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Press Release · May 27, 2004

California’s Chronic Budget Blues

Governor’s Popularity Has Not Brightened Bad Fiscal Mood; Residents Unhappy About Budget – But Many Unwilling To Pay Their Way Out

SAN FRANCISCO, California, May 27, 2004 — Despite signs of a slowly improving economy, and vigorous efforts by a popular and influential governor, Californians’ unhappiness about the state’s economic and fiscal condition isn’t getting better, according to a new survey released by the Public Policy Institute of California (PPIC) and The James Irvine Foundation.

Nearly three-fourths (73%) of Californians still say the state’s budget gap is a big problem – the same percentage that said the gap was a big problem around the time of Governor Gray Davis’ 2003 May Revision. Among likely voters, concern is even greater, with 80 percent believing the budget gap is a big problem today. “Many Californians feel they have been burned in the past by the budget situation,” says PPIC Statewide Survey Director Mark Baldassare. “Even with a new, charismatic leader, they will likely have to see real fiscal improvements before their pessimism about the state’s finances turns around.”

In fact, the governor’s budget – one that includes no new taxes – gets mixed reviews from state residents. Half (50%) are satisfied with the plan, 41 percent are dissatisfied, and 9 percent don’t know. Moreover, half (50%) say the plan should have included tax increases, with Democrats and Republicans deeply split on the issue (66% Democrats, 31% Republicans). A wide majority (76%) say they are at least somewhat concerned about the effects the plan’s proposed spending cuts will have on services.

Put Your Money Where Your Mouth Is… Or Not

Despite that concern over cuts, many residents are unwilling to pay to protect public services. Large majorities oppose cutting spending for K-12 education (81%), colleges and universities (73%), and health and human services (68%); and most residents are either very or somewhat concerned that the state budget gap will cause severe cuts to their local school district (85%), local health and human services (80%), and local services such as parks and police (78%). However, when asked if they would support raising property taxes to fund local public schools, 50 percent said no, 45 percent said yes. Raising the state portion of the sales tax also gets a split response from state residents (49% support, 48% oppose). A real-world test? This November’s ballot measure to add a 3 percent surcharge on telephone use to fund hospital emergency services is lagging among likely voters (56% no, 41% yes).

What might look like penny pinching may also be related to voters’ doubts about the state government’s fiscal effectiveness. “People have a pretty high level of suspicion about how sensibly and economically the tax money they send to Sacramento is used,” says Baldassare. In fact, nearly three-fourths (74%) of likely voters and 71 percent of all residents believe state government could spend less and still provide the same level of service. Local government comes under similar fire: A majority of residents (58%) and likely voters (57%) believe local government in their area could spend less and provide the same service. Moreover, 47 percent of residents say they would rather have a smaller government with lower taxes and fewer services – 46 percent prefer a bigger government with higher taxes and more services. Support for the smaller government option grows to a majority among likely voters (54% to 39%).

Take From the Rich… And Tax the Vices

So who should pay to help get the state out of its current financial hole? As in past PPIC surveys, a majority of Californians support increasing taxes geared toward certain groups – namely, the wealthy and smokers. Residents support raising cigarette taxes (70% to 28%) and raising the tax rate on the state’s top income bracket (56% to 38%). This November’s ballot measure to increase tax on income over $1 million to fund mental health services is getting vigorous support among likely voters (67% support, 31% oppose). Likely voters also favor the idea of raising more tax revenue by allowing the expansion of gambling on Indian lands (53% good idea, 39% bad idea). However, they are almost evenly split on the idea of expanding gambling on non-Indian lands in the state (47% good idea, 48% bad idea).

Governor’s Golden Glow Remains Untarnished

Anxiety about the state’s finances doesn’t seem to be affecting Governor Schwarzenegger’s popularity: Large majorities of all residents (64%), and of likely voters (69%), approve of the way he is doing his job. Although his ratings drop somewhat on fiscal issues, even in this problematic area he receives comfortably high marks: 55 percent of residents and 61 percent of likely voters approve of his handling of the budget and taxes. Only 32 percent of residents, and 28 percent of likely voters, disapprove. The propositions the governor has backed since taking office are also seen in a favorable light: 60 percent of residents believe Proposition 57, the $15 billion bond he championed last March, helps the state’s fiscal situation either a lot or somewhat.

“People see the budget situation as something brought on by others, but apparently do not fault Governor Schwarzenegger,” says Baldassare. The difference between the governor’s and the legislature’s approval ratings may bear this out. Today, only about one-third (35%) of likely voters approve of the job lawmakers are doing, compared to over half (52%) who disapprove. The legislature is, however, on more positive ground than it was nine months ago when approval stood at 28 percent and disapproval at 58 percent. “Partisan gridlock and inaction in Sacramento has been very exasperating for Californians,” says Baldassare. “Lawmakers improved status may be partly because they and the governor are seen as having a fairly successful working relationship up to now.”

Beyond budget issues, the turnaround in approval of the state’s top officeholders is occurring at a time when the overall mood is also improving. While far from blissful – 44 percent of residents say California is going in the wrong direction, 43 percent say it is going the right way – the general outlook has improved from what it was just a few months ago. In February 2004, PPIC’s Statewide Survey found that 51 percent of residents thought the state was going in the wrong direction, while 35 percent believed it was going in the right direction. Latinos are a notable exception to this trend – their current outlook (38% right direction, 50% wrong direction) has barely budged since February (36% right direction, 50% wrong direction). Overall today, whites are more optimistic than Latinos about where the state is headed (47% to 38%).

Bush Support on the Decline – But Is Kerry Benefiting?

President George Bush’s approval ratings are shrinking in California: A majority of residents disapprove of the way the president is handling his job (55% to 41%), as do likely voters (56% to 40%). Among all residents, this is a 16-point drop from one year ago in June 2003, when his approval stood at 57 percent. The only region in California where the president enjoys majority support is in the Central Valley (55%), a stark contrast to the San Francisco Bay Area (26%) and Los Angeles area (38%). Democratic presidential candidate John Kerry currently holds a 9-point lead over the president among likely voters in California (48% to 39%), narrower than the 17-point advantage the “unnamed democratic challenger” had in February 2004. Recent national polls show Bush and Kerry in a statistical dead heat.

More Key Findings

  • Restricting State Government’s Hand — Page 10
    A strong majority of likely voters (60%) support this November’s ballot measure requiring voter approval for any state-level legislation that reduces local government revenues.
  • Retooling Prop 13 — Page 12
    Fifty-six percent of likely voters think taxing commercial property according to its current market value – currently restricted by Proposition 13 – is a good idea. Only 38 percent think it is a bad idea.
  • Economy Still on Top, But Gas Prices on the Radar — Page 13
    One-third of Californians cite the economy, jobs, and unemployment as the top issue facing the state, and the percentage naming gasoline prices (4%) has risen significantly.
  • First Lady a Hit — Page 25
    A strong majority of Californians (59%) have a favorable impression of First Lady Maria Shriver, while only 10 percent have an unfavorable one.
  • What Your Parents Don’t Know… — Page 27
    Nearly half (49%) of parents who currently have children attending public school say they know very little or nothing about how their local school district receives and spends money.

About the Survey

The California State Budget Survey — a collaborative effort of the Public Policy Institute of California and The James Irvine Foundation — is a special edition of the PPIC Statewide Survey. This is the third in a series intended to raise public awareness, inform decisionmakers, and stimulate public discussions about the current budget and the underlying state and local finance systems. Findings of this survey are based on a telephone survey of 2,001 California adult residents interviewed between May 11 and May 18, 2004. Interviews were conducted in English or Spanish. The sampling error for the total sample is +/- 2%. The sampling error for subgroups is larger. For more information on methodology, see page 19.

Mark Baldassare is research director at PPIC, where he holds the Arjay and Frances Fearing Miller Chair in Public Policy. He is founder of the PPIC Statewide Survey, which he has directed since 1998. His most recent book, A California State of Mind: The Conflicted Voter in a Changing World, is available at

PPIC is a private, nonprofit organization dedicated to improving public policy through objective, nonpartisan research on the economic, social, and political issues that affect Californians. The institute was established in 1994 with an endowment from William R. Hewlett. PPIC does not take or support positions on any ballot measure or on any local, state, or federal legislation, nor does it endorse, support, or oppose any political parties or candidates for public office.