Governor Brown was in office when the first state spending limit was passed in 1979. Yesterday he proposed a measure that might actually work as advertised.
We’ve learned a lot about state budgets, revenues and unintended consequences during the past 35 years. Governor’s Brown’s rainy day reserve nods to that experience, and brings forth a proposal more focused yet more achievable than past efforts.
Reformers have been at this a long time.
In the wake of Proposition 13, Paul Gann successfully promoted his eponymous spending limit. It made a difference exactly once, in 1987, before it was “improved” out of existence by Proposition 98 in 1988 and Proposition 111 in 1990. Fiscal conservatives attempted to reimpose constitutional spending discipline in 1992, 2005, and 2009, each time rejected by the public. Only in 2004 was there consensus on a constitutional reform. A relatively weak Budget Stabilization Account was proposed to the voters by Governor Schwarzenegger and the Legislature, which provided virtually no protection against the budget boom and bust later that decade.
The need for consensus drove Governor Brown’s latest effort. Without a new proposal, the November ballot would feature a perfectly good measure that moderates excessive spending and provides a strong rainy day reserve. Unfortunately, this measure would probably be doomed to failure. The Legislature originally placed this measure on the 2012 ballot as part of a budget deal with Governor Schwarzenegger, but since he left office, legislative Democrats and their public union allies have been agitating to sink it. They already postponed the statewide vote once, and every indication is that if this measure remains on the November ballot, the unions will finance a campaign to kill it.
The Governor threads this needle by retaining and improving the rainy day reserve, while dropping the potentially incendiary provisions that “limit” state spending. He has in effect leveraged the reserve requirement to (1) remove the opportunity to spend one-time revenues on ongoing programs, (2) accumulate surpluses into a fund that could offset the effects of economic downturns, and (3) allow some portion of these accumulated revenues to pay down both budgetary debts, like money borrowed from local governments or special funds, and off-budget debts, like unfunded obligations for retired employees’ health benefits or retired teachers’ pensions.
Thus the Governor proposes to retain the key elements of fiscal restraint and debt reduction, while nipping in the bud the potential political liabilities that would bring out the well-funded government union opposition.
Governor Brown will need to dust off his cross-aisle consensus-building skills this summer, since placing a measure on the ballot requires a two-thirds approval by both houses of the Legislature. Rarely will we see a vote so clearly designed to separate the practical problem solvers from the dreamers and the errand boys.