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Contributors
Jon Coupal- Columnist
Jon Coupal
is an attorney and president of the Howard Jarvis Taxpayers
Association -- California's largest taxpayer organization with
offices in Los Angeles and Sacramento. [go to website] [go
to Coupal index]
 Is
Half a Loaf Better Than None?
How
did we get here from there...
[Jon Coupal] 12/26/03
The deal is done. And as a result, voters will decide in March
whether to accept a $15 billion bond to "repackage" the
existing debt incurred by Gray Davis and the Legislature as part
of last summer's budget negotiations. The incentive to pass the
bond is another measure appearing on the same ballot, a package
of budget reforms intended to prevent future budget disasters.
The two plans are "double joined" -- meaning that both
the bond and the reform provisions must be approved for both
to become effective. For example, even if the budget reform package
passes by 75% of the vote, by its own terms, it does not become
effective unless the bond passes as well.
The deal is controversial, not because the budget reform provisions
are bad. They're not. If approved, they would mandate a balanced
budget and establish -- for the first time -- a reserve account.
The deal is controversial because Governor Schwarzenegger promised
something much better; an effective spending limit fixing the
amount of spending (adjusted annually for population and inflation)
over which the Legislature would be constitutionally prohibited
from exceeding. Regrettably, the Democrats in the Legislature
successfully stymied his efforts.
In reflecting
whether to accept or reject the proposals, voters would be
wise to
consider how we got in this mess in the first
place. During the last four years the state engaged in massive
over-spending. When the bills came due, Democrats said raise
taxes, Republicans said cut spending. The result was instant
deadlock. The temporary solution -- which was no solution at
all -- was to borrow and thus delay the day of reckoning. This "nonsolution" was
not only bad policy, but was legally suspect. Two billion of
the credit card charge has already been stricken by the California
Courts as a result of legal action by the Howard Jarvis Taxpayers
Association.
In any event, these maneuvers were not enough to hide the extent
of the problem from voters who took out their wrath on the sitting
governor and replaced him with a candidate who said he could
solve the problem without raising taxes. After surveying the
catastrophic damage created by the previous administration and
its cohorts in the Legislature, Governor Schwarzenegger proposed
consolidating the questionable debt, on which the current year's
budget was based, by asking the voters to approve, and make legal,
the $15 billion bond.
Believing that the tax-and-spend crowd would be fearful of
massive cuts, the Governor would demand a meaningful spending
limit as the price to support the bond which would, in turn,
prevent huge cuts in programs loved by the Democrats. But in
what could prove to have been a tactical error, Schwarzenegger
also publicly said he would spare most programs from major cuts.
In so stating, he damaged his own bargaining position in the
effort to force Democrats to accept a spending limit with teeth.
For taxpayers, the end result is a mixed bag.
On the plus side, the Governor's tax cutting credentials remain
essentially intact as he has not proposed any tax increases and,
indeed, delivered on his promise to repeal the car tax. Second,
state officials have properly acknowledged that borrowing must
have the consent of the voters. Third, the budget reform package
could help maintain the visibility of the spending issue, even
if it is not true reform.
But this might not be enough for California taxpayers. Although
Schwarzenegger started strong out of the box, he has failed to
deliver on a specific promise. Despite some good excuses (he
needed the Democrats, but they wouldn't deal) that alone is cause
for nervousness among the sixty two percent of the California
electorate who voted for fiscal conservatism. Second, that which
was promised -- a real spending limit -- is very important to
those same 62%. Now, if taxpayers want an effective cap on spending,
they may have to look to the initiative process. But at this
late date, it is unlikely a measure will reach the ballot before
March of 2006, plenty of time for lawmakers to find ways around
the limited restraints contained in the current reform package.
The only way the Governor can win the support of taxpayers
for passage of the budget bond he so desperately needs to close
the gap is to absolutely and unequivocally take tax increases
off the table. In the absence of a true spending limit, he must
use every opportunity to say that under no circumstances will
he increase taxes to boost state revenues. And just as important,
he must come out forcefully against upcoming ballot measures,
like Proposition 56 this March, that are designed to raise taxes.
Then, and only then, will the voters of California give him a
pass on not delivering a true spending limit.
In the absence of such an unequivocal pledge, voters have little
reason to support anything coming out of Sacramento.
copyright
2003 Howard Jarvis Taxpayers Association
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