Thoughts on the May California Special Election

So, here we are again in California, about to go to the polls for a special election with a total of six statewide ballot measures.  With absentee voting about ready to start (the election is on May 19th), it’s time for my pre-election comments.  Unlike the last time we had a special election like this, in 2005 when Governor Ahnold asked us to “blow up the boxes” and we turned him down, these are not his unilateral proposals.  Instead, they represent a carefully and painfully negotiated compromise between the governor, the Democratic legislative majority, and a small group of Republican legislators (including some now ex-leaders) to address the state’s catastrophic budget deficit.  Given the situation, it’s worth saying a word about the state’s budget problem before talking about the ballot measures themselves.

California’s budget could most quickly be summarized in three words — It’s a mess.  In large part, that’s because of the inability of California’s voters to reach any sort of consensus about what they want the government to do and how to fund it.  On the one hand, Californians, both through the legislature and through ballot initiatives, have approved a lot of state spending mandates.  These range from Prop 98’s direct mandate for education spending to the indirect mandate for massive spending on prisons and the criminal justice system through the victims’ bill of rights and three strikes initiatives.  On the other hand, Californians have enacted measures to limit or even reduce how much revenue there is to fund all these mandates.  The great grandaddy, of course, is Proposition 13.  (See my other posts on this subject.)  Not only did it roll back property tax levels and make it much harder to pass additional taxes, but it also capped property tax revenue in a way that has hamstrung public schools and local governments.  This, in turn, has led to many “creative financing” approaches such as redevelopment funding, development fees, and various and sundry “user fees” that have attempted to fill the resulting budgetary gaps.  Then there’s Proposition 218, which attempted to plug some of these “loopholes” by forcing ballot approval for fees and assessment measures.  Finally, when the gouvernator took office, he pushed through the legislature, with enormous popular support, a rollback of the vehicle license fee — essentially a personal property tax — that further cut state revenue.  As a result, in recent years we’ve had a repeated scenario — enormous state deficits, a legislative deadlock on how to address the deficit, and a “solution” that usually involves some budget cuts, some minor tax and/or fee increases, and tossing the major portion of the deficit forward to future years through loans and bonds.  With each successive year, the deficit problem gets bigger and harder to address.  This year it was over $40 Billion and, as even some Republicans had to admit, impossible to address without some kind of “revenue enhancement” — a.k.a., tax increase.  Of course the current recession/depression has only made matters worse; both increasing the need for funds for programs like unemployment benefits and MediCal and reducing the state’s revenue sources from income tax, sales tax, and property taxes.

That brings us to the ballot measures.  Measures 1A through 1F were written to both address the budget deficit and provide an incentive to the legislature to solve future budget impasses more quickly.  Will they work?  Probably not totally.  California’s budget process is, at the moment, almost hopelessly broken due to the combination of the political schism in the state  (see my article on splitting California) and the 2/3 requirement for passing a state budget.  On the other hand, if these measures don’t pass, even the duct tape and baling wire temporary fix approved this year will quickly fall apart, leaving a deficit so large that the state may face a serious likelihood of having to declare bankruptcy.  That’s a prospect that very few people would relish.  (Well, OK, actually I guess some Orange County ultraconservatives and maybe even some Republican legislators wouldn’t mind finally being able to drown government in the bathtub.  See, http://en.wikipedia.org/wiki/Grover_Norquist.)

So, what exactly are the ballot measures?  What would they do? and, most importantly, should you vote for them?  Let me quickly cut to the chase.  While there’s something in each of the measures to not like, I think we’re struck without any palatable alternative to passing them.  Both Schwarzenegger and the Democratic legislative leadership have come to the same conclusion and are campaigning hard to pass all six measures.  Much as I hate to agree with them, I’m afraid I too must support approving all six.  Now let’s look at each in detail.

Prop 1A — puts a cap on future state budgets, establishes a “rainy day” fund reserve to be funded over time when there are budget surpluses, and extends tax increases enacted as part of this year’s budget compromise.  Liberals hate the budget cap; conservatives hate extending the tax increases.  I personally think both are needed.  Unlike the federal government, California doesn’t have the luxury of being able to approve a deficit budget.  We need to acknowledge that we’ve got to pay for what we get.  A few years back, the legislature adopted a policy of no new expenditures without funding to balance them.  Unfortunately, many of the state’s major expenditures, such as MediCal, unemployment benefits, and prison costs, aren’t really discretionary.  When their costs go up, there’s very little choice (at least in the short run) but to pay those costs.  In my opinion, the fiscal restraint imposed by Prop. 1A is probably a good thing.  When coupled to the rainy-day fund and the ability to keep needed revenue flowing into the state treasury, I think this ballot measure very much deserves support.  YES

Prop. 1B — This was the tit for tat that convinced at least one of the statewide teachers’ unions to support Prop. 1A.  (The two are a package — Prop. 1B won’t take effect unless Prop. 1A also passes.)  This measure would provide some supplemental state funding for local school districts and community colleges, at least partially offsetting the damage done by this year’s funding cuts.  Some school districts may still face bankruptcy in the meantime, but at least this will help stop the bleeding.  In the long run, we really need to revise Prop. 13 (am I a broken record, or what), but in the short run this will help.  YES.

Prop. 1C — This would allow the state to borrow against future state lottery revenues while also “improving” its operation.  I have a lot of problems with the state being in the business of encouraging gambling.  Why don’t we, instead, just put a check-off box on the state income tax for a lottery with some of the frankly-contributed tax dollars?  At least it would be more honest.  At any rate, sadly, it’s a needed part of the budget picture.  A reluctant YES.

Prop. 1D — This measure would temporarily relax some of the mandates on the use of educational funding.  That means some specialized educational programs may be short-changed in the short run.  However, it’s either that or having to cut the more general education funding.  It’s robbing Peter to pay Paul, and we really ought to be paying both Peter and Paul, but until the state budget process gets fixed, it’s an unfortunate but necessary compromise.  Another reluctant YES.

Prop. 1E — Here’s another unfortunate budget impass victim.  In 2004, voters passed new finding for mental health services.  It was one of the few times in recent history that voters actually agreed to additional state revenue.  This measure would shunt that revenue, temporarily, to fund other mental health programs; funds that would otherwise come from the general fund.  Again, not the best thing, but necessary.  YES.

Prop. 1F — This measure is likely to be the most popular of the bunch.  It freezes the governor’s and legislators’ pay if there’s a budget deficit, and als0 stops elected officials’ pay raises in times of economic uncertainty.  Not a big incentive, but every little bit helps.  YES.

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