Taxes & Spending

California’s Next Hurdle

There was never any serious hope that the Democrats in the legislature would consent to Gov. Arnold Schwarzenegger’s plan for pulling California out of the hole they have dug for the state in the past five years.

Both the Senate and the Assembly are securely in the pockets of the powerful special interests their Democratic members were largely elected to serve: the state employees’ unions, the Indian tribes that own or want to start casinos, and, above all, the California Teachers Association.

The Democratic legislators (and, of course, Gov. Gray Davis) had run the state $38 billion into debt by squandering money they didn’t have all over these and a handful of other powerful friends. When they learned that the new governor wanted to put a legal cap on future state spending, their response was a mirthless chuckle.

Their solution, of course, is simple: more taxes. It is always more taxes. If Schwarzenegger promised the voters he wouldn’t raise taxes, so much the worse for him.

Schwarzenegger’s additional proposal, to cover part of the state’s deficit by floating a new $15 billion bond issue, didn’t meet with their approval either. In this case, they attributed their refusal to a concern for the voters’ children and grandchildren, who supposedly would have to pay off the loan. But precisely where was their compassion for future generations when they saddled the state with this overwhelming debt in the first place?

Fortunately, California law provides the governor with an alternative way of trying to get what he wants, and he can be counted upon to invoke it. Under the state constitution, “initiatives” put on the ballot by petition have, if passed, the force of law. They constitute, therefore, a highly effective way of putting laws on the books that the legislature would never consent to pass.

Schwarzenegger, who was swept into office in a burst of popular fury over excessive spending by the legislature, is perfectly situated to take advantage of the initiative process. The head of steam that elected him has by no means dissipated. He can go directly to the people and ask them to put initiatives on the ballot next November to impose a spending cap on the legislature and authorize a bond issue to cover the gaping hole in the state budget. He can then stump the state asking voters to “send a message” to the legislators by passing both.

It is interesting to note that this will be the very election in which voters are simultaneously being asked to choose between President Bush and a Democratic challenger, and in which California Sen. Barbara Boxer, a Democrat, will be up for re-election. This will confront California’s Democratic strategists with the problem of delivering the state for Boxer and Bush’s Democratic opponent while many voters are in a foul mood over the conduct of the Democratic legislature.

It would be nice to think that Schwarzenegger could also bring about the ouster of a good many of the Democratic legislators whose behavior has caused the state’s fiscal mess. But thanks to a bipartisan gerrymander engineered three years ago, virtually all of the members of the legislature-Democratic and Republican alike-will be running in districts lovingly designed to guarantee their re-election, barring an electoral tidal wave. (The Republicans agreed to this on the instructions of Bush’s political Svengali Karl Rove, as part of a deal to hold onto the GOP’s California House seats, even though it insures Democratic control of the legislature until the next redistricting in 2010.)

In any case, Schwarzenegger seems likely to prevail in the initiative battle, rolling over the legislature that has rejected his proposals. That may not make the legislature any the less Democratic, but the spending cap, which will index increases in spending to inflation plus the growth of the state’s population, will put a severe crimp in the damage these special-interest puppets can do.

Of course, everything depends on Schwarzenegger’s not losing his nerve. But there is no sign of that yet. So the message to the big spenders may yet be, “Hasta la vista, baby!”


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