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Governor caught in a trap set by his own promisesDaniel Weintraub, Sacramento Bee Columnist, January 20, 2005 Dan Walters Editorial on the Politics of Prop 98 Dollars Gov. Arnold Schwarzenegger has just learned a valuable lesson: Don't make promises you aren't absolutely sure you can keep. A year ago, Schwarzenegger made nice with the state's most powerful teachers union - the California Teachers Association - and the union's allies in the education lobby. The schools establishment supported his request to trim the projected growth in education spending by about $2 billion. In return, Schwarzenegger pledged not to tinker with their budgets anymore in the years ahead. What neither the governor nor the school lobby knew at the time was that state revenues in the ensuing year, buoyed by a strengthening economy, would soar well beyond expectations. And the state's constitutional formula that dictates spending on education would then trigger a massive increase for the schools, which if delivered would devour almost all of the growth in revenues and leave next to nothing for any other program in the budget. To keep to the letter of his agreement with the school leaders, Schwarzenegger would have had to cut services elsewhere or raise taxes - violating other pledges he had made. Even if he had decided to raise taxes, his agreement with the schools would have given them more than half of any new money brought into the treasury. Promising too many things to too many people, he had boxed himself in. To escape his predicament, Schwarzenegger proposed giving the schools a 6 percent increase of $2.9 billion - about $2.4 billion from state funds and the rest from local property taxes. That's enough to allow local districts to keep pace with enrollment growth and inflation; indeed, it is probably more than anyone thought education would be getting when the original deal was hatched a year ago. But the governor's new budget would give the schools about $2.3 billion less than they would have been entitled to under a strict reading of Proposition 98, the constitutional provision that sets a minimum level of funding for education. Schwarzenegger is correct when he says that school spending will still grow at a healthy clip, and he could also point out that state and local spending on education has grown by more than $11 billion since 1998. Spending per pupil has also grown, by more than 20 percent - contrary to what you might be hearing in the teachers radio commercials blasting Schwarzenegger and alleging, falsely, that the education budget has been cut. But this is about more than just numbers, and school leaders are right to feel that the governor let them down, and to question whether his word is good. In a visit to The Sacramento Bee's editorial board Tuesday, Schwarzenegger was understandably defensive about the situation. He pointed out that he kept his word to higher education leaders who had a similar deal with him, and to local government officials. He even invited The Bee's reporters to investigate his dealings in Hollywood, where, he said, his word was good, and he was known for delivering more than he agreed to in his business deals. "I would never, ever, intentionally say something to someone knowing that I cannot keep my promise," Schwarzenegger said. But Sacramento isn't Hollywood, and Schwarzenegger is no longer the master of his own fate. His ability to follow through on a deal is affected by the economy, by the state's spaghetti pot of fiscal funding formulas, by 120 independent members of the Legislature and their willingness to go along with his ideas. In this case, the governor said, circumstances changed, and he simply could not deliver. "When you have a certain amount of money, when you have growth of revenues of $5 billion, and someone comes to you and says, 'Now give us $4.7 billion out of this $5 billion,' we can't do that. Now did I think about it? Was it a tough decision? Yes. It's a very tough decision. ... "It is very difficult sometimes to make those decisions, about education, should we give this $4.7 billion because this is something we talked about last year, or should I then take off hundreds of thousands of kids from health care, from [the] Healthy Families [program]? Should I take them off from that, when I kept saying in my campaign that I want to have during my administration all kids get insured? "So it's like you have these two opposing things. ...[You] have the children on both sides, education and health care, so you try to give both something." I asked the governor what, if anything, he had learned from the experience. His answer: Always leave yourself an out. "I think you learn, uh, to just always make it clear that things can change, and that changes, then, the deal," he said. "That's just the way it is. ... At that point, when I sat there, I didn't know what situation we would be in today, and that there would be this other side, and we'd have to take the money away." Just a few days ago, Schwarzenegger said that the state's budget mess was the result of politicians promising people more than the state could afford to deliver. Now he knows firsthand just how easy it is to fall into that trap. School budget fight really skirmish in war for Capitol controlDan Walters , Sacramento Bee Columnist, April 24, 2005 As Gov. Arnold Schwarzenegger retreated on overhauling public worker pensions, the war over his "year of reform" shifted to a measure that would impose some limits on state spending growth and empower governors to unilaterally cut spending. The governor says it's needed to control the state's tendency to spend more than it receives in revenues. But one provision, modifying the spending guarantees for schools that voters enacted in 1988, has become its most contentious issue and fueled an escalating conflict over Schwarzenegger's 2005-06 schools budget. Technically, the budget and the ballot measure are disconnected, but politically, they are intrinsically and intricately intertwined. The hard-hitting television commercials that the California Teachers Association is airing to excoriate Schwarzenegger on his budget are really aimed at forcing him to abandon the spending limit, just as he retreated on pensions, or defeating the measure in a special election next fall. Conversely, pro-Schwarzenegger ads are airing to counter the effects of the CTA spots. That said, the budget flap is a case study in how single-purpose, short-term decisions lead to longer-term problems. The saga began in 1988, when the CTA and other members of the "Education Coalition" pushed Proposition 98, saying it would merely give the schools a fair share of the state's revenues - a protective reaction to 1978's Proposition 13, which slashed local property taxes and shifted responsibility for schools largely to the state. Fast-forward to 2000, when the state received a one-time, $12 billion windfall of income taxes from upheavals in the high-tech industry. Although then-Gov. Gray Davis publicly pledged to avoid spending the windfall on permanent obligations, he quickly bowed to political pressure and committed about $8 billion for spending and tax cuts - the genesis of the budget deficits that plague the state five years later. The state could not afford those commitments and has since then borrowed tens of billions of dollars to cover its "structural deficit." A major component of the 2000 spending binge was nearly $2 billion a year for schools that Davis committed with a political gun at his head - a CTA-sponsored ballot measure that, if approved, would have raised school spending by about $6 billion a year. CTA dropped the measure in return for the extra $2 billion that, under Proposition 98, was almost impossible to reduce once it had been folded into the school financing base. As he became governor, Schwarzenegger negotiated a deal for a one-time, $2 billion reduction in the state's school spending with the CTA and other school groups, but promised that he would fully implement Proposition 98 in subsequent years. In retrospect, it was a foolish, or perhaps naïve, promise. This year, faced with the reality of the budget, Schwarzenegger reneged. His administration was projecting a $5 billion increase in revenues for 2005-06 and Proposition 98 would have required virtually all of it to go to schools, but he scaled the school boost back to $3 billion, saying the other $2 billion was needed for health, welfare and other high-priority programs. That's the basis on which the CTA ads accuse Schwarzenegger of shortchanging schools by $2 billion, and on which the pro-Schwarzenegger ads hail his $3 billion boost for schools. The school folks want their money, and in a perfect world they'd get it, and even more. California schools are certainly not overfinanced. But if schools were to receive all of the $5 billion increase in revenues, that would lead to service cuts in other programs, unless the already horrendous deficits were to grow larger or the state were to raise taxes, which Schwarzenegger has also repeatedly pledged not to do. Schwarzenegger shouldn't have made his Proposition 98 promise in the first place, but under the circumstances, giving schools 60 percent of the state's projected revenue increase is not unreasonable, as even some pro-school spending advocates agree privately. It's really just pulling back the $2 billion that Davis irresponsibly granted the schools in the first place. Reasonableness, however, is not a factor. The school money has become a weapon in this year's fight for control of the Capitol.
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