.

“We will cut Healthy Families, CalWORKS and Cal Grants,” he said, characterizing his differences with the governor as  “a matter of degree.”

Steinberg also said his caucus opposed the governor’s plan to borrow about $2 billion from city and county governments to balance the state books.

But he said Senate Democrats supported the governor’s $6 billion worth of new revenues, internal borrowing and other money-making measures, such as selling off a portion of the State Compensation Insurance Fund.

Those plans include accelerating the collection of withholdings on independent contractors and corporations, which would give the state a one-time injection of cash.

“We don’t have a difference with the governor on those proposals,” Steinberg said.

While Steinberg attempted to unveil a formal Democratic counterproposal to the governor’s May revision, Bass remained non-committal.

She released a statement to the press Tuesday afternoon, saying “Assembly Democrats will be fighting for families affected by the budget by pursuing a balanced approach that includes revenues and reforms as well as cuts. Our responsible budget solutions will be aimed at minimizing hardship and maximizing opportunity for California’s economic recovery.”

Earlier this month, Steinberg and Bass presented a united front, appearing together at a press conference after the governor’s address to the Legislature to outline the coordinated Democratic response. Now, Bass talks about what “Assembly Democrats” will fight for, while Steinberg is laying out his vision for the budget without a sign-off from the speaker.

Sources in Steinberg and Bass’s office say the two leaders continue to work closely together. And the differences in public approach may have more to do with the different internal dynamics in the two Democratic caucuses. Senate Democrats seem driven to act quickly, and want to start by introducing a package of $13 billion in cuts, while some Assembly Democrats want to slow the process down a bit, and at least ensure that new revenues are part of the conversation.

The speaker’s office Tuesday refused to put a number on how much they would cut, saying only the Assembly would adopt a comprehensive budget solution.

Bass and Steinberg have both been adamant that the budget will contain deep cuts. And Bass, like Steinberg, has said even if there are new revenues or other ways of closing the budget gap, the cuts to state programs would come first.
While Steinberg tried to push the Legislature and the governor closer together Tuesday, the administration pushed back, characterizing Steinberg’s plan as incomplete and insufficient.

Schwarzenegger spokesman Aaron McLear said Steinberg’s proposal was “about two-thirds of the way there” – and that isn’t good enough.

“As the Legislature does every year, they seem to be interested in solving only part of the problem,” said McLear. “The governor is insisting we solve the entire problem.”

McClear said Steinberg’s decision  to spend down the governor’s $4.5 billion reserve was problematic. “Schwarzenegger can support a proposal whose mathematics end in $24 billion. The governor is not interested in solutions that only get us part of the way there,” he said.

By drawing down the reserve and rejecting the plan to borrow $2 billion from locals, McLear said, “the Senator took $6 billion off the table without other solutions. It is unacceptable to only solve part of our problem.”