During his presentation of the 2005/06 budget, Governor Schwarzenegger proposed a bold agenda of reform. By March, supporters of the Governor's reform agenda began circulating petitions to qualify initiatives to enact reform. One the central piece of his prosped reform was fixing the state budget process. That reform ended on the ballot as Proposition 76. Editorials from the Sacramento Bee and Los Angeles Times appeared in May. In July, the Secretary of State renamed the Proposition 76 title and ballot summary.
As the charges fly between Gov. Arnold Schwarzenegger and the education lobby about who's the bigger liar on school funding levels, the real agenda sits buried just underground. It's a land mine waiting to go off.
The agenda - a chain of connected items - includes sharp reductions in the political clout of public employee unions, long-term reductions in school funding, constitutional spending caps for all programs and the additional long-term political power, particularly in budgeting, that two pending ballot measures would give the governor, fiscal conservatives and their corporate backers.
The ballot measures are LWOM, the California Live Within Our Means Act, and Lewis Uhler's initiative to eviscerate the political clout of public employee unions by curbing the use of dues for political campaigns. Both are likely to qualify for the November special election that Schwarzenegger threatens to call.
Together, they're a microcosm of the "starve the beast" agenda of Grover Norquist, the powerful head of Americans for Tax Reform who has been driving the national conservative movement since the early 1990s. Norquist was one of the sponsors of Proposition 226, the "paycheck protection" measure that California voters narrowly rejected in 1998.
Like Uhler's proposal, Proposition 226 would have required unions (in that case all unions) to get each member's written consent annually before they could use any part of his or her dues for political purposes. Schwarzenegger hasn't officially joined up with Uhler, a former John Bircher, co-author of a failed 1973 spending limit initiative and for a time a member of Ronald Reagan's administration in Sacramento, but he's not shy about publicly ogling Uhler's proposal.
But if Uhler's initiative is simple and direct, LWOM is a complicated piece of legislation of many parts - a Rube Goldberg budgeting machine - that even its sponsors acknowledge contains serious legal and drafting uncertainties.
What seems not at all uncertain is that it would put an automatic damper on future spending and reduce long-term school funding by some $4 billion a year below the minimum level currently guaranteed by Proposition 98 that voters approved in 1988, a level that even now leaves California's per-pupil spending well below the national average.
LWOM also provides that whenever two-thirds of the Legislature can't agree on a budget by the constitutional deadline, or when the governor vetoes the budget act, the prior year's spending levels will automatically be extended, regardless of whether they're insufficient, excessive or simply unnecessary.
That will give conservative political minorities even greater power to extract concessions from the majority and increased incentives never again to vote for a budget, thus making it possible that spending levels in a rapidly growing state would be more or less frozen indefinitely.
LWOM also would allow the governor unlimited discretion to cut whatever he wished during the course of a fiscal year at any time that he decides projected spending exceeds projected revenues and the Legislature fails to get a two-thirds majority to bring spending and revenues into balance.
Former Gov. Pete Wilson, now a frequent voice in Schwarzenegger's ear, unsuccessfully pushed a similar measure, Proposition 165, in 1992. Wilson was also a lead sponsor of Proposition 226, which Norquist saw as a chance, as he once said, to "crush labor unions as a political entity." The combination of the two new initiatives may not be class warfare, as some of its opponents charge. And, as the backers of LWOM claim, California's is a broken and incomprehensible system that's undermined fiscal discipline, driven up deficits and defied rational policy making. The prison guards and other public unions, said Bill Hauck, one of the authors of LWOM and a veteran of countless reform attempts, have "locked up this Capitol so tight" that it's hard to make any changes.
But LWOM and Uhler wouldn't break the locks. They'd just change them and give the keys to a different crowd. The combination of constitutional budget cap formulas and autopilot default provisions for extending prior year spending would further reduce any chance to get legislative accountability and transparency in state government.
And as Legislative Analyst Elizabeth Hill said months ago, it would replace the (not very effective) Proposition 98 up escalator for school spending with the different but no more comprehensible autopilot system setting spending limits. It would be a heavy chain on the door to better schools, community colleges, health programs and other services that a modern society depends on.
Worse, LWOM is based on some false premises. California is not a high tax state; general fund school spending, which has risen more slowly in recent years than the budget as a whole, and which remains low, has not been driving the deficits.
More important, these two reforms don't address the vastly more complicated dysfunctions of government. Hauck says, "You have to start somewhere." But these starts smack more of Norquist's ideology and Wilson's 10-year-old hatred of the teachers unions and his gubernatorial frustrations than of any serious attempt to fix the system.
Spending Limit Flaw: Governor Would Get Upper Hand
By George Skelton, Los Angeles Times Columnist, June 30, 2005
A savvy lobbyist I know is fond of ending his conversations good-naturedly by saying: "Don't worry. Things will get worse."
I won't identify the man — he might not want to be publicly associated with what I'm about to write — except to say that he has been working the Capitol crowd for about 40 years. And that throwaway line of his has been pretty much on target as a prophecy of government deterioration.
Blame everyone, including the voters.
First there was Proposition 13, which dramatically reduced property taxes, but switched the burden for funding schools from local taxpayers to state government. One result was less local control. Another was increased strain on the state budget.
Later came legislative term limits, which robbed the Capitol of knowledge and know-how, as evidenced by the current bumbling over a budget.
And there's all that ballot box budgeting — the most stifling being Proposition 98, which guaranteed minimum school funding that grows automatically each year. Rather than allow the governor and Legislature the flexibility to make major spending decisions, the law locks them into a complex formula adopted narrowly by voters 17 years ago.
No business could operate that way. No government should.
Now, the current budget brawl in Sacramento highlights a glaring flaw in Gov. Arnold Schwarzenegger's ballot initiative to limit spending and "live within our means." It will be on the governor's special election ballot in November.
First, two good things about the initiative:
It would enforce some fiscal discipline. Spending growth would be limited to the average increase in revenue over the previous three years.
Proposition 98 would be amended to give the state more flexibility over education funding. Schools could be granted a one-time bonus without it becoming part of their annual guarantee.
But the flaw:
There'd be a significant shift of power to the minority party and the governor, resulting in a disincentive to compromise with the legislative majority.
If the Legislature didn't pass a budget by July 30 — one month into a new fiscal year — the previous year's spending plan would be imposed. This means that, because of California's draconian two-thirds vote requirement for passage of a budget, one-third of one house could stonewall and "pass" the old budget.
Minority conservatives looking to "starve the beast" of government could enact a budget that froze spending. This might sound fine, but it would not provide for California's perpetual population growth.
Moreover, if a governor sensed a looming deficit, he could ask the Legislature to staunch the red ink. Fine. But under Schwarzenegger's plan, if there were no agreement within 45 days, the governor could cut spending any way he wanted.
Again, one-third of either house could shift all the budgeting power to the governor.
Republicans might like that power shift if the governor were Schwarzenegger. But what if Democrats played the game and the governor were Gray Davis?
The current budget deadlock is aggravating and partisan enough. But if the governor's initiative were in effect, the result could be absurdly 100% political. There'd be even less incentive for the minority, which is almost always Republican, to negotiate in good faith if it could transfer all power to a GOP governor.
Republican legislative leaders say this is tilting at windmills.
"Have you ever known us to relinquish power?" asks Assembly Republican Leader Kevin McCarthy of Bakersfield.
Says Senate Minority Leader Dick Ackerman (R-Irvine) about automatically reinstating the old budget: "In theory that sounds good, but I've seen Republicans who want to spend as much money as Democrats. Nobody wants the old budget."
But Assembly Budget Committee Chairman John Laird (D-Santa Cruz) contends the Schwarzenegger proposal would "reward gridlock and eliminate a collaborative process."
It hasn't been so collaborative lately, however.
The two sides are within hair-splitting difference of a compromise. But Schwarzenegger and Republicans have been hesitant to negotiate a final agreement with Democrats.
For one thing, Republicans would love to blame Democrats for again failing to pass a budget by July 1. This would provide anti-Democratic fodder for Schwarzenegger's budget "reform" campaign in November.
For another, Schwarzenegger keeps trying to dangle on-time budget passage — which Democrats want more than he does — as leverage to obtain a legislative compromise on all his ballot initiatives. The compromise package would be placed on the ballot as a bipartisan alternative to the controversial initiatives.
A compromise on budget reform could easily fix the power-shift flaw. The Legislature could retain all its power, but be forbidden to act on anything else until a budget were passed or fixed.
Nerves have been too raw for negotiating, however.
Schwarzenegger and Assembly Speaker Fabian Nuñez (D-Los Angeles) blew up at each other during a meeting Tuesday in the governor's office. Senate leader Don Perata (D-Oakland) also was there.
The governor talked about linking the budget to his "reforms." Perata said the Legislature couldn't rewrite the state Constitution in two days. Schwarzenegger countered that his proposals had been around for months and Democrats hadn't responded.
Nuñez complained the governor had been out campaigning. The governor accused Democrats of having to clear all their moves with unions. Nuñez used a barnyard expression and stormed out. So did the governor.
As the lobbyist says, things keep getting worse.
Live Within our Means gets new ballot summary
By Daniel Weintraub, California Insider Web Blog, July 27, 2005
The attorney general's office has issued a new title and summary for the governor's budget reform that is better for the measure's supporters than the original summary the office prepared for the initiative as it was circulated for signatures.
There was much chortling on the left, and indignation from the governor's office, when the original summary appeared and emphasized the measure's effect on school funding. The new version changes that in a couple of ways.
First, the title now starts with the words "state spending" instead of "school funding."
Second, the summary itself leads with the overall spending limit, which is based on a three-year average of revenues. The old version started with its potential effect on school spending.
Finally, the new version omits a phrase in the original that said the measure would permit suspension of the minimum funding requirement. That's already current law. Instead, the new version says the measure would not require repayment when the minimum level is suspended. A different but important distinction.
All of these changes are also reflected in the shorter and snappier ballot label.
The changes came about after supporters of the measure -- Proposition 76 -- threatened to sue to get a better summary.
I still find it hard to believe that people base their votes on these things, but the players who run the initiative wars seem to think so, and focus groups apparently back that up. So to the extent that the original title and summary was a problem for the governor, the new one is less so.
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