Today, Governor Schwarzenegger has come out with his revised state budget. It, quite predictably, calls for more massive program cuts, including the wholesale elimination of programs that serve the most vulnerable in the state. He refuses to even put on the table for discussion any tax increases or the development of other revenue sources. As always, the Republican legislators bob their heads as a block in agreement.

For those of us working in non-profits or the public sector in California, there are absolutely no surprises here. We’ve easily recognized Arnold and the Republican legislators’ agenda all along because it mirrors a national plan that is based on a cold, neoliberal, Darwinian philosophy.

We’ve perceived that the long-term goal all along has been to completely dismantle government and empower corporate America and the financial elite. These are the individuals who have, framed on the walls of their posh offices, the words of Grover Nordquist to “reduce government to the level where it can be drowned in a bathtub.”

Essentially, they want us to return to a feudal society, with a ruling elite and cowed masses worried about keeping their jobs, their homes, their chance at an education, their dwindling hopes for any improvement of their lives. They’ll continually utilize fear and anger to maintain their power. The only money spent will be on national defense, while they regularly stoke fears about terrorists or illegal immigrants (Viking raiders, Attila the Hun, displaced native tribes, your great-grandparents from Sweden, Italy and Ireland…or Mexico) in the peasants, while really using those armed forces to ensure their status quo at home. Ironically, much will be similar to the times when the monopoly British East India Company ruled the American colonies or when many western towns were company towns.

Arnold et. al. have been quietly laying this foundation for his entire term: to culminate in the privatization of all public services and destruction of government “by the people, for the people..” in favor of domination by corporations, their lobbyists and the elite. They’ve repeated the mantra that the private sector can always do so much better than the public sector. They’ve thrown out the whole concept of checks and balances in our system. They’ve rewritten history in terms of the “Founding Fathers,” who perceived the dangers of concentrated power in the private sector and in the merging of government with business (including mainstream media). They’ve conveniently ignored the blatant examples of how blind trust in, and lack of oversight over, the private sector always leads to disaster (Enron, bank failures, oil spills, Halliburton, corporate-sponsored initiatives). They claim concern for small businesses while their unchecked brand of rule trends that private sector towards uncompetitive, corporate monopolies in all sectors. They talk about democracy, while regularly seeking to undermine it and impose the will of a minority. They rail against big government, but enable big corporation in its place.

But for those of us who work in public schools, non-profit health agencies, state agencies, local fire and police departments, etc., the biggest conflict is their attitude that everything will be solved by an unfettered, free market and that everything should be addressed by “the wonders of the marketplace.” They worship competition and eschew cooperation. They feel everyone is motivated solely by material gain and deny, or have contempt for, those of us who believe in public service, in caring for others, in the common good, that we’re all in this together and that we need to cooperate in order to make better communities, a better state, a better world.

They are also, quite clearly, willing to bet the whole house (meaning the house serving the common good) on their battle plan because they won’t be the ones killed as the house is burned down. They’ll watch from their gated communities on the hillside, like the “Stratus Dwellers” in an old Star Trek episode, with their millions from tax breaks safely ensconced in overseas tax shelters.

As the past few years have indicated, Arnold and the Republicans will not even discuss any options that don’t fit with their philosophy. Never mind that their job, as elected officials, is to PUT ALL OPTIONS ON THE TABLE, especially in “crisis” times!!! They will stonewall to the point where the state is paralyzed or on the verge of collapse because they demand we take their way or the highway. They will cynically bet that the other side will always blink first, due to that side’s actually caring for the real people hurt by their drowning of government/enthrone the plutocracy strategy. After all, we’re the ones who see and feel the human costs of their death by a thousand cuts approach and we always want to minimize the pain. Of course, this slow-bleed of government achieves all of their goals in the end.

And here we are. We’re right where they’ve wanted us since the implementation of FDR’s New Deal, the rise of the middle class in the 1950’s, and the enactment of various civil rights legislation in the 1960’s.

California, since 1978, has been the test case for their destruction of that New Deal and its more egalitarian benefits, through the promotion of a neoliberal agenda at the state level. If they destroy safety nets, privatize social services, education, transportation, and more, and drown the last vestiges of state government, they will be emboldened to do so across the rest of the country. The end result will most certainly be states and a nation about as far from the ideals of a true democracy as you can imagine. It will be a complete failure of Gandhi’s test of a society being ultimately being judged by how it treats its most vulnerable.

The big question now is, are those of us who believe in another vision willing to make our stand? Even if it does cause a lot of short-term pain? Are those in Sacramento who truly believe in something besides a monopoly dominated “free” market/emasculated puppet government world willing to draw a line in the sand? Are we willing to go beyond rallies that are ignored, letters and petitions that are stuck with contempt in a back drawer, and raise the ante? Are we willing to fight for the most vulnerable who, quite literally, have nothing else to lose at this point and will suffer and die from this destruction of state government? Are we willing to get out of our special interest silos and work together for a society that values cooperation, the common good, and basic caring and that can function (as other countries have clearly shown) quite well with a vibrant free market economy, representative government, active non-government organizations, and independent media-each serving to keep the excesses of the other in check through constant vigilance and citizen participation?

I know I am because as one proud, “bleeding heart liberal,” (as they so like to label us) I’m sick to hell of this crap.



Glenn Reed, Eureka

Yesterday’s front-page story in the SF Chronicle on the California budget crisis was shocking, dishonest and disgraceful.  The piece described Governor Arnold Schwarzenegger as a “steely-eyed, sword-wielding strongman” – who will “hold his ground” against Democrats in the state legislature.  Never mind the Terminator has driven the state to bankruptcy – after six years of tax cuts for the rich, fiscal gymnastics and borrowing schemes.  Never mind that Schwarzenegger lied about a voter mandate in the May 19th election – and says he won’t support a “single tax increase whatsoever.”  Never mind that by vetoing last week’s budget stop-gap measure, Arnold forfeited $2 billion that the state can no longer use – and our government now has to pay with I.O.U.’s.  Never mind the Governor told the New York Times that despite the state’s disastrous plight, he will sit down in his Jacuzzi and “lay back with a stogie.”  The Bay Area’s paper of record would rather portray him as a “tough guy.”

Carla Marinucci is the Chronicle’s worst reporter, a point Beyond Chron has written about time and time again.  With all the talented printed journalists who are unemployed or underemployed, Marinucci stays on as their top political writer – with yesterday’s ode to Schwarzenegger being her most recent incarnation (although Matthew Yi co-authored to the piece.)  And it’s hard to see how much lower the Chronicle, which is on the brink of going out of business, can go in its coverage of a serious political issue.

Consider Marinucci’s first paragraph: “Gov. Arnold Schwarzenegger has played an astonishing range of roles in California’s budget dramas – bipartisan peacemaker and people’s advocate among them. Now, the governor is reprising a classic familiar to millions: the steely-eyed, sword-wielding strongman.”  Bipartisan peacemaker?  The only thing Arnold ever succeeded in getting Democrats and Republicans in Sacramento to agree on is that they both dislike him – prompting many commentators to label him a “party of one.”  As for a “people’s advocate,” Schwarzenegger twice called a special election to have the voters decide – and in both instances, he was soundly rejected.

And while old movie posters from Conan the Barbarian, Terminator and Total Recall could make him out to be a “steely-eyed, sword-wielding strongman,” it’s hard to see the Governor’s current posture as nothing but the pathetic bluster of a deranged bully.

Here are the facts: declining revenues due to a severe recession have bankrupted California – leaving us with a $26.3 billion deficit.  The state can lay off every employee tomorrow, and it still wouldn’t balance the budget.  On May 19th, the voters rejected a complicated set of ballot measures that Arnold championed – after opponents on the left and the right campaigned against them.  There has been very little analysis about what “the people” were saying, except a poll that found only 36% of voters (and 24% of Californians) want a cuts-only budget.

Nevertheless, Schwarzenegger has made common cause with right-wing extremists at the Howard Jarvis Taxpayers’ Association – and Republican in the state legislature.  He says the voters on May 19th wanted the state to pass an “all-cuts” budget, and that he won’t support “any tax increase whatsoever.”  Arnold has proposed a budget that will shred our social safety net, and up-end the California Constitution by raiding school funding.  He wants to open up the ocean for drilling to get revenue, but opposes a tax on oil companies that would make that profitable – even though Sarah Palin’s Alaska has one at 25% of profits.

As June 30th approached, Democrats in the state legislature proposed using $2 billion in reserves to start plugging the hole – money that must be used before the end of the 2008-2009 fiscal year, or else it’s gone.  They couldn’t pass a comprehensive solution because of the two-thirds rule, but this – along with a few budget savings and closing tax loopholes – would have prevented the state from issuing I.O.U.’s.  How did Arnold respond?  Repeatedly veto the package, and insist we must resolve the “whole problem” all at once.  As the midnight deadline loomed, Schwarzenegger offered no solution besides the veto pen.

Apparently, the Governor is emboldened by his rising poll numbers – from a pitiful 30% to a dismal 43% – which may be attributed to a more aggressive posture with the state legislature.  But no one stops to ask if those 13% are right-wingers who want to shrink the size of government and drown it in a bathtub.  I suspect the legislature’s Republican minority is getting along better with Arnold these days, now that he’s backed off on all tax increases.  For a while, he was persona non grata in the Grover Norquist Fan Club known as the GOP caucus.

But you wouldn’t know any of this by reading yesterday’s Chronicle – although the piece briefly mentioned the state’s bond rating has collapsed, and banks are refusing to cash the state IOU’s.  The article quoted Schwarzenegger’s communications director, who said the Governor has “the luxury” of being near the end of his term – and not having to face the voters again.  Marinucci could have mentioned (but didn’t) that Arnold’s legacy – from slashing the vehicle license fee to solving each budget crisis by borrowing more money – will be driving the state to bankruptcy.  If Gray Davis was still Governor, we might not have a deficit.

In last Sunday’s New York Times Magazine, Schwarzenegger said he was not letting California’s fiscal crisis get to him personally.  “I will sit down in my Jacuzzi tonight,” he told reporter Mark Leibovich. “I’m going to lay back with a stogie.”  There are so many analogies that come to mind with the Governor’s quote.  You could say it’s just like “Nero fiddled while Rome burned,” or another “let them eat cake” moment.  A more recent comparison would be George W. Bush, who said he was getting plenty of sleep at night during the Iraq War.

As an R.E.M. fan, however, Arnold’s callous attitude reminds me of the following:

It’s the End of the World As We Know It,

It’s the End of the World As We Know it,

It’s the End of the World As We Know It

And I Feel Fine …

Paul Hogarth is the Managing Editor of Beyond Chron, San Francisco’s Alternative Online Daily, where this piece was first published.

President Obama’s stimulus bill provides long overdue federal funds to communities facing hard times, but San Francisco will lose virtually all its money from Washington to Sacramento.  The City will receive an extra $92 million in federal money this year, but the state has already cut $62 million from what it gave last year.  And with Governor Schwarzenegger pushing a “cuts-only” budget to address the state’s shortfall, things are only likely to get worse.  Mayor Newsom’s proposed budget set aside $25 million to plan for future state cuts, but it could be more like $200 million.  Nearly all federal gains to the Human Services Agency have already been cancelled out by state losses, without counting Arnold’s new proposal to eliminate Cal-Works (which would cut another $100 million out of that department.)  Sacramento could decimate the City’s Health Department, and it has already killed public transportation funding.  Not only does this mean that advocates must fight for every cent in the City budget, but it forces us to pay close attention to what’s happening in the State Capitol.

Obama brought hope to our country after decades of despair, but for Californians – who enthusiastically backed him by a wide margin – the federal stimulus won’t amount to much.  That’s because we have a two-thirds requirement in the State Capitol to pass a budget, a shrill minority of Republican legislators who refuse to vote for a single tax increase, and a lame-duck Governor whose legacy will be driving the state to bankruptcy.  The Obama Administration will be sending money to San Francisco, but Schwarzenegger will be taking most of it away.

Take the budget of the City’s Human Services Agency.  It’s bad enough that Mayor Newsom has proposed slashing $24 million in General Fund dollars, which means that for the first time it would get less than the Fire Department.  The feds are giving it an extra $20.8 million this year, but the state has already cut $17.7 million – a “net gain” of only $3 million.  Now, Schwarzenegger wants to end Cal-Works aid to families, slash payments for IHSS (in-home supportive services) even further, and eliminate the cash assistance program for immigrants.  The City already “back-filled” cuts to IHSS after the state budget passed in February.  Absorbing these additional cuts would cost Human Services a whopping $114 million.

The Department of Public Health got an extra $37 million in FMAP (Federal Medical Assistance Percentage) funds this year, but the state also cut $14 million.  Now it stands to lose 19 of the $23 million “net gain,” if Arnold has his way.  The Governor wants to eliminate the Healthy Families Program, which would mean 12,000 uninsured children in San Francisco – unless the City pays for it out of its own budget.  Schwarzenegger also wants to reduce AIDS drug assistance program (which literally saves the lives of patients), Medi-Cal reimbursements for drug treatment and skilled nursing facilities, and kill funding for Prop 63 substance abuse treatment.  Keep in mind that Newsom already plans to cut about $100 million of the City’s Health budget.  Can we afford to lose any more?

The good news is that apparently Schwarzenegger has backed down on “borrowing” up to $2 billion from local governments to pay off the state deficit.  The bad news is that he wants to steal part of the state’s gasoline tax revenue which goes to local government – to pay the “debt service” caused by all his financially reckless schemes of the past six years.  The Department of Public Works – the one major City agency that hasn’t yet seen budget cuts from Sacramento this year – could lose $13 million.  Arnold’s plan would also take $3 million out of the Metropolitan Transportation Agency.

Speaking of public transportation, the City passed a Muni budget last month to plug a $129 million deficit – by raising bus fares and cutting service.  Muni’s “state of emergency” did not happen by accident.  A large chunk of this gap happened after the Governor eliminated STA funds, which provide the bulk of state funding for public transit.  The MTA did receive $67 million in federal stimulus funds, but most of it went to “shovel-ready” capital projects (whose benefit won’t be seen for years) – while our “transit-first” city can’t afford to keep most of our buses running.

All told, the City and County of San Francisco is getting an extra $92 million in federal funds this year – most of it from the American Recovery and Reinvestment Act (ARRA).  But due to the shenanigans in Sacramento, our state funding has taken a $62 million hit – negating more than two-thirds of what we got from the Obama stimulus.  If the Governor and state legislature pass a “cuts-only” budget as they keep threatening, City Controller Ben Rosenfield says we could lose up to $200 million.  Mayor Newsom’s budget proposal put aside some money if the state makes more cuts, but only $25 million.  Any way you look at it, it will be a disaster.

Back in San Francisco, the Board of Supervisors is considering changes to the Mayor’s budget.  The Firefighters Union (who have Newsom consultant Eric Jaye on retainer) are planning a rally tomorrow in front of City Hall against a Board proposal to cut the Police, Fire and Sheriff budgets.  Newsom’s plan increases the Fire Department budget, but some Supervisors believe that every department must “share the pain.”  Meanwhile, the Coalition to Save Public Health – a group of non-profit and City workers who provide front-line health and human services for the poor – will have their own rally across the street at 12:30 p.m.  Many of these groups are facing budget cuts.

At the end of the day, however, everyone at the local level is fighting to minimize devastating cuts that are inevitable.  The real fight is in Sacramento, and advocates must pressure the Democratic leadership to insist on revenue solutions (like an oil severance tax, or restoring the income tax for high wage earners to Reagan-Wilson levels.)  State Senate President Darrell Steinberg and Senator Mark Leno are hosting a live Internet townhall tonight on the state budget at 6:00 p.m.  Submit your questions at Leno’s website, and if you’re in front of a computer this evening you should watch.

Democrats have their back to the wall in Sacramento, and they need support just to keep pushing harder.  But we will never truly resolve this mess until the voters pass a constitutional amendment eliminating the two-thirds requirement to pass a state budget.  This is what has blocked progress in the state, and has given us a Mississippi budget.  That’s why the answer I want to hear tonight is what political strategy the Democratic leadership has to make this change a reality.  We must generate mass public outrage to get rid of it.

Paul Hogarth is the Managing Editor of Beyond Chron, San Francisco’s Alternative Online Daily, where this piece was first published.

This morning, New York Times columnist David Brooks criticized his GOP allies on Capitol Hill for pushing a federal spending cap, calling it “insane.”  But here in California, the discredited theory of Reaganomics lives on …

I’ve been on record supporting a special election to get the budget reform California desperately needs – such as scrapping the “two-thirds rule” in the legislature, or helping local governments raise revenue.  But now that a statewide election is set for May 19th, no such measures will be on the ballot.  Instead, the six propositions we will get to vote on are Schwarzenegger gimmicks that would cripple the state’s ability to function, throw us further into debt, and roll back a small handful of fiscal victories.  A campaign must start now to urge a “no on everything” vote, repeating the success that progressives had in 2005 by defeating Arnold’s special election.  The Governor, however, is a lot savvier this time.  Prop 1B (which deals with school funding) is a naked ploy to keep teachers from opposing Prop 1A (an awful spending cap), and there’s a dangerous possibility that organized labor will sit out this whole election.  Democrats are not unified in their opposition, as State Senate President Darrell Steinberg even gave Schwarzenegger cover last week at a press conference when he promoted the “budget reform” package.  Only by exposing this election as another Arnold scam can the state come out winning, helping to map a sane fiscal future for California.

Many observers noted the “parallel universe” that California – a very blue state – experienced when it passed Proposition 8 on the same night we elected Barack Obama.  Today, it’s déjà vu all over again.  Nationally, President Obama’s budget proposal is a sharp repudiation of the Reagan Era – with progressives on the offensive, and optimistic about the future.  But at the state level, right-wing ideologues still dictate our budget policy.  Progressives are on the defensive, allowing a Republican Governor to pit constituencies against each other – while some Democrats reluctantly believe our choices are the bad and the worse.

After a grueling process where Republicans (once again!) abused the state’s two-thirds vote requirement, Arnold and the legislature finally passed the budget by cutting a deal.  In exchange for the necessary GOP votes and the Governor’s signature, a special election was called for May 19th to pass some budget “reform.”  It was a Faustian bargain that cries out the need to scrap the two-thirds rule, and I don’t fault Democrats for using any means necessary to pass a state budget.  But now that Propositions 1A-1F are on the ballot, voters don’t have to approve them – and the Democrats shouldn’t encourage them.

Proposition 1A: Spending Cap to Disaster

As I’ve written before, a spending cap would cripple the state’s ability to provide essential services.  It’s been tried in Colorado, and the results were disastrous.  A spending cap would give California a permanent fiscal straitjacket – which is precisely what the right-wing extremists in the legislature have always wanted.  All of them signed the infamous Grover Norquist pledge – from the same guy who wants to “shrink the size of government so we can drown it in a bathtub.”

Prop 1A creates a spending cap by nearly tripling the amount of revenue that gets locked into the state’s Rainy Day Fund – and bars the flexibility to use that money in times of need.  It also strictly regulates how the state can spend “unanticipated” revenues.  It gives the Governor more power to unilaterally cut certain spending without legislative approval – such as blocking cost-of-living adjustments.  Given that Arnold already killed the renters’ tax credit for seniors and the disabled, why give him the power to terminate more programs?

A spending cap was the only way Republicans in the legislature would support any tax increases to pass a budget.  And it’s true that Prop 1A includes several revenue measures: (a) raise the sales tax from 8 to 9%, (b) up the vehicle license fee that Arnold slashed on his first day in office, and (c) raise the income tax on every bracket by 0.25%.  But a vote against Prop 1A doesn’t stop those tax increases from going into effect; it just means they expire in two years, and there would then be a fight in the legislature to extend them.  What is the “upside” if Prop 1A passes?  Those taxes would instead sunset in four years – 2013.

Selling out the state’s flexibility in exchange for these (mostly regressive) tax increases to stay on the books for an extra two years?  Sounds like an awful deal to me.  As the Legislative Analyst’s Report says, a lot of what Democrats got in Prop 1A is temporary – while the spending cap parts are permanent.  “Once these effects have run their course,” it said, “Prop 1A could continue to have a substantial effect on the state’s budgeting practices.”

Proposition 1B: Attempting to Bribe the Teachers’ Union

It will take resources to defeat Prop 1A, and getting organized labor (the one progressive institution who can deliver) to oppose it will be essential.  Arnold suffered a humiliating blow in 2005 because unions went all out to defeat his special election, but they had good reason to do so: each ballot measure that year was a direct assault on working people.  

Schwarzenegger clearly learned from that mistake, which is why Prop 1B was designed to throw a bone at the California Teachers’ Association – hoping to keep most unions out of defeating Prop 1A.  Prop 1B would guarantee school funding through $9.3 billion in “supplemental payments” – but it only goes into effect if Prop 1A passes.

I’m all for school funding – but at the cost of passing Prop 1A?  So far, Arnold’s ploy is working.  The CTA has offered “interim support” for Prop 1B, while no union has taken a position on Prop 1A.  Given the expense of defeating statewide ballot measures, unions are being understandably cautious about entering the fray – unless there’s a consensus in the labor movement to defeat Prop 1A.  Education advocates should consider that the $9.3 billion in Prop 1B is not an annual appropriation, but doled out over a five to six-year period.

Education is a high budget priority – but so are housing, health care and public transit.  Even if Prop 1B guaranteed additional funds for public schools, the straitjacket of Prop 1A means all other issues we hold dear will be sacrificed.  It’s the classic “divide-and-conquer” strategy Republicans use all the time to keep progressives fighting with each other.  While every group is protecting its budget during these tough times, now is not the moment to take the bait.  Despite the attractive “sweetener” of 1B, Prop 1A must fail.

Proposition 1C: Arnold’s Awful Lottery Idea

This is just the latest in a series of reckless Hollywood gimmicks the Governor has proposed – sinking our state deeper into debt, and strangling our ability to get anything done.  Prop 1C would let the state borrow $5 billion against future lottery sales.  What will Arnold propose next year – borrow against future tax revenues?  Is there any end to our credit card Governor’s nerve when it comes to raiding our fiscal future?

Propositions 1D and 1E: Turning Back the Clock

It’s rare when California voters approve fiscal measures that both (a) create more revenue and (b) fund good projects.  In 1998, voters passed Proposition 10 – a cigarette tax that created a Childrens’ Health Fund.  In 2004, voters passed Proposition 63 – a 1% tax on millionaires to fund mental health programs.  Props 1D and 1E would re-direct these tax revenues – slashing programs voters created for a purpose.  Arnold tried to cut funding for mental health before, but Prop 63 prevented him from doing so.  We can’t let this happen.

Proposition 1F: Do-Nothing Reform

The last measure on the May ballot – Proposition 1F – sounds like a good idea.  It would ban statewide elected officials from receiving pay raises if the budget has a deficit.  But does anyone honestly believe this is the kind of “structural budget reform” the state needs that would justify an expensive, statewide, off-year special election?  Even if it’s good public policy, the budget savings are miniscule.  This is more about Arnold trying to score political points against the legislature than proposing a sensible long-term solution.

Democrats Have to Stop Being Scared

All too often, liberals get spooked by the state’s dire financial situation – agreeing to go along with an awful Republican budget “solution” at the ballot to prevent cuts that affect poor people.  In 2004, for example, Arnold proposed two ballot measures – Propositions 58 and 59 – sold as necessary to solving the state’s $15 billion deficit.  I’m embarrassed to admit I voted for both of them, because I feared what would happen if they failed.

Prop 58 was a $15 billion bond to pay off just one year’s budget deficit – which we are now stuck paying interest on.  Prop 59 was a state “balanced budget amendment” that has placed California in a permanent fiscal straitjacket.  In the long run, was it a good idea to support such a reckless solution?  Conventional wisdom at the time was that a “yes” vote would prevent devastating budget cuts.  But what if we stood up as a matter of principle?

Assembly Speaker Karen Bass (D-Los Angeles) has sent signals that she won’t support the special election measures, and State Senator Loni Hancock (D-Berkeley) has publicly opposed Prop 1A.  Democrats are unified about wanting to scrap the “two-thirds rule,” but that won’t be on the May 19th ballot.  And when Arnold  had a press conference last week to promote his special election measures, one of the leaders who flanked him was State Senate President Darrell Steinberg (D-Sacramento.)

I like Darrell Steinberg.  He’s been a champion for mental health funding, and is a vast improvement over his predecessor, Don Perata.  But standing next to Schwarzenegger to promote a reckless special election with no budget solutions to vote for was disgraceful.  Props 1A-1F must be defeated, because they would wreak long-term havoc on the state.  They are awful Republican solutions, and Schwarzenegger should be left alone to defend them.

Because if Democrats unify to sink these ballot measures (with substantial help from labor), Arnold will have to own these defeats – just like he did in 2005.  And when we have to go back to the drawing board, progressives will have the upper hand.  Unless, of course, too many Democrats went along to support these failed proposals.

Paul Hogarth is the Managing Editor of Beyond Chron, San Francisco’s Alternative Online Daily, where this piece was first published.

(A spending cap would most certainly not be a positive for our budget mess. – promoted by Brian Leubitz)

From today’s Beyond Chron.

With the state bankrupt and giving I.O.U.’s instead of tax refunds, the California legislature is expected to vote on a mid-year budget later this week.  It’s bound to have horrific cuts, but no one has details because it’s being crafted in secret negotiations with the “Big Five” (Governor + party leaders in each chamber.)  Democrats control 63% of the legislature, but the “two-thirds rule” lets Republicans run the show.  And the minority refuses to vote for a single tax increase – unless Democrats agree to kill the eight-hour workday (and other similar extortions.)  Everyone thinks a statewide special election is inevitable, which could help us get meaningful budget reform.  But June 2nd would be a terrible time to do it, because none of the needed fiscal reforms would be on the ballot.  Instead, we’d have the Governor’s awful proposal to borrow money off future lottery revenue – and a deeply insidious proposal to cap state spending.  While San Francisco has no choice but to call a June special election (or else cut half of its General Fund), the state musn’t go full speed ahead.

After writing a piece last week that argued the need for California voters to approve budget reforms, I developed a weird sense of dread that my article was written in vain.  Of course we must abolish the “two-thirds rule” so the state can pass a sane budget, and the political mood is ripe for some fiscal reforms that would save local government.  But op-ed pieces alone don’t put good things on the ballot, and the fact we may have a statewide special election soon doesn’t guarantee voters will get the chance to weigh in on these ideas.

To place an amendment on the California ballot, you either need (a) a two-thirds vote of the state legislature, or (b) a petition with 700,000 valid signatures, i.e. eight percent of how many voted in the last gubernatorial election.  Placing an initiative statute – such as restoring the upper-income tax bracket – would require 430,000 signatures, or 5% of the last turnout.  The first option isn’t likely (why would two-thirds of the legislature vote to scrap the “two-thirds” rule?), so the realistic approach is to start collecting signatures.

Democrats have submitted an initiative to lower the threshold to pass the state budget from two-thirds to a 55% majority, and are in the process of gathering signatures.  But if we have a June special election, voters still won’t have the opportunity to pass it.  Because in order for ballot initiatives to qualify for an election, all signatures must be turned in 131 days beforehand – and June 2nd is 120 days away.  Our only hope to have this passed is to delay any statewide special election until August, or possibly even into November.

As for other budget reforms that are desperately needed (and politically winnable among voters), no one has even started collecting signatures for them yet.  Progressive activists must file these initiatives with the Attorney General’s Office for review immediately – so that we can start the expensive and time-consuming process of gathering nearly a million signatures.  Otherwise, they won’t be on the statewide special election – and it will all be academic.

What initiatives would we expect to see on a June 2nd statewide special election?  According to the Secretary of State’s Office, four propositions have already qualified.  Two are budget related, and both would make the fiscal crisis worse.  One is Arnold Schwarzenegger’s idea to borrow money from the state’s future lottery revenues – which would sink us even further into debt.  But a recent poll has voters not liking it, so hopefully it would go down in flames.

The second proposal – however – is far more dangerous, because the same poll showed 70% of respondents calling it a “good idea.”  Authored by State Senator Roy Ashburn (a Central Valley Republican), it would impose a mandatory state spending cap – putting California in a fiscal straitjacket that would render us impotent at addressing our needs.

Spending caps have been tried elsewhere.  Colorado passed a spending cap in 1992, and the disastrous results include: (a) teacher salaries plummeted from 30th to 50th in the nation; (b) children receiving full vaccinations fell from 24th to 50th; (c) and low-income adults with health insurance dropped from 20th to 48th.  “By creating a permanent revenue shortage,” said the Center on Budget and Policy Priorities, a spending cap “pits state programs and services against each other for survival each year and virtually rules out any new initiatives to address unmet or emerging needs.”

An analysis by the California Budget Project projects that, if voters approve a Republican spending cap, the state would have to cut $40 billion a year – “eliminating all General Fund support for higher education; the judiciary; child support services; health care services; resources – including fire protection; and environmental protection.”  This is no accident.  The sponsors’ true intentions are simply to starve the public sector, shrinking the size of government (as their mentor famously said) so we can “drown it in the bathtub.”

But that’s the reality we would face with a June 2nd statewide special election.  Voters like the idea of restricting how much the government can spend, knowing we are in bad budget times and sacrifices must be made.  It won’t be impossible to defeat this proposal, but we’ll have to work hard (and devote a lot of resources) to educating voters about its dire consequences.  And it will be far more difficult, and quite infuriating, if there are no sensible alternatives on the same ballot – while everyone is asking for solutions.

A statewide special election makes no sense – unless progressives can also qualify their own budget reforms (eliminate the “two-thirds rule”; restore the upper-class tax bracket; amend Prop 13 to exempt commercial property; amend Prop 218.)  But going full speed ahead doesn’t give us that opportunity.  It only poses the risk of doing more harm than good – and we can’t afford to screw it up.

The same, however, cannot be said about San Francisco’s independent effort to hold a special election on June 2nd.  Facing a $576 million deficit that could mean cutting half its General Fund, the Supervisors have no choice today but to move ahead.  While the City has its own fiscal straitjacket that will hamper its ability to raise revenue, we don’t have the luxury of time to make sure the state can fix its own house in order.  We’ll have to walk alone for now.

From today’s Beyond Chron.

Arnold’s executive order laying off 10,000 state employees – and slashing another 200,000 paychecks to the federal minimum wage – is not just insulting because he’s punishing people for the actions of others.  It’s that the budget crisis we’re in is largely his fault, and the Governor refuses to take responsibility.  Starting with Schwarzenegger’s first day in office when he repealed the Vehicle License Fee, Arnold has played one game of fiscal gymnastics after another – leaving us with today’s budget deficit of $17 billion.  With right-wing Republicans in the state legislature still playing their usual game of obstructionism, Arnold has shown no leadership of reining them in – and now says that state workers have to suffer.  When Newt Gingrich did this to federal employees in 1995, he paid a heavy political price for it.  Will the press let Arnold off the hook again?

Imagine you’re a nurse in a state hospital, or a lawyer in the Attorney General’s Office – and your boss says you now have to work for $6.55/hour.  That’s what Arnold calls a needed stopgap measure for a state budget that is six weeks past due.  It’s easy to blame the legislature’s Republican minority – who every year refuse to pass a budget with any tax increase whatsoever, and can hold it hostage because the state requires a 2/3 majority.  But we’ve come to expect irresponsible obstructionism from these right-wingers – who still won’t say how they’ll come up with a solution.  Schwarzenegger’s supposed to be a “post-partisan” moderate Republican, and it’s his job to bring them in line.

The Governor admitted last week that laying off temporary workers and cutting everyone else’s salaries down to minimum wage won’t resolve anything.  But Arnold has nobody to blame but himself for the fiscal mess we’re in today – because for five years, he has repeatedly played a game of “borrow, borrow, borrow” to put off one budget crisis after another.  And inevitably, the chickens have come home to roost.

In 2003, on his first day in office, Arnold Schwarzenegger repealed the Vehicle License Fee.  This modest tax had been around since 1935 – where car owners paid 1.5% on the purchase of a new automobile.  Governor Earl Warren raised it to 2% in 1948, but the state temporarily lowered it in 1998 because of excess revenues (understanding that it would be restored when the state hit hard times.)  In one fell swoop in 2003, the state lost $5 billion in revenue for the first year – with increasing losses each successive years.

We already had an $11 billion deficit when Arnold repealed the so-called “car tax” – but never mind.  Schwarzenegger then placed a $15 billion bond measure on the March 2004 ballot, called it the “California Recovery Act” and convinced voters that we needed it to bring our fiscal house in order.  The trouble with bonds is that they have to be paid back with interest – and paying off one year’s deficit is now costing the state $1 billion a year.

If it had never been repealed, the Vehicle License Fee would net the state $6.5 billion this year.  Add the $1 billion we currently owe for interest on the 2004 Bond, and the Governor is single-handedly responsible for a $7.5 billion hole in this year’s budget alone – or almost half the deficit.  So what’s Arnold’s solution for this year’s budget, since he balks at raising taxes?  Another bond measure – borrowed against future lottery revenues.

When you’re already in a hole, it’s a good idea to stop digging.  “What about next year,” asked a frustrated Assemblyman Mark Leno.  “Are we going to bond against future income taxes?  Are we going to bond against future property taxes?  This is like an addict desperate for the next fix.  We need to be honest with the people of California, and admit that the state has a revenue problem.  And the way you get out of it is through taxes.”

The Democrats in the legislature have a comromise to plug the state’s $17 billion deficit – which involve a painful set of budget cuts coupled with reasonable tax increases.  $5.6 billion could be achieved by asking Californians who make more than $272,000 a year to pay an extra 1% on their state income tax (from 9 to 10%.)  This increase was originally placed in the ’60s by Governor Ronald Reagan, repealed by George Deukmeijan and then restored temporarily by Pete Wilson.  So it’s the Reagan-Wilson tax rate for the wealthy.

Another $1.1 billion could be raised by nixing a tax break that businesses use when they have a net operating loss one year.  “In a year when we’re asking the blind, disabled and elderly not to take a cost-of-living adjustment,” explained Leno, “it’s fair to also ask businesses not to benefit from an accounting allowance.”  Another $1.5 billion could be realized by temporarily lifting a fine that people who owe back taxes must pay – which would actively encourage scofflaws to pay up, bringing the state more revenue.

But Republicans in the legislature – whose votes are needed to get a 2/3 majority to pass the budget – simply refuse to acknowledge we have a revenue problem.  All 15 GOP State Senators and 31 of their 32 Assembly members have signed the infamous Grover Norquist pledge to “oppose and vote against any and all efforts to increase taxes.”  Schwarzenegger refuses to bring them in line – and now wants to punish state workers with layoffs and pay cuts.

For years, I’ve assumed that – beyond the 2/3 requirement – the culprit for this gridlock is the state’s ultra-partisan redistricting.  After the 2000 U.S. Census, the Democrats and Republicans in the legislature drew the lines in such a way that each district was virtually guaranteed to elect a member of one party or another.  The result is that Republicans who go to Sacramento are extremely conservative – and come from districts whose electorate is more likely to punish an incumbent for being “too moderate” than “too extreme.”

But that’s no longer the case.  In a recent statewide poll of registered Republican, 65% said the state legislature should pass a budget (even if it means more taxes) – whereas only 29% said “no new taxes” (even if it means gridlock.)  These G.O.P. legislators are out of touch with their own constituents – and it’s time for them to join the Democrats and support some very modest revenue measures.

Moreover, the media needs to shame Arnold for passing the buck on state employees – as opposed to all the other times they’ve let him off the hook.  People who work for the state don’t deserve that kind of abuse, and the Governor’s as bad as Newt Gingrich for taking this move.