If you’re curious about what happened in California’s special election last night, when voters roundly rejected a complex series of propositions aimed at extending taxes, borrowing, and spending, look no further than Assemblywoman Noreen Evans, chairwoman of the State Assembly Budget Committee.
“Obviously, it’s disappointing,” Evans told the AP, “but I think the voters are sending a message that they believe the budget is the job of the governor and Legislature. We probably need to go back and do our job.” Well, there’s a novel idea.
Imposing a fiscal Atkins Diet on California’s grotesquely obese budget has been the fervent hope of Californians for the past decade, but the legislature and successive governors have instead gone binging at the buffet—with a vengeance.
Over the past 11 years, the Golden State’s budget has ballooned by 80%, as the state’s labor unions have tightened their grip around Sacramento. Statewide, sales taxes now stand at 8.25%, the highest in the country (it’s 10.25% in some cities).
In the latest issue of Commentary, Fred Siegel describes New York City’s fiscal woes thusly: “whereas city government was originally developed to serve the citizenry, the citizenry is now working in large part to serve government.”
The same can be said of California, where a bloated bureaucracy and its labor unions have begun to suck the life out of the residents they supposedly service.
Democrats dominate both the Assembly and State Senate, and all that’s prevented them from growing government even larger is Prop. 13, a 1978 initiative that requires all tax increases to pass by two thirds of each legislative house.
This was the context for intensive negotiations over the state’s $42 billion deficit that took place in January and February of this year between Governor Arnold Schwarzenegger (a centrist Republican), the Democratic leadership in Sacramento, and a handful of Republicans necessary to give the others the two-thirds majority they needed to raise taxes to close the gap.
The increases passed by the narrowest of margins, but were only a temporary salve as the deficit continued to grow. The principals to the negotiation also called a special election to pass six separate ballot measures, all of them aimed at sustainably stanching the state’s chronic budget bleeding.
But these measures were deeply flawed. As I and others have explained in detail elsewhere, while the flagship measure, Proposition 1A, was billed as a “spending cap,” it was in fact a significant tax increase masquerading as a highly “flexible” restraint on Sacramento’s checkbook; the effectiveness of this restraint, such as it was, hinged on the interpretation of the term “unanticipated revenues,” and as the state’s non-partisan Legislative Analyst’s Office ominously put it, the measure’s “fiscal impact would depend on how current constitutional provisions would otherwise be interpreted.” Other propositions would have borrowed against future lottery revenues, diverted fees from special funds to the general fund, and inhibited legislator pay raises.
The politics of the initiatives proved interesting, as the Governator and the Democratic leadership vigorously promoted it, laying out doomsday scenarios of understaffed fire and police departments if they failed, while the California Republican Party and most, but not all, Republican legislators opposed the measure. California’s liberal activists and organized labor were split, with some unions nearly coming to blows.
But in the end, the measures were crushed by an average of about 60%-40% with only the legislator pay hike initiative passing (easily). The main measures failed in every single county in the state, including the strongly liberal San Francisco Bay Area.
Jon Coupal, president of the Howard Jarvis Taxpayers Association—which spearheaded the grassroots opposition to the ballot measures and whose eponymous founder shepherded Prop. 13 to passage 30 years ago—told me that “this is a clear victory for fiscal conservatives… In conservative Orange County, the margin was a stunning 76%-24% rejection. There are no tea leaves to read here. This was angry conservatives opening a big can of whoop-ass on the tax-and-spend establishment.”
Echoing Coupal, San Diego County Republican Party Chairman Tony Krvaric told me that “when taxpayers are forced to tighten their belts while an arrogant, bloated state government asks them for a bailout, you eventually reach a point where voters—regardless of party affiliation—say ‘Enough is enough!’”
Indeed, at a time when Washington’s spending makes drunken sailors look thrifty, the defeat of these measures signals that Republican ideas of fiscal sanity are still compelling even to Democrats. The GOP needs to amplify this message and harness the energies of the “Tax Revolt” movement to its own engine.
Ron Nehring, chairman of the California Republican Party, underlined this point, arguing that “Republicans can and must actively demonstrate our support for solving California’s budget crisis through spending cuts that bring the size of government in line with reality, not through more tax increases that only hurt families and further compromise our state’s competitiveness.” We can only capitalize on this victory by transforming successful opposition into constructive ideas.
As for the Governator, his decline began four years ago, when a slew of center-right propositions he plumped for failed narrowly, and his fall seems to have arrived last night, when his slate of center-left measures crashed and burned.
So unpopular were these measures that Arnold actually fled the state on Election Day in favor of a White House photo-op for President Obama’s announcement of new CAFE standards. The governor apparently couldn’t bear to watch the carnage.
A chastened Schwarzenegger said in a prepared statement, echoing Evans’s conciliatory tone, “tonight we have heard from the voters, and I respect the will of the people who are frustrated with the dysfunction in our budget system. Now we must move forward from this point to begin to address our fiscal crisis with constructive solutions.”
So what now? What “constructive solutions” can emerge from a Sacramento in thrall to liberal interest groups? It’s difficult to imagine the bureaucracy effectively voting to shrink itself.
But the prospects for reform aren’t all bad. Krvaric told me that “when legislators go back to the drawing board, they should remember that… according to a recent poll, a majority of Californians—including Democrats—support the 2/3 requirement to raise taxes and balancing the budget ‘primarily with spending cuts.’”
Coupal observed that “simple principles work: spend no more money than you take in. Families and the private sector get it. Government should too.”
Assemblyman Nathan Fletcher (R-San Diego) told me that “there are going to be serious and substantial cuts to the state budget—the same type of cuts hardworking families are having to make.” Fletcher also said he and his colleagues will have to work hard to “help California become a more job-friendly state. We need to help the small businesses in our state that are overwhelmed with high taxation and regulatory burdens be in a position to grow again in California.”
In future articles, I hope to sketch out some innovative approaches in greater detail. But for now, Californians can take justifiable pride in last night’s results, while the governor and the rest of Sacramento should heed Evans’s advice and “go back and do [their] job.”
11 responses so far
1 nealjking // May 21, 2009 at 1:39 am
As a California voter, I voted against these initiatives. They seemed ad-hoc and therefore likely to incur unexpected consequences, as is typical with initiatives.
I believe that the legislators must do their jobs and produce bills and budgets that take a comprehensive view of costs, constraints and consequences.
Unfortunately, the peculiarities of the California constitution require a super-majority to pass the budget, so a fraction of the legislature have been able to prevent agreement on the budget. I think this has to be changed.
2 Churl // May 21, 2009 at 1:42 am
But those Tea Party rallies are still mere manifestations of the hypnotic power that Fox News holds over illiterate rubes.
Right?
3 barker13 // May 21, 2009 at 8:03 am
Re: Churl; 1:42 AM –
(*HUGE FRIGG’N GRIN*)
(*GUFFAW*)
And now… returning to a state of dismal depression…
The reality is… Obama and the Dems (with plenty of GOP support) are going to “bailout” California and all the other dysfunctional states.
We’re so $crewed…
Spend your money now, folks… it ain’t gonna be worth nearly as much next year.
BILL
4 Realist // May 21, 2009 at 9:41 am
barker said: “The reality is… Obama and the Dems (with plenty of GOP support) are going to “bailout” California and all the other dysfunctional states.”
WAAAAAAA.
Another bogus claim without merit. California recieves a mere 78 cents for every dollar it sends to the federal government.
South Carolina on the other hand gets $1.35.
Who is really getting “bailed out”? Red state hypocrites, thats who.
5 barker13 // May 21, 2009 at 10:05 am
Re: Realist; wrote 16 minutes ago –
“WAAAAAAA”
You don’t think so? You don’t believe Obama’s deficit spending (aka: Bush’s deficit spending on steroids) particularly when throwing good money after bad is… er… bad?
OK. (*SHRUG*) At least you’re up front about it.
“Another bogus claim without merit.”
So you’re saying you disagree with my prediction that Obama and the Dems (because it’s the Dems who control both Houses of Congress – they’re the ones with the power) will “bailout” California?
(*SHRUG*) We’ll see.
“California recieves a mere 78 cents for every dollar it sends to the federal government.”
OK. (In case you don’t know, Realist, I live and pay taxes in NY… one of ‘dem ‘thar “blue” states. I’m against a federal bailout of NY also. And yes, NY “pays” more in federal taxes than it “receives” – just like CA.)
“Who is really getting “bailed out?”"
Again… I thought my prediction was pretty clear: I’m guessing California will be, along with other states whose state governments have been irresponsible and incompetent and who have brought their states to the point of bankruptcy absent federal bailout.
(*SHRUG*)
“Red state hypocrites…”
Are you off your meds or simply intellectually incapable of following what I’m writing?
BILL
6 liv&win // May 21, 2009 at 10:27 am
I live in CA and it is next to impossible to raise a family effectively here. It costs so much with income, sales and property taxes. And the quality of services I receive are suspect. Fortunately I live in a place with a good school district, and good isn’t as great as it should be. So at least I don’t have that extra $6,000-$20,000 in annual private school costs.
The problem with CA isn’t the 2/3 majority needed to pass tax bills. That actually works as desired by keeping the slim majority from trampling on the minority. It requires compromise of the legislature. The problem is that the unions have negotiated sweet-heart deals in salary and other benefits. What we need is a constitutional amendment which pegs public salaries to private compensation. No one in private sector gets retirement benefits at 90% of their highest paid years after 30 years of work. Many in the private sector are fortunate to have a generous employer match to their 401(k) and good quality health insurance. This mismatch between public and private is DISGUSTING.
7 barker13 // May 21, 2009 at 11:22 am
Re: Liv&win; wrote 48 minutes ago –
To paraphrase Mary Matalin’s husband…
“It’s the liabilities, stupid!”
Yep. We’ve got to move away from employer “provided” pensions and move towards individual savings.
It’s that simple.
And yeah… this will affect GOP base groups like cops and the military as well as Democratic base groups and unions.
BILL
8 // May 21, 2009 at 3:38 pm
Mr. Rosen: “Democrats dominate both the Assembly and State Senate, and all thats prevented them from growing government even larger is Prop. 13, a 1978 initiative that requires all tax increases to pass by two thirds of each legislative house.”
WRONG. The citizens of CA are to blame. Practically every election as some ballot initiative that will result in both more spending and more debt, and the citizens, themselves, vote these things into existence. You can’t blame the Democratic legislature for that.
Moreover, the budget problem got substantially under Shwarzeneggar b/c he, ignorantly, slashed the car registration tax that had been paying for so much of the state’s spending. It’s fine to cut taxes, but, like most governing Republicans, he failed to cut spending proportionately, and the budget got worse.
9 barker13 // May 21, 2009 at 4:43 pm
Re: Spartacus; wrote 60 minutes ago –
“…the budget problem got substantially under Schwarzenegger b/c he, ignorantly, slashed the car registration tax that had been paying for so much of the state’s spending. It’s fine to cut taxes, but, like most governing Republicans, he failed to cut spending proportionately, and the budget got worse.”
Honest question: In California the Chief Executive (Governor) has the power to set taxes (fees?) such as vehicle registration independent of legislative approval?
Is that what you’re saying, Sparky?
(Seriously… enlighten me… I don’t know.) (*SHRUG*)
BTW… believe me, I’m 110% with you on the whole “if you’re gonna cut taxes ya gotta grow revenue through growth or cut spending.” You’ll get no argument from me!
Hmm… here’s a proposal! If you can pass a law requiring 2/3 legislative approval for tax increases, why not bookend the concept by passing a law requiring ONLY 1/3 minority vote for CUTTING spending…?!
BRILLIANT…!!!
(*AS BILL GRABS HIMSELF ANOTHER GUINNESS*)
BILL
10 Mike K // May 21, 2009 at 4:50 pm
nealjking, if that provision is changed, and it probably will be changed as part of a bail out deal, you will see spending skyrocket until default is the only option. The legislature has managed to spend every penny they could find and they still have plenty of ideas for more spending if they find any more pennies. I just want out if I could sell my house.
11 // May 21, 2009 at 10:58 pm
barker: Schwarzennegar used an Executive Order to slash it. Technically speaking, the tax was a “fee” and that, I believe, is the reason it can be cut by Exec Order.
I believe part of the reason CA spending is so out of control is that no one has had to pay for it. Instead, the voters just keep approving the issuance of bonds. It’s crazy.
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