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Office of the Chancellor / Public Affairs
Wednesday, August 27, 2003
 

Sacramento Bee 8-27-03

Peter Schrag: California's agenda: Is anybody up to tackling it?

 

So is the great populist recall of Gov. Gray Davis another Proposition 13 -- a great upsurge against the political establishment that fundamentally reshapes the state's political landscape, and much of the nation's as well?

Few people would argue that it doesn't need reshaping. Whatever terms you use -- structural deficits, structural impediments to budgeting, fudging and dodging -- and whatever the diagnosis, there's no question that the system is broken.

If pressed, most people might also agree that just dumping Davis isn't a fix, not even close. At best it might be an opportunity to address the long list of California fiscal and governmental ailments. But no clean house rhetoric unravels the complex mess into which California -- the politicians, the voters, the "interests" -- has gotten itself.
Begin with the structural deficit. What it means, simply, is that California's expenditures are growing faster than its revenues. Put another way, it means that while we want quality schools and high levels of other services we don't seem to be willing to pay for them.

Fred Keeley, who as a member of the Assembly last year struggled with the state's budget, says even an improving economy won't close that deficit. The thing won't fix itself. In the meantime, the fiscal finagles of the last two years -- borrowing against future revenues from a tobacco suit settlement, closing part of a monstrous deficit with bonds -- only defer the problems. Keeley calls it "fiscal lunacy."

There are two possibilities, or maybe some of each: One is letting services continue their gradual deterioration. The other is to repeal the tax cuts and corporate tax loopholes of the last few years -- altogether some $10 billion annually -- widen the base of the sales tax to include services, which make up a rapidly growing part of the economy -- lawyers' and accountants' fees, auto repairs, dry cleaners -- and move more of the weight of the income tax to middle-income taxpayers so it isn't as dependent on the fluctuations in upper-bracket incomes.

It probably also means increasing property tax revenues, as Warren Buffett, Arnold Schwarzenegger's economic guru, seems to suggest. The most feasible way to do that would be to enact a split roll under which commercial property would be assessed differently, and re-assessed more frequently, than residential property.

It also means major reforms in the way government functions: reducing the clout of corrections officers, firefighters and the other muscular state public employee unions. And it includes major reforms in the budgeting process, including eliminating the requirement for a two-thirds vote in each house of the Legislature to enact a budget or raise taxes.

The present system not only gives political minorities an effective veto power; it also invites chronic gridlock and buck-passing, making it impossible for anyone to know who's really responsible for delays and for the pork that governors have to approve to woo holdouts to vote for a budget. An initiative that would lower the two-thirds threshold to 55 percent is now moving toward the March ballot.

As many have pointed out, when taxes can be cut by majority vote but only raised by a two-thirds vote, you have a ratchet effect that makes a shambles of any coherent fiscal policy. Combine that with the long list of initiatives that have locked away an estimated 75 percent of the state's general fund for specific purposes -- schools, transportation, child care, parkland -- and government has even less ability to set priorities and respond to crises.

The list runs on: legislative term limits that make novices into committee chairs and deprive the Legislature of the collegiality, loyalty and experience it needs; the replacement of policy staff in Sacramento with political operatives; reapportionment into seats that are safe for one party or another and whose occupants therefore reflect the extremes of their respective parties, not the moderate center; the confounding of state and local authority; the resulting confusion and alienation of the voters; the chronic inattention of mainstream television to state issues or, indeed, to anything other than scandals and celebrities.

If he wins by a persuasive margin, California's post-recall governor has a short window of opportunity to get the state's attention. Schwarzenegger says he's rich enough not to be dependent on interest-group money. But that doesn't free him of the need to negotiate with them or to untangle the governmental mess that's accrued in California over the last 30-plus years. He can't just dunk their collective heads in a toilet bowl.

The GOP's idol, Ronald Reagan, with whom Schwarzenegger is sometimes compared, arrived in Sacramento in 1967 where he called for -- and got -- the largest tax increase in California's history.

According to Lou Cannon's masterful new book "Governor Reagan: His Rise to Power," out next month, by the time Reagan finished his two terms, the state's budget had more than doubled, its welfare allowances were the most generous in the country. Is California up to that?

If Schwarzenegger wins, would Ronald-Arnold be more than an anagram