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Press Release · February 25, 2003

Crisis Of Confidence: Public Clashes With Leaders On Budget, Economy, Iraq

Residents Concerned About State’s Fiscal Calamity, But Few Back Solutions; Little Support for Bush Administration on Iraq, Tax Cut

SAN FRANCISCO, California, February 25, 2003 — It’s beginning to look a lot like 1994. The new year finds Californians in a dark mood — deeply bearish about the state’s economic prospects and acutely resentful of their elected representatives — according to a new survey released today by the Public Policy Institute of California (PPIC). And while they express profound concern about the state’s fiscal condition, state residents are unwilling to make many sacrifices to help Sacramento balance the books.

By a wide margin, Californians today say the economy and jobs (28%) are the biggest problems facing the state, followed by the state budget and taxes (15%), education and schools (11%), and war and terrorism (10%). An overwhelming majority (71%) of state residents say they expect bad times financially in the coming year, compared to 47 percent one year ago (February 2002). More Californians today (60%) than in November 2002 (47%) believe their region of the state is in an economic recession. Economic angst is also taking its toll on residents’ overall perceptions of the state: 60 percent say California is headed in the wrong direction, while only 28 percent believe it is headed in the right direction. One year ago, 56 percent said the state was headed in the right direction.

Consistent with their heightened anxiety, Californians’ confidence in government has taken a beating. About one in three Californians (36%) say they can trust state government to do what is right “just about always or most of the time,” while 58 percent say they trust the state government “only some of the time.” In January 2002, nearly half of state residents (47%) said they could trust state government most of the time. And the percentage of residents who believe that state government wastes “a lot” of tax dollars has jumped to 55 percent from 38 percent in January 2002.

Approval ratings for Governor Gray Davis have also hit an all-time low. Today, 60 percent of Californians — and 72 percent of likely voters — say they disapprove of the way he is handling his job, compared to 43 percent who disapproved of his performance in October 2002. Nearly two in three residents (63%) disapprove of his handling of the state budget and taxes. The state legislature does not escape Californians’ wrath: More residents disapprove than approve of the legislature’s performance overall (45% to 36%) and of its handling of budget issues (57% to 26%).

“There is a great deal of concern and frustration out there,” says survey director Mark Baldassare. “And Californians have never been shy about pointing fingers.” Indeed, more Californians blame Davis (23%) for the budget crisis than any other cause, including population growth and immigration (17%), the state’s economic downturn (16%), and the energy crisis (13%). When asked specifically about the role of government, 43 percent of state residents say Governor Davis and the legislature deserve “a lot” of the blame for the problem, and 38 percent say they deserve “some blame.” Interestingly, when the state was running a budget surplus, state leaders received few kudos: In January 2000, only 12 percent of state residents gave the governor and state legislature a lot of credit for the surplus.

Message to State Leaders: Keep On Spending …

Nearly all Californians (95%) say that the state’s budget deficit is a big problem (74%) or somewhat of a problem (21%). Most residents (91%) are also very concerned (63%) or somewhat concerned (28%) that the fiscal crisis will cause severe cuts in areas like education, health care, and the environment. Consistent with these priorities, half of Californians (52%) say K-12 education should be the top priority for state spending, followed by health and social services (25%), higher education (7%), roads and infrastructure (6%), and corrections, including prisons (2%).

Although more residents (43%) say they would prefer to deal with the state budget deficit through a mix of spending cuts and tax increases — rather than cuts alone (32%) or taxes alone (7%) — it is not clear what spending reductions would receive public support. Indeed, despite the budget crisis, majorities still believe the state government should spend more money on K-12 education (65%) and health and human services (52%). And few residents want to see less money spent on any state program, including K-12 education (5%), public health (12%), higher education (15%), roads and infrastructure (21%), and environmental protection (23%). In fact, corrections and prisons — the only program area that saw an increase in the governor’s budget — is also the only area where a significant number of state residents (42%) support a reduction in spending. In concept, however, residents like the idea of limiting spending: 52 percent say they would favor an amendment to the state constitution that limits spending increases.

… But Hands Off Our Wallets

If spending cuts are not palatable, is the public willing to support tax increases? Yes — for someone else. Californians support elements of the governor’s proposal that would affect relatively few people, but reject measures that would spread the pain around:

  • 74 percent favor, 25 percent oppose: raising cigarette taxes
  • 52 percent support, 42 percent oppose: reinstating the top rates on the state income tax
  • 44 percent favor, 52 percent oppose: raising the state sales tax from 6 to 7 percent

The same holds for alternative revenue options being considered by the state legislature:

  • 56 percent favor, 39 percent oppose: taxing all internet commerce
  • 39 percent support, 58 percent oppose: reinstating the full vehicle license fee (VLF)
  • 37 percent favor, 60 percent oppose: extending the sales tax to include services
  • 22 percent favor, 76 percent oppose: raising fees at public colleges and universities

Overall, Californians are divided about whose approach they prefer in balancing the state budget: 33 percent say they support the approach of the Democrats in the state legislature, 30 percent support the Republican approach, and 13 percent favor the governor’s plan. But the split is even more fundamental: While 49 percent of residents would pay higher taxes to support a government that provides more services, 45 percent would rather pay lower taxes for a smaller government providing fewer services.

“If state leaders hope voters will make the hard choices, they are fooling themselves,” says Baldassare. “There is little consensus and even less will.” And voters could always be tempted to put the screws to state government again: 25 years after Proposition 13 — the most famous voter reprimand of state government’s fiscal activities — state residents remain more positive (57%) than negative (21%) about its passage. While there is slim support for changing some elements of Proposition 13 — 52 percent favor eliminating limits on property tax assessments for commercial property — Californians remain opposed (60%) to allowing local special taxes to pass with a simple majority.

Californians Stand Apart on Iraq, Prefer Deficit Reduction to Tax Cut

State residents give President Bush his lowest ratings to date: 51 percent of Californians say they approve of his overall performance in office, lower than his national approval rating (63%) and significantly below his state approval rating just four months ago (60% in October 2002). There are also wide partisan differences: 84 percent of Republicans say they support the way the president is handling his job, while only 30 percent of Democrats and 48 percent of independents approve of his performance.

President Bush receives less support for his handling of the situation with Iraq and Saddam Hussein: 50 percent disapprove and 46 approve of his performance in this area. Today’s rating marks a modest decline from October 2002, when 51 percent approved of his handling of the crisis. It is also significantly lower than his national approval rating on Iraq (61%). When asked a more direct question about military involvement in Iraq, about half of state residents (53%) favor military action under certain circumstances, compared to 68 percent nationally. Twenty-nine percent favor military action even if our allies disagree, 20 percent favor action only if our allies agree, and 4 percent favor action but are uncertain about the conditions. Finally, despite the administration’s recent high-profile efforts to make a case for intervention, state residents remain as divided as they were in October 2002 about whether or not officials have done enough to explain to the public why military action in Iraq may be necessary. Currently, 49 percent of Californians say the administration has not made a case, while 47 percent say it has.

Support for the president also falters when it comes to the federal budget: Similar to Americans generally, 47 percent of Californians disapprove and 45 percent approve of his handling of the federal budget and taxes. Specifically on the issue of taxes, half of state residents (50%) say they would prefer to have the federal government balance the budget instead of using the money to fund a tax cut, while 34 percent say they would take the tax reduction. Why so little support for the tax cut? State residents are divided about the fairness of the president’s proposal: 47 percent say it is unfair to people like them, while 43 percent think it is fair. Nationally, 42 percent of Americans think the tax plan is unfair to people like them.

“The partisan differences are stark when it comes to support for the president and his policies,” says Baldassare. “The post-September 11 unity is just a hazy memory.” The partisan split is just one of many attitudinal divides in California today, including race, gender, and geography. On the president’s handling of Iraq, for example, Latinos are more disapproving than whites (55% to 44%), women less supportive than men (53% to 47%), and residents of the coastal San Francisco Bay Area (55%) and Los Angeles (53%) more critical than the inland residents of the Central Valley (41%).

About the survey

The purpose of the PPIC Statewide Survey is to develop an in-depth profile of the social, economic, and political forces affecting California elections and public policy preferences. Findings of this survey are based on a telephone survey of 2,004 California adult residents interviewed from February 6 to February 17, 2003. Interviews were conducted in English or Spanish. The sampling error for the total sample is +/- 2%. The sampling error for the 1,461 registered voters is +/- 2.5% and for the 988 likely voters is +/- 3%. For more information on survey 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 state and federal legislation nor does it endorse or support any political parties or candidates for public office.