On Monday, I recapped in short snippets how we got to this point in the budget debate. Today, more depth on the sad story of the state budget.

While legislative Republicans have been widely blamed for sandbagging the Governor’s January proposal to ask voters to extend taxes, there has been scant attention paid to the fact that the most significant opposition to the Governor’s plan has not been from Republicans or business, but rather from the public employee unions – particularly SEIU and CTA.

When the Governor initially suggested a June special election to extend the sales, income and VLF taxes enacted as part of the 2009 budget compromise (supported by many businesses), many in the business community – and even some legislative Republicans – indicated support for the extensions and vote, if they were part of a comprehensive, bi-partisan solution that included fiscal reforms. While labor publicly indicated vague support for the Governor’s plan, behind closed doors the public employee unions were, by most accounts, aggressively pushing back against the Governor’s special election.

Although the public and Governor Brown wanted an election to vote on the tax extensions and accompanying reforms, CTA and SEIU wanted to conserve their political funds in advance of the hotly competitive 2012 election cycle, which they still believe offers them a chance to secure two-thirds Democratic majorities in the Assembly and Senate. And despite the Governor’s support for some sort of pension reform and a mechanism to control state spending – and the fact some version of these reforms were must-haves for Legislative Republicans – CTA and SEIU just said no.

As Republican legislators and the Governor negotiated in March, the public employee unions quietly and effectively used their influence with their Democrat allies in the Legislature to nix the idea of a June vote, or at best, delay the process to the point that a June election was not feasible. By the time the Republican legislators presented a list of details to support their reform proposals, labor had already killed any chances for a bi-partisan compromise and a June election.

It didn’t take long for labor to reveal their true agenda – no vote, no reforms, just taxes. On April 12, the Sacramento Bee’s Kevin Yamamura reported that California Teachers Association President David Sanchez was urging state leaders to drop the idea of a public vote and instead to approve the taxes themselves with a two-thirds legislative vote. The public employee unions based their “new” approach in part on the difficultly of passing higher taxes at the ballot box.

In a subsequent June 9 Sacramento Bee story on the budget, Kevin Yamamura reports that Governor Brown and GOP lawmakers were indeed close to agreeing on other items such as a spending cap and pension cuts for new state employees. Later in this same story, David Kieffer, Executive Director of SEIU California State Council, made it clear that the union was still opposed to taking the taxes to a public vote.

There is certainly plenty of blame to go around, but some of the blame must rest with the public employee unions, who spent millions electing Governor Brown and allies to the state Assembly and Senate in 2010. They appear to have used this influence to resist any and all attempts to achieve meaningful fiscal reforms, despite California’s perennial budget crisis. The true extent of their share of the blame, however, may become clearer given the budget developments of the past few days.

The Governor has now vetoed a budget filled with gimmicks and clearly not balanced – a view supported by GOP Legislators, Democratic Treasurer Bill Lockyer and confirmed today by Democratic Controller John Chiang (when he ordered legislative pay halted pending a balanced budget).

Given these new budget dynamics, it seems likely that a variety of groups on both sides of the aisle may be advising the Governor and Democratic legislative leaders to buck the public employee unions, cut a deal with the GOP for a vote on extensions, along with pension and spending reforms and let the voters decide.

If such a deal seems to be gaining traction and then suddenly dies, there will be little doubt that the public employee unions once again flexed their political muscle and killed the bi-partisan, comprehensive solution sought by the Governor in January of this year.