Brown's Punch & Judy Budget Show

MARCH 30, 2011

By JOHN SEILER

California’s budget comedy resembles an old Punch & Judy puppet show, with Gov. Jerry Brown in the role of Punch, whom Wikipedia describes:

He carries a stick as large as himself, which he freely uses upon most of the other characters in the show. He speaks in a distinctive squawking voice, produced by a contrivance known as a swazzle or swatchel which the professor holds in his mouth, transmitting his gleeful cackle.

That’s what Brown has been doing these past months in trying to cajole Republicans in the Legislature into putting his $12 billion tax-increase proposal on a special June ballot, while keeping Democrats on board for $13 billion in spending cuts.

“Punch” Brown’s latest snap of his punishment stick: Calling off talks with Republicans over the GOP two votes he needs in each house of the Legislature to get the election going. He’s upset that Republicans, he says, keep presenting “an ever-changing list of collateral demands.” He was referring to the Republican list of 53 issues produced late last week.

But that’s just part of “Punch” Brown’s showmanship. He’s been performing so long he knows how, exactly, to get a rise out of an audience.

He well knows that Republicans, basically, have three demands for budget reform:  pension reform, a strong budget limitation and continuing the $1.7 billion in redevelopment funding.

As my colleague Steven Greenhut has shown, the redevelopment stance is the height of Republican hypocrisy. Refusing to cut the $1.7 billion redevelopment waste would mean increasing taxes $1.7 billion to pay for it. So Brown probably could rile up GOP constituencies enough to get the funding cut.

Two Top Items

That leaves just two items: Budget limitation, such as reviving the Gann Limit. Brown actually supported the original measure in 1979 back when he was governor. Unfortunately, misled voters eviscerated Gann in 1990. But Brown could blame that on Republicans who backed the reversal, such as then-Gov. George Deukmejian.

And the second reform item is pension reform. It’s understandable that Brown is loath to go against the powerful state government-worker unions who put him into office. Yet, pension reform is inevitable, whether by him, the next governor or a statewide initiative.

Unfunded state pension liabilities lie North of $500 billion, according to analyses last year from Stanford University, the University of Chicago and Northwestern University.

And the Little Hoover Commission just chimed in with its analysis showing:

California’s pension plans are dangerously underfunded, the result of overly generous benefit promises, wishful thinking and an unwillingness to plan prudently.  Unless aggressive reforms are implemented now, the problem will get far worse, forcing counties and cities to severely reduce services and layoff employees to meet pension obligations.

“Punch” Brown campaigned last year as the experienced politician who had the smarts and guts to solve the state’s problems. He contrasted himself to the naivete of GOP opponent Meg Whitman, who only had money, and to the then-reigning governor, Arnold Schwarzenegger, whose own inexperience had led the state to disaster.

Remember that funny commercial “Punch” Brown — he’s such a joker — produced in the last weeks of the campaign, showing Arnold and Meg mouthing the same GOP platitudes, sometimes using the exact same words?

Yet “Punch” Brown still refuses to tackle the major budgetary issue facing the state: pension reform.

Instead, he keeps up the Punch & Judy Budget Show to entertain us.

“We gave it our best. We’re very disappointed. It’s done,” said Sen. Bill Emmerson (R-Hemet). Emmerson is part of the so-called “GOP 5” state senators willing to deal — that is, sell out — on the budget.

But if you’ve watched these budget negotiations over a number of years, you know that nothing ever really is “done” until the money is lifted from the taxpayers’ paychecks and wasted on every last penny of pork.

So, who knows?

Tax Revenues Up

Moreover, state and local tax revenue has rebounded across the country, according to a new report released Tuesday by the U.S. Census Department. For California, from the Fourth Quarter of 2009 to the First Quarter of 2010, income taxes are up 31 percent and corporate net income taxes are up 33 percent. The general sales tax and the severance tax are virtually unchanged.

It’s too early to tell, exactly. But my analysis would be that at least some of this growth is due to companies anticipating the end of the 2009 Schwarzenegger tax increases; that California would be at least a little more friendly to business and jobs creation.

Which means that “Punch” Brown and the Democrats should be rejoicing that business is improving and tax revenues rising. They should be doing what Schwarzenegger promised to do, but never accomplished: ensuring that the state’s budget problems were fixed — permanently — and that California again was a jobs-creation machine.

Instead, at least so far, we’ve only goten a rerun of the Schwarzenegger budget stopgaps that postponed the problems until today.

Having gotten rid of one actor, in his place we have the Punch & Judy Budget Show.