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Press Release · June 12, 2003

Special California State Budget Survey: Californians Bitter, Partisan As Budget Crisis Drags

Little Support for Short- and Long-Term Fixes, But Willingness to Ante Up for Schools; Most Residents Believe Current Tax System is Fair

SAN FRANCISCO, California, June 12, 2003 — Still wary of a stagnant economy and caught between a rock and a hard place as they consider state budget options, Californians are lashing out at state leaders, according to a new survey released today by the Public Policy Institute of California (PPIC) and The James Irvine Foundation. Yet, while partisanship reigns over taxing and spending proposals, state residents remain surprisingly united and steadfast in their support for K-12 education.

Nearly all Californians (94%) say that the state’s budget deficit is a big problem (73%) or somewhat of a problem (21%). Despite this overwhelming concern, they are unwilling to support many of the solutions proposed by Governor Gray Davis and the State Legislature. On the one hand, most Californians are opposed to spending cuts in the major programs that dominate the state budget, including K-12 education (82%), health and human services (71%), colleges and universities (69%), and transportation projects (61%). Majority support for spending cuts is apparent in only one area — prisons and corrections — and at 55 percent, this support is by no means overwhelming. On the other hand, residents also reject all but one proposed tax or fee increase:

  • Income Tax: 45 percent support, 48 percent oppose changing the top rate of the state income tax from 9.3 percent to 10.3 percent. Support has fallen from 52 percent in February.
  • Sales Tax: 46 percent favor, 52 percent oppose a one-half cent increase in the state sales tax.
  • Vehicle License Fee (VLF): 38 percent support, 58 percent oppose reinstating the full VLF.
  • Cigarette Tax: 71 percent favor, 28 percent oppose raising cigarette taxes.

Is there anything state residents will support? Borrowing, but with serious reservations. A majority of Californians say they favor authorizing a $10.7 billion state bond issue proposed by the governor. As for repaying the bonds, there’s a slight preference for using existing resources (54%) — the position of Republican leaders — rather than the governor’s plan for increasing the sales tax to repay the bonds (50%). However, 61 percent of residents say they oppose the general concept of borrowing money as a way to reduce the deficit. “In the borrowing proposals, Californians have found the least offensive option,” says survey director Mark Baldassare. “But make no mistake about it, they are resentful about the choices they are being asked to make.”

Government Ratings Hit Lows

Coincident with the deepening budget crisis and their anger over proposed solutions, Californians’ trust in government “to do what is right” is at its lowest level since the PPIC Statewide Survey began in 1998. Today, only 34 percent of all adults say that they trust the government in Sacramento to do what is right just about always or most of the time, while 60 percent say state government can be trusted only some of the time. A majority of Californians (52%) also think that the state government wastes a lot of the money it raises in taxes.

Approval ratings for Governor Davis also continue to drop. Today, 64 percent of Californians — and 75 percent of likely voters — say they disapprove of the way he is handling his job, compared to 60 percent who disapproved of his performance in February. Two in three residents (66%) — and 74 percent of likely voters — dislike his handling of the state budget and taxes. If a recall election were held today, 48 percent of Californians would vote to recall the governor, while 41 percent would vote to keep him in office. Among likely voters, the margin of support for a Davis recall is 8 points (51% to 43%). Only 16 percent think that a successful recall would make the current budget crisis more difficult to solve, while 52 percent think it would have no effect on the state’s ability to put its fiscal house in order. As in the governor’s ratings, there is a strong partisan split over the recall question: 57 percent of Democrats oppose the recall while 75 percent of Republicans support it.

More residents also disapprove than approve of the legislature’s performance overall (44% to 39%) and of its handling of budget issues (57% to 29%). It is interesting to note that more Californians agree than disagree (48% to 42%) that term limits in the state legislature make it more difficult to solve complex budget issues because representatives lack experience. Again, there are strong partisan differences: 54 percent of Democrats say term limits make it more difficult to resolve budget issues while 52 percent of Republicans disagree.

“This deep partisan split is evident almost across the board,” says Baldassare. Although Democrats and Republicans disagree on current budget proposals, their more fundamental, ideological differences divide the state into two camps: While 49 percent of Californians would pay higher taxes to support a government that provides more services, 45 percent prefer to pay lower taxes for a small government that provides fewer services.

But Majority Still Willing to Dig Deep for Education

Despite the budget crisis and growing polarization, Californians remain loyal to a long-standing concern: K-12 education. Indeed, when residents are asked to rank the most important issue facing the state, schools (13%) and the state budget (13%) tie for second place behind the economy and jobs (31%). Overall, 62 percent of Californians want to spare K-12 spending when given the choice between that and preserving spending on health and human services (20%), higher education (10%), and corrections (6%).

Despite their aversion to taxes generally, 67 percent of Californians say they are willing to pay higher taxes to maintain current funding for K-12 public education. And 73 percent of adults and 65 percent of likely voters say they would vote yes on the $12.3 billion Kindergarten to University Bond Act. The other major fiscal proposal on the 2004 ballot — the California Infrastructure Investment Fund — also receives majority support (59% all adults, 53% likely voters).

No Groundswell of Support for Major Structural Reforms

Given their frustration with the current budget debate, are Californians ready for reform? Yes and no. On some targeted proposals, residents are supportive:

  • Spending Limits: 70 percent support the idea of limiting the amount of money by which state spending could increase each year.
  • Commercial Property Taxes: 57 percent favor lifting limits on commercial property tax assessments.
  • Internet Sales: 57 percent believe that taxing Internet sales is a good idea.

However, Californians are much less ready to make or agree about more fundamental fixes: Many Californians are reluctant to change the two-thirds supermajority requirements in favor of allowing the legislature to pass the budget with a 55 percent vote (46% to 43%) or enabling voters to pass local special taxes with a 55 percent majority (46% to 45%). “Californians are angry about the current budget crisis, but there is no reservoir of discontent over larger structural issues,” says Baldassare. Why is it so hard to make the case for reform? First, although residents are engaged — 61 percent say they are closely following news about the state budget — few residents know much about the budget process in California. Only 15 percent of Californians say they know a lot about how their state and local governments raise and spend money. Moreover, residents are more likely to blame the crisis on external factors — population growth (22%), the economy (18%), the energy crisis (16%) — than on factors involving the fiscal system itself, such as spending increases (9%) or revenue declines (8%). Second, Californians are not outraged by the current tax system:  66 percent of state residents believe the local and state tax system is fair, and about half think they pay the right amount (47%) or too little (4%) in taxes.

Federal Fiscal Leadership Also Found Lacking

Californians find little to like at the federal level when it comes to budget and tax issues. Although 57 percent of Californians approve of President George W. Bush’s overall job performance — compared to 64 percent nationally — his rating remains far more mixed on federal budget and tax issues specifically: 48 percent of state residents approve and 44 percent disapprove of his handling of fiscal policy. Why the gap? Many Californians question the wisdom of tax cuts at a time of deficits and economic uncertainty:

  • By a two-to-one margin, state residents say they would rather have the federal government spend more money on domestic programs than have a tax cut (62% to 29%).
  • Nearly six in 10 respondents believe that the better way to improve the national economy is to reduce the deficit rather than cut taxes (58% to 34%).

“As unhappy as they are with Sacramento, Californians don’t see Washington as a model for fiscal leadership,” says Baldassare. “They are unhappy with their choices across the board.” Predictably, there are strong partisan differences in attitudes about President Bush and budget issues: While a majority of Californians (62%) believe the federal government should provide financial assistance to states facing budget deficits, Democrats (74%) are far more likely than Republicans (40%) to support federal aid.

Other Key Findings

  • Consumer Confidence: A Glimmer of Hope? — Page 14
    Although many Californians (57%) continue to say the state is headed in the wrong direction, and 61 percent believe their region is in an economic recession, there is hope: The percentage of residents expecting bad economic times in the next year has fallen to 58 percent from 71 percent in February.
  • Most Hated Tax — Page 10
    The income tax (35%) beats out property taxes (26%), vehicle license fees (21%), and sales taxes (14%) as Californians’ most disliked tax.

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. It is the first survey in a series intended to raise public awareness, inform decisionmakers, and stimulate public discussions about the current state budget and the underlying state and local finance system. Findings of the survey are based on a telephone survey of 2,003 California adult residents interviewed from May 22 to June 1, 2003. Interviews were conducted in English or Spanish. The sampling error for the total sample is +/- 2%. The sampling error for the 1,424 registered voters is +/- 2.5% and for the 961 likely voters is +/- 3%. For additional 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 and director of the PPIC Statewide Survey. 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.