It has become obvious that Gov. Schwarzenegger and legislative leaders of both parties simply won’t be able to reach a compromise that comes anywhere close to closing California’s rapidly growing budget deficit, now estimated at some $40 billion over two years. The state government is running low on cash. Within weeks, it may have to start paying people in IOUs.
Democrats simply won’t agree to enough cuts. Republicans won’t agree to tax increases, and they can block that because of the state’s requirement for a two-thirds vote. The Democrats’ convoluted (if politically smart) attempt to do an end run around two thirds and raise taxes by majority vote isn’t going anywhere; even if it’s revived and signed into law, it’s all but certain to get struck down in the courts or overturned by referendum. The governor you ask? Schwarzenegger has little credibility with lawmakers of either party. When it comes to big deals, he simply can’t close.
For anyone who still held out hope that our state’s leaders could fashion a way out of this mess by themselves, the legislature’s very own analyst offered an answer today: no way. The legislature’s failure to act over the last two months has added $12 billion to the problem, according to a report from the legislative analyst’s office and comments by its chief Mac Taylor. So what to do? The voters, via the ballot measure, are the only ones who can resolve the crisis.
That’s my reading of the LAO report, at least. The LAO explicitly suggests that the legislature and governor seize on the idea of a special election (talked about for June or later) and move it up to April. What would be on the ballot? Well, first there would be two ballot measures that were sent to the people as part of last year’s budget agreement –the $5 billion in lottery borrowing and the establishment of a stronger rainy day fund for the state. To that, the LAO would add measures, suggested by Schwarzenegger, that would ask voters to redirect money previously set aside by ballot initiatives (Prop 10 for early childhood, Prop 63 for mental health) to the state’s general fund.
The LAO and Taylor don’t stop with just these four measures. The legislative analyst actually proposes new measures to add to the ballot. What are they?
1. Two new measures that would also grab money apportioned by initiative to help with the current state budget crisis. One of the measures targeted would be Prop 49, the after-school initiative sponsored by Schwarzenegger himself in 2002
2. A measure that would permit the state to issue gas tax bonds — that is to securitize future gas tax revenues — and use the money to accelerate the building of current transportation projects.
3. A measure that would ask voters to approve massive short-term borrowing in order to put such borrowing on a stronger legal footing if it is challenged in court. The LAO suggests one method might be to seek more "economic recovery bonds" — that is general fund bonds to cover the deficits — like the $15 billion in bonding authority in Prop 57, which was approved by voters in the last major budget crisis, in early 2004.
4. A package of tax increases would be placed before voters as ballot measures. These are tax proposals that Republicans won’t support. The LAO, bowing to political reality, says the legislature should let the people decide. Given the number of tax proposals on the table, it’s possible this could produce a half-dozen different measures.
All told, the legislative analyst — yes, these folks work for the legislature, which is supposed to handle the budget — are arguing that the only way out of the fiscal mess is an April election in which voters would cast ballots on, by my count, between 9 and 15 complicated and important measures. (The LAO report is titled, "Overview of the Governor’s Budget." It would have been more honestly titled: "You Know That Question About Whether the State Is Governable? It Isn’t. Even Those of Us Who Work in the Legislature Know This"). Clearly, California has reached a point where it is no longer a true republic. Ballot measures are the coin of the realm. We are truly a blockbuster democracy.
And if the voters don’t approve most of these budget measures in the special election the LAO wants?
Well, then, there may be no way out.