Dems step up fight with governor on money for schools

Largely symbolic move adds $2 billion to education budget

By Lynda Gledhill, John M. Hubbell, San Francisco Chronicle, May 17, 2005

Democrats laid the foundation on Monday for this year's budget fight, demanding that Gov. Arnold Schwarzenegger devote more money to education and floating a plan to let voters decide in a special election if taxes should be raised to increase school funding.

Schwarzenegger released a revised budget last week that contains $4 billion in unexpected revenue but does not significantly increase spending on education, angering Democrats who say the governor is shortchanging schools.

The nonpartisan legislative analyst said Monday that if lawmakers increase spending, they should make more significant cuts or raise taxes to keep the state's finances from falling even further out of balance.

The Senate budget subcommittee on education, in a largely symbolic gesture, voted to put another $2 billion into the education budget, and state Senate leader Don Perata, D-Oakland, said he wants voters to approve a tax increase for education if the governor calls a special election this fall.

"He's certainly offered us an immediate opportunity in November to address this situation. I would challenge Californians in November to agree to a tax for education, to improve education in this state," Perata said.

Education officials have been bashing Schwarzenegger for breaking his word by not giving them money they believe they are due under an agreement made with the governor.

Last year, education groups agreed to take a $2 billion cut to help the state out during the budget crisis. In exchange, they say, Schwarzenegger assured them that they would get their proper share of any new revenue that came in to the state.

"When the governor asked for a reprieve last year, it was with the idea that he would step up to the plate and return that $2 billion. That didn't happen," said Sen. Jack Scott, D-Altadena (Los Angeles County), chair of the three-member subcommittee, which voted along party lines to approve the funding.

The issue will ultimately be decided during negotiations between the governor and legislative leaders of both parties as they try to craft a budget before the July 1 deadline.

Administration officials dismissed the notion that a tax increase is the solution.

"Taxes aren't our default mechanism," said H.D. Palmer, spokesman for the Department of Finance. "Taxes don't deal with the other side of the ledger."

Perata said he would be interested in exploring either an upper-income tax or a sales tax on some services. To get on the ballot any measure would have to muster a two-thirds vote in the Legislature, which would require Republicans to vote for it.

"In a perfect world, the Legislature would do its job, and do it itself. But I think the governor at the very least ought to commit to working together with Democrats in both houses to get the Republican votes that are necessary to put onto the ballot a proposition that we increase funding for education. It really doesn't need to be any more complicated than that," Perata said.

In his revised budget plan presented on Friday, Schwarzenegger proposed using new revenue to fund transportation projects, pay down debt to local governments and reduce deficit borrowing.

While the governor gave schools about $500 million more than they are due under Proposition 98, the voter-approved mandatory funding mechanism for schools, he has taken unrelenting criticism from education groups for breaking his deal with them.

"We were deeply concerned and deeply disappointed that the overall budget revision cements the governor's broken promises to California students and public schools, and it fails to provide any long-term solutions," said Kerry Clegg, president of the California School Boards Association.

Meanwhile, the independent legislative analyst said the governor's revised budget does have significant savings that lawmakers should try to replace if they restore some of his proposed cuts.

"Our message to the Legislature is that it's an important budget opportunity to get the state's fiscal house in order, but it will take ongoing solutions of the magnitude proposed in the governor's budget," said Elizabeth Hill, whose nonpartisan advice is widely respected by the Legislature.

She said more spending could also be accommodated through tax increases.

Hill said the state will continue to see budget deficits in the years to come, with a $5 billion gap in the 2006-07 fiscal year.

She did raise concerns about some of the governor's proposals, including saying that an accounting difference leads her office to believe that the governor overstated revenues by $600 million. Palmer said the administration is studying Hill's method of accounting.

Hill also cautioned that several proposed savings may not be realized, including $400 million in employee pay concessions, nearly $500 million in teacher retirement costs that the state wants to shift to school districts and $525 million of revenue from the sale of a pension obligation bond.

Palmer said the administration has been diligent about trying to only count achievable savings, noting that the administration downgraded how much it expected to see from several other proposals.

While the administration said on Friday that all of the $4 billion in new revenue will be counted as one-time and not available for spending next year, Hill said she anticipates about $500 million of the revenue to be ongoing.

Lower taxes or higher spending? Let voters choose

By Daniel Weintraub, Sacramento Bee Columnist, May 17, 2005

Maybe it's time for Gov. Arnold Schwarzenegger to do something that would make his planned election this fall truly special. Democrats complain that the proposals Schwarzenegger has put forward so far are not important enough to merit the unscheduled statewide vote. He wants to change the way political district lines are drawn, adopt new rules for hiring and firing teachers, and overhaul the state's budget process.

Meanwhile, the governor last week proposed a revised budget for the coming year that Democrats have panned because, in their view, it spends too little on public education and the poor.

The two confrontations - Schwarzenegger's policy agenda and the next state budget - seem destined to become intertwined as summer approaches. So why not go ahead and link them overtly? Here's the idea: Pass a stop-gap budget that mostly continues the status quo for the time being. Then, this November, put the issue directly to the people of California.

Some will cringe at the idea of putting the state budget - or at least its driving principles - on the ballot. Don't we have enough problems with direct democracy already?

But the Legislature has been tied in knots for years over the budget, and there is no sign that this ideological deadlock will be broken any time soon. Democrats want higher spending, while Republicans refuse to raise taxes. A compromise, when there is one, means higher spending and lower taxes. We get more deficits, and more borrowing.

So instead of pushing the problem off for yet another year, Schwarzenegger could expand the special election to a subject nearly everyone would consider worth the trouble: the state's fiscal future. This is a crucial, threshold question that is perfectly proper for the voters to decide.

The governor's revised budget would spend about $7 billion more next year than this. It gives schools a $3 billion increase (enough to keep pace with enrollment growth and inflation) and increases spending on health care and transportation. It would freeze welfare payments to the elderly and disabled at their current levels while cutting monthly grants to the able-bodied poor. It begins repaying the state's debt to cities and counties while also asking counties to shoulder more of the burden of wages paid to workers who care for the disabled in their homes.

But Schwarzenegger has conceded that his budget proposal, even if fully adopted, won't fix the state's problem. He estimates that next year, he will still have to close a $4 billion gap between spending and revenues. His package needs to include a plan to wipe out that gap without raising taxes. Voters deserve to know what will happen if they stick with his approach.

Then we get to the alternative.

The Democrats say they would like to spend at least $2 billion more on the schools than Schwarzenegger has proposed. They also generally oppose his proposed cuts in social welfare programs, which total about $1.3 billion. Throw in an assortment of other spending priorities - from public employee wages and benefits to higher education - and let's call it an even $4 billion. That's probably the real difference between Schwarzenegger's position and the Democrats in the current year. Add that to the gap the governor acknowledges will still exist next year, and the total shortfall in the Democrats' plan is closer to $8 billion.

Where might that money come from? Everyone's favorite source is always the wealthy. Democrats say they would like to restore the higher rates on upper-income taxpayers that were temporarily in place under former Republican Govs. Ronald Reagan and Pete Wilson. That could raise an estimated $2.5 billion a year.

A split roll property tax - raising taxes on commercial property by reassessing their land and buildings every year - might raise another $3 billion.

And the rest of the money could probably be found by expanding the existing sales tax to cover some professional services, like lawyers, accountants, architects, barbers and auto mechanics and such things as sporting events, amusement parks and cable television.

That menu of taxes is only an educated guess. It would be up to the Democrats to craft the tax package that they think the voters would be most likely to approve, with the only proviso being that it be big enough to pay for all their proposals and balance the budget for the foreseeable future.

The biggest problem with this scenario is that it would take a two-thirds vote to put the Democrats' taxes before the voters, and no Republican lawmaker would want to vote to do that. But if the governor embraced the idea of taking the issue to the people, he might be able to get enough Republicans to vote to place the package on the ballot even as they vowed to oppose it at the polls.

The choice would be clear, the debate intense. But it is a discussion California dearly needs to have. Do we want a slimmed-down government that gets by on the level of resources we're committing to state programs today? Or do we want to raise taxes and provide more services? Using this approach, at long last, we would have the answer.

Initiatives on unions, teachers set

The two measures qualify for the next ballot

By Andy Furillo, Sacramento Bee, June 7, 2005

An initiative that would restrict government employee unions' political spending and another that would extend public school teachers' probationary periods qualified for the next statewide ballot, the secretary of state's office announced Monday.

The public employee union measure would require labor organizations to obtain their individual members' written consent every year before they could spend their dues money on political campaigns.

As for the teachers, they would have to work for five years instead of two before they could obtain "permanent employee" status.

The two initiatives would be decided in a special election in November if Gov. Arnold Schwarzenegger calls for one. If he doesn't, the proposals would be put to the voters in June 2006. Schwarzenegger has until next Monday to call for a election on Nov. 8 - longer if he wants a statewide vote even later in the year.

Schwarzenegger has championed the teacher tenure initiative as a cornerstone to his effort to change government operations in the state. The Republican governor has expressed philosophical agreement with the measure targeting public employee unions, but has not come out specifically in favor of the initiative.

Longtime conservative activist Lew Uhler organized the effort to get the union dues measure on the ballot. His successful petition-gathering campaign was financed in large part by the Small Business Action Committee, an organization whose leader, Joel Fox, is closely aligned with Schwarzenegger.

"I'll be darned," Uhler said Monday, when told his measure had qualified. "We anticipated that it would, and it's obviously going to be a battle royal. We are all geared up for it."

Gale Kaufman, a Democratic political consultant who is heading up the campaign for the Alliance for a Better California, which opposes the Uhler initiative, said her organization "is very disappointed that an initiative designed to cripple the rights of working men and women has qualified."

California Business Roundtable President Bill Hauck said the tenure measure "is important to make sure that teachers are really going to be able to live up to the standards we need them to live up to."

"I think two years is too short a time to determine whether that will be the case," said Hauck, who also is a board member of Citizens to Save California.

The Schwarzenegger-backed committee is leading the campaign for teacher tenure and two other legs of the governor's overhaul agenda - one that would take redistricting away from legislators and put it in the hands of a panel of retired judges and a third that would impose a new spending control mechanism on the state budget.

Kaufman said the tenure proposal "is designed to hurt teachers' ability to teach in the classrooms."

"Quite frankly, when you tell people this one initiative is the entire reform package the governor has put forward on education this year, they are dumbfounded," Kaufman said.

One other ballot measure - an initiative that would require parental notification for unemancipated teenage girls who are seeking abortions - has qualified for the next ballot. Five others, including the two supported by Schwarzenegger, are pending signature approval by state election officials. If Schwarzenegger calls the special election for Nov. 8, all initiatives qualifying by June 30 would be on the ballot, according to the secretary of state's office.

Arnold's union strategy hit

Critics blast effort to build public anger against groups ahead of vote

By Tom Chorneau, Associated Press, June 7, 2005

Democratic leaders and union officials on Monday condemned a plan by Gov. Arnold Schwarzenegger's political team to create a "phenomenon of anger" against public employee unions leading up to an expected special election. Some critics said the disclosure of the strategy is shocking but consistent with the increasingly bitter fight over Schwarzenegger's ballot proposals.

"The idea of creating anger is so offensive," said Barbara Kerr, president of the California Teachers Association. "It's the worst kind of politics. I believe the people of California are smarter than the governor is giving them credit for and they will see through this."

The Los Angeles Times reported Sunday that its reporters had listened to a conference call between the governor's political team and top contributors. The group discussed how to persuade voters that unions are the cause of many of California's problems.

"When you get to the point of 'These people are on your payroll and they are out to roll you every day,' that creates a kind of phenomenon of anger," Don Sipple, Schwarzenegger's media adviser, said during the call. "But it takes a long time to get there. As the campaign goes on, we have to articulate that."

Schwarzenegger is expected in the next week to call for a special fall election to pursue his agenda to impose a new state spending cap, redraw legislative and congressional districts and lengthen the time it takes schoolteachers to earn tenure.

Many of the governor's supporters are pressing a separate measure that would restrict the use of union dues for political purposes.

On Monday, the secretary of state said the union-dues and teacher-tenure items both qualified for the next statewide ballot, either a special election this fall or a regularly scheduled election next June.

Democrats and their supporters claim those measures are aimed at them. They are promoting a platform that includes a new energy-deregulation proposal and prescription-drug discounts while also mounting a campaign against the governor and the business interests backing the anti-union measure.

Nurses and teachers unions have loudly protested at the governor's public appearances. On Monday, labor leaders took issue with the newly revealed campaign strategy.

"Reports about Gov. Schwarzenegger's strategy of demonizing public employees should come as no surprise," said J.J. Jelincic, president of the 140,000-member California State Employees Association. "Ever since he dropped his 'moderate' facade earlier this year, he has been blaming government employees for the inability of his administration to meet the real needs of Californians."

Lance Corcoran, executive vice president of the California Correctional Peace Officers Association, said the governor's agenda will backfire because it goes beyond unions and targets all working people.

Treasurer Phil Angelides, who declared he will run against Schwarzenegger next year, delivered 50,000 petition signatures to the Governor's Office on Monday calling for Schwarzenegger to drop his plans for the election expected to cost $80 million.

He said if the governor needs to manufacture animosity to achieve his goals then there's no need for an election because voters aren't truly discontent about the things he wants changed.

"The governor's so-called reforms will take California in the wrong direction while doing nothing to address the real issues facing our state," he said.

Schwarzenegger, appearing on a Sacramento radio talk show Monday, said the biggest reason for the election is to pass his spending cap. He said he expects the unions to continue fighting his agenda, pointing out that he believes that labor groups are happy with the status quo.

"They like it the way things are, but I believe very strongly that the way things are will bankrupt the state," Schwarzenegger told an afternoon audience of KFBK-AM.

The governor was not asked about the comments of his political adviser. His spokeswoman referred calls to Marty Wilson, a senior campaign consultant, who didn't immediately return phone calls from The Associated Press.

Pressure for special election

Conservatives say backing off now is not an option

By Carla Marinucci, San Francisco Chronicle, June 7, 2005

Gov. Arnold Schwarzenegger's push for a special election has fired up California conservatives to such an extent that a retreat now could be devastating to the governor's political future and to his party, Republican grassroots activists and conservative leaders warn.

"There's no turning back," said Thomas Del Becarro, chair of the Contra Costa County GOP and publisher of PoliticalVanguard.com, a conservative news and commentary Web site. "At this point, the momentum for reform continues to build, and the grassroots' hearts and minds are into this election -- as much as it was for the recall."

"If it doesn't happen, the governor has a credibility issue," agreed Jon Fleischman, a GOP campaign strategist and publisher of the Flashreport, a roundup on California politics. "The soldiers are wanting to be deployed -- and if the governor calls the retreat, that demoralizes the soldiers."

The no-nonsense outlook from conservative GOP loyalists came at the inaugural meeting Saturday of the new state chapter of the Club for Growth -- a supply-side, anti-tax political action committee that has raised millions of dollars for conservative causes nationwide. Much like the abortion rights powerhouse Emily's List at the other end of the political spectrum, the organization's goal is to bundle political contributions to help candidates and causes that support its causes -- in this case, an anti-tax agenda of "liberty, opportunity and taming the government 'monster.' "

The weekend's meeting brought some 300 activists to the Crowne Plaza Hotel to listen to a roster of high-profile speakers -- including pollster Dick Morris and Stephen Moore, one of the founders of the national Club for Growth -- who assessed the GOP outlook across the nation and prepared the party's loyalist troops for the fight ahead in California.

The governor for months has said he intends to go to the voters to make changes in the state budget process, redistricting procedures and the way public school teachers earn tenure.

Schwarzenegger has faced an organized and determined opposition on these measures. Groups such as teachers and nurses have protested his appearances and have broadcasted political ads as if already in the late stages of a campaign.

The governor's decision to go forward with an election -- should he choose to -- carries political risks. If he loses, the governor's ability to push the Democratic-controlled Legislature will be severely weakened, and analysts say his potential opponents in next year's re-election campaign will be emboldened.

With just days until Schwarzenegger's deadline for calling a November special election, many of this weekend's speakers at the conservative gathering drew cheers by urging them to put their checkbooks -- and their grassroots organizational skills -- behind the governor's proposed ballot measures. The group also rallied behind the "paycheck protection'' issue, which is intended to curb the political clout of Democratic-allied unions and could qualify for the special election ballot.

"What's at stake is either reform or higher taxes," said Joel Fox, a Schwarzenegger adviser and co-chair of the Citizens to Save California, a fund- raising committee working to support the governor's measures. The final decision to hold a special election remains with the governor, he said, but "It's a great opportunity -- like a 100-year flood ... and I think he will do it."

Schwarzenegger has recently been battered by falling numbers in polls and has lost ground among moderates and independents, but the enthusiasm at the weekend gathering was evidence the governor still has overwhelming support among conservatives. Even in California, a state dominated by Democrats, the committed conservative core has considerable organizing muscle because of its ability to raise money and manpower for GOP causes.

But Garry South, a veteran Democratic strategist, says the GOP conservative wing and groups such as the Club for Growth have made it only more difficult for Republicans to make inroads in California.

For example, he said, polls repeatedly show that "voters are not opposed to new taxes" if the money will improve schools in California, and generally they don't oppose tax increases to the wealthiest Californians.

"The Club for Growth has as its goal keeping moderate Republicans from winning primaries, to sweep the horizon and try to reduce it to the true-blue, orthodox right," he said. "They're not going on a crusade against Arnold, but against everyone else? Yes."

Many attendees at the meeting noted that conservatives differ with Schwarzenegger on issues such as gay rights and the environment but continue to strongly back his efforts to balance the budget without raising taxes -- and were fired up when he took a high-profile stance against illegal immigration, recently endorsing the work of the Minutemen, a citizens group that patrolled the border.

The new California Club for Growth has endorsed Schwarzenegger's call for reform and now plans to promote initiatives directly to the state's voters, says former Assemblyman Tony Strickland, president of the organization.

"Arnold Schwarzenegger is a good salesman for our message," Strickland told the group at Saturday's meeting. "With Arnold Schwarzenegger's success, we will be able to make sure we will win California in 2008 and send (New York Democratic Sen.) Hillary Clinton packing."

But there were warnings that, after months of talking, the governor could pay dearly if he fails to deliver on his agenda.

"The governor has drawn a line in the sand against the most powerful (special interests) which have wrapped its tentacles" around the state budget, said state Sen. Tom McClintock, a popular figure among conservatives. "And it's important to see that fight through."

Steve Frank, whose Political News and Views newsletter reaches 200,000 subscribers around the state, agreed, saying that "on a state level, if the GOP throws its hands in the air and says, 'We give up,' and the governor doesn't stand for reform in the face of a Democratic onslaught, then how can we?"

Fox told Republicans to applause that "the reason we had the (2003) recall was to fix the budget problems," and many Republicans now believe that if Schwarzenegger waits until 2006 to bring budget reform before the voters, "he doesn't affect the budget" until at least two years later -- too late for many.

"For that reason alone, we will have the special election," Fox said.

A radical plan for California reform: Home rule

By Peter Schrag, Sacramento Bee Columnist, June 8, 2005

Given California's substandard school funding, the Democrats' soak-the-rich tax increase proposal for education is amply justified and easily affordable for people who've just gotten the biggest federal tax cuts in history. But it wouldn't begin to clean up the state's larger governmental mess. Nor would the convoluted autopilot spending cap now heading to the ballot that the governor is supporting, or the frontal attack on public employee unions that he's threatening to back.

The tax increase, even in the unlikely event that it passed, would add another layer to the state's incomprehensible fiscal system. Ditto for the governor's agenda. Neither would streamline government or make it more accountable or transparent. In some ways, they would tangle it up some more. At its dysfunctional heart, the system effectively confuses, alienates and disenfranchises voters, especially at the local level, where neither voters nor their representatives control their own revenues and thus much of the local agenda.

For even the most conscientious Californians, it's virtually impossible to understand how schools are funded, who allocates local property tax receipts, what justifies control of the state's budgeting system by a political minority or how Proposition 13 transferred power from local districts to the state. The system increases the clout of the special interests that Gov. Arnold Schwarzenegger rails about.

Meanwhile, power in most large cities and school districts has gone to public employee unions - and in some cases developers - which are now the prime source of campaign money and of candidates for school boards, city councils, boards of supervisors and the hundreds of other jurisdictions that most voters hardly know exist.

No one, to take a single example, denies the clout of the California Teachers Association in Sacramento (or that of the cops, or the prison guards, or the big corporations or the Indian casinos), but CTA's local affiliates have at least as much clout in the big districts as the state organization has, and maybe more.

Just ask Jay Schenirer, former president of the Sacramento City Unified School District board of trustees, who lost his seat after an intensive union campaign against him. His crime: to support the conversion of a failing high school into a cluster of small charter schools. Look at local school budgets (or for that matter, city and county budgets) burdened by years of over-generous union deals.

That clout was inadvertently handed to the unions by a pair of court decisions in the 1970s and by Proposition 13 itself. By effectively eliminating local districts' power to increase property taxes, it severed one crucial nexus between citizens and their governments. If the district could no longer bite local businesses (or anyone else) in the pocketbook, interest in local elections waned.

Where once moderate business leaders, looking for a combination of fiscal responsibility and good services, had often run for office or supported others, now the biggest source of funding and organization in local elections - and often of candidates - is the public employee unions themselves.

That doesn't mean union-supported school board members are faithful toadies to the organizations that backed them. Once they're in office, many respond to a host of other pressures - from parents, from the state, from the circumstances of running complex systems. But they can't replace the civic-minded leaders in increasingly short supply on local governing boards, especially in large districts, where running for any office is expensive. And like Schenirer, those who get elected are in danger from well-funded, union-backed opponents if they cross the union.

And because citizens lack the fiscal nexus with local government, their role as voters has eroded as well - in part because their control has been eviscerated and in part because the convoluted system is both impenetrable and unaccountable. Union clout is as much a symptom as a cause of the state's problems. The tighter the caps on elected government, state and local, the more restricted the discretion of elected officials, the more attenuated citizenship becomes.

No single change is enough for a real fix; the system is too tangled for that. But because civic engagement begins at the local level, probably the most promising start in restoring it is to re-empower local agencies with some ability to raise their own revenues. Those increases (or cuts) would be enacted through a majority vote of residents or, better yet, through a simple majority vote of the local governing board.

The seeming radicalism of such an idea tells you how far California's sense of government has gone in the last generation. There was a time when it was regarded as a civic book truism. If voters and taxpayers didn't like the tax bite or how it was spent, all they had to do was support the challenger in the next election.

It was a clear way of holding government accountable and engaging the citizenry. If Schwarzenegger and the Democrats were really interested in reform and not another ballot fight, they might want to learn about it. It was called democracy.