Budget Battle A Bad Movie Sequel

APRIL 4, 2011

Have you ever watched one of those predictable, boring movies where you wish you could just skip the obligatory chase and romance scenes and get to the “I see it coming” ending already?

That’s what I feel like as I watch the unfolding drama – and I use the term “drama” loosely – regarding the state budget crisis. I also dislike the term “crisis.” The Japanese, suffering from an earthquake, tsunami and nuclear meltdown, are facing a crisis. Californians are enduring a manmade budgetary disaster that can easily be fixed if our leaders decided to live within their means.

The governor a few days ago suspended his talks with the GOP after Republicans in the Legislature had the audacity to demand that the governor consider placing various conservative-oriented reform initiatives on the ballot in exchange for putting tax extensions before voters in June. Never mind that the GOP’s demands were fairly toothless – modest pension reform and a spending cap, for instance.

Knowing the spinelessness of the GOP legislators in general, I’d guess Brown could have bought off a few with phony reforms and managed to get his tax-vote through. But the governor decided instead to grandstand. Brown has claimed that his vote idea is about the fundamental right of the people to determine their fate – a situation he once compared with the protesters in the Middle East.

In the governor’s worldview, distorted perhaps by $30 million in union campaign spending on his behalf, the people have a fundamental right to vote – but only on a tax question, not on cost-saving measures to reform the government. I once harbored the secret hope that Brown would be beholden to no one, a politician at the end of his career who wanted to build a legacy of putting California’s dysfunctional government back on track. But now we see that Brown is just another phony, more similar to Arnold Schwarzenegger than anyone would like to admit.

My guess is that Brown backed out of talks because he has seen a potential ending to the B movie he now is starring in. In this climate of tough economic times and angry voters, the public will most likely vote for reforms, even half-hearted ones, and against more taxes, even if the tax votes are championed by millions of dollars in union ad campaigns. A recent poll finds Democratic voters overwhelmingly opposed to higher taxes, which should be sobering to the Brown team.

It would be a major embarrassment for Brown if he puts various measures to the test, and the reforms pass, and the taxes don’t. Instead, Democrats are looking at a legally questionable means to get the tax extensions before the public without any GOP legislative votes. They might pull it off, but voters are likely to say “no thank you” despite all the Democratic efforts to let voters decide.

The Republicans have been hotly debating the wisdom of having some legislators negotiate reforms with the governor. It’s a tactical debate, with most conservatives opposed because they fear that the tax vote could pass and that the reform measures won’t be meaty enough to improve anything. The negotiators believe that it’s a historic opportunity to get long-needed reform and that the governor’s desperation to place his tax extensions on the ballot gives them leverage.

Ultimately, it’s not going to matter. In fact, even if the Democrats get their way and convince the public to approve taxes, the drama still ends with the state eventually running out of money – although voter approval of tax extensions or increases will delay things until the sequel. California government spends more money than it receives, in good years and bad ones. The state already has one of the highest overall tax burdens in the nation, and businesses really are fleeing.

Democratic legislators believe that the government is too small and that taxes are too low and that the rich don’t pay their fair share, even though this state’s steeply progressive tax system is the cause of many fiscal problems. Evidence: Last week, legislators passed a bill that will raise most Californians’ electricity rates as the state increases its green-energy mandates.

If Brown signs the bill, California’s public and private utilities will need to purchase 33 percent of their electricity by 2020 from alternative sources such as wind, geothermal and solar – something that will mean rate hikes (through full implementation of the bill) ranging from 34 percent to 74 percent, depending on which utility company one uses.

Even a handful of Republicans supported this travesty by arguing that it will help green jobs in their districts – forgetting about all the other jobs that will be lost in the process.

State legislators don’t get it. Until there is a different mentality among legislators and voters, there’s little chance the state can fix its problems. You can give this government as much money as you choose, but it’s like giving the ATM card to an addicted gambler. Another fix won’t fix anything. We’re heading toward insolvency, and how quickly we get there remains the real question.

A revived economy will help – but how are we going to get there as long as state pols are oblivious to what it takes to create economic growth?

So California continues down the same road despite all the machinations in the Capitol. The action hero couldn’t save us because he backed away after getting slapped down in 2005 by the unions that run the state government. And the new governor, despite his well-honed frugal image, can’t save us, either. His cuts are basically window-dressing. He’s owned by the unions and is doing what he can to protect the interest group that most benefits by the status quo.

Maybe it’s fitting that Brown is a retread from the 1970s – that’s when so many movies had bleak endings. Unless, someone fixes the script quickly, this will have a sad ending, too.
–Steven Greenhut

No comments

Write a comment
No Comments Yet! You can start the discussion, add a comment to this post.

Write a Comment

Leave a Reply


Related Articles

Run a restaurant like a school?

April 2, 2012 By Steven Greenhut SACRAMENTO — California’s public schools continue to lay off teachers, in a process that

Separation of marriage and state

July 1, 2013 By Steven Greenhut SACRAMENTO — As a kid, I remember watching a rerun of the 1952 “I

Tax hike could just go to pensions

April 4, 2012 By Wayne Lusvardi Looks like California won’t need a tax hike after all—except to fund pensions. Economist