By Mark Baldassare, research director, Public Policy Institute of California
This opinion article appeared in the San Diego Union-Tribune on July 15, 2004
If there's one lesson that Gov. Arnold Schwarzenegger has learned in the last
month, it's that the more things change, the more they stay the same. After all,
things couldn't seem more different: 64 percent of Californians currently
approve of the way Schwarzenegger is handling his gubernatorial duties while,
just one year ago, 64 percent disapproved of then-Gov. Gray Davis' performance.
But despite his tremendous popularity with the public, the governor is finding
out that delivering "action, action, action" is easier done in Hollywood than in
the chronic quagmire of fiscal politics in Sacramento.
Just a few weeks ago, it seemed all but certain that the governor had made
enough progress in his months of tough negotiations with some of the main
recipients of state spending to patch together a budget compromise that would
get the required two-thirds majority support of the Legislature. Passing a
budget on time? "No problema" for the new governor. He was coming off an
impressive number of early victories, including convincing a skeptical public
that his fiscal remedy of $15 billion in bonds and future borrowing limits would
cure the state's fiscal ills.
However, as predictable as the summer heat in Sacramento, all this hard work
began to unravel as partisans took sides on a promise to local governments that
their funding would be cut for two years but protected in the future. With each
party sensing some political advantage in the coming November elections,
Republicans went along with future funding guarantees for cities and counties,
and Democrats refused to make promises to local governments that might
jeopardize the future budgets of schools, health and social services. And so,
the brief era of good will between the governor and Legislature came to an end,
and the blame game began.
In reality, the governor's chances of getting around the partisan divide were
probably sunk even before this recent impasse, when members of both parties
fully realized that this budget, like the last governor's, was simply postponing
the day of reckoning over the mismatch between spending and tax receipts. The
independent Legislative Analyst's Office says there will be a chronic budget gap
of $6 billion in fiscal year 2005-06 and every year into the foreseeable future
if the governor's budget passes.
So unless there is a dramatic increase in economic growth, tax increases or
spending cuts will have to be on the table when Schwarzenegger's spending
promises kick in a year or two from now. Alternatively, the Legislature will
decide to pile up even more debt and push the problem even further into the
future – the odds-on favorite for how the current budget standoff will end.
Why is it so difficult for the Legislature to pass a budget? Some experts
point to the two-thirds vote hurdle for passing a state budget, but the fact is
that there were no delays when times were rosy a few years back. Simply put,
when times are tough political interests retrench, and the budget process
reflects this reality. For Republicans, the answer is to cut spending. For
Democrats, the answer is to increase taxes. For both sides, finding their way to
the middle ground is unpopular in an increasingly partisan environment.
In a few months, the voters will get their turn at the wheel when they are
asked to make fiscal policy at the November ballot box. Among the panoply of 14
state measures are a tax on incomes of over $1 million to fund mental health
services (Proposition 63), an initiative to protect local government funding
from state raids (Proposition 65), an initiative to fund emergency medical
services with a telephone surcharge (Proposition 67), and initiatives to expand
non-Indian gaming (Proposition 68) and Indian gaming (Proposition 70).
Where does the public stand on the fiscal issues confronting the state? Like
the elected officials representing them in Sacramento, Californians are deeply
divided along partisan lines. Half of state residents say they prefer to pay
lower taxes and have fewer services, while half want higher taxes and more
Republicans overwhelmingly want a smaller government, while Democrats
strongly favor a larger government. Like the Legislature, voters remain
skeptical of the need to make cuts in their most favorite programs, arguing that
government waste is so great that the state could spend less and provide the
same level of services.
The governor's biggest hope of bridging the partisan divide may be the
California Performance Review he is unveiling in the coming months. This
exercise promises, in Schwarzenegger's words, to "blow up the boxes" and find
ways to make government more responsive, effective and efficient. What's at
stake is whether or not Schwarzenegger can make good on his promise to restore
trust among voters who are deeply skeptical of state government. Without it,
current and future talks on revenue and spending reforms will inevitably fall on