Dems on Budgetary Hot Seat

NOV. 3, 2010

By ANTHONY PIGNATARO

Five of the nine ballot measures on Tuesday’s ballot dealt with taxes or the budget. The biggest one, Prop 25, replaced the Legislature’s required two-thirds vote of budget approval with a simple majority. It passed easily, leading some to speculate that with the added bonus of newly elected Gov. Jerry Brown and solid Democratic control of the Assembly and Senate the doors to the treasury would fly open and the Dems would start easily passing massive tax and spend budgets.

But that’s apparently not going to happen. In fact, California voters sent legislators a stunningly mixed message, approving Prop 25 but canning other measures that would have raised taxes. The result may not, in fact, be the dream the state’s public employee unions had savored.

“Democrats now have 100 percent control of the budget process,” former Republican leader Jim Brulte said, according to KQED’s John Myers. “They get to own the results.”

Steve Maviglio (the spokesman for the No on Prop 23 campaign) seemed to sense the danger in his post-election California Majority Report blog: “While the good news is that voters appear to have approved a majority vote budget, life just got harder for lawmakers in crafting a budget with the passage of Props 22 and Prop 26 which put further restrictions on the budget process.”

Or as Jon Coupal of the Howard Jarvis Taxpayers Association put it to me, “Maybe it’s a good thing Meg Whitman didn’t win.”

Let’s start with Props 21 and 24. Prop 21 would have pushed an $18 annual vehicle licensing fee on drivers, while 24 would have repealed business tax breaks. Both lost by wide margins. That’s bad news for Brown, who made a campaign pledge to take any new tax increases directly to the voters.

“Add those to the Prop 1A vote in 2009, and it’s clear that on a statewide level people don’t want increased taxes,” Coupal said. “You could have a registration tax on child molesters, and that still wouldn’t win.”

What’s more, Prop 22, which prohibits the state from raiding cities and local redevelopment agencies, passed overwhelmingly. That cuts off a revenue stream legislators had been relying on in even this most recent budget (on election night, Nathan Barankin, Senate President Pro Tem Darrell Steinberg’s communications director, tweeted that “If Prop 22 passes, a new $1 billion hole appears in the 10/11 state budget”).

And then there’s Prop 26, which voters also approved. That measure requires a two-thirds vote before legislators can pass various fees.

“Prop 26 was a huge surprise,” Coupal said. “That shut the door on fees.”

All this likely adds up to what we have now – fights over increased taxes, spending cuts and dragged out budget negotiations. “It’s all very interesting,” Coupal said.

Interesting, but not necessarily good. After all, Prop. 23, which would have rolled back the state’s global warming cap and trade regulations, failed miserably, leading many economists to predict that state’s double-digit unemployment numbers will remain abysmal or even get worse.

“It’s a pretty bad time for California,” Coupal said the morning after the election. “Let’s assume the national trend to Republicans sends a positive signal to businesses to increase capital investments. You’ll start to see recovery, but not in California.”