Guest Contributor
Andrew Gloger
Andrew Gloger is a policy fellow at the Pacific Research Institute

A Wolf in Sheep's Clothing
Prop 56 lurks, ready to consume new taxes
[Andrew Gloger] 2/27/04

Governor Schwarzenegger scored a political victory in his campaign to pass propositions 57 and 58 by attracting the endorsement of the California Democratic Party. But in doing so he has given Democrats a "yes on all propositions" rallying cry that could cause the governor trouble if the lesser-known proposition 56 also passes on March 2.

Proposition 56 has been deftly packaged by its supporters as a way to ensure that lawmakers pass the state budget on time. If legislators miss the June 15 constitutional deadline, they would forfeit pay and be forced to stay in session until a budget is enacted. This is the main message spun by supporters. But it is far from the main purpose of the proposition.

The real objective behind Proposition 56 is to get rid of the two-thirds vote requirement to pass a budget, making it easier for legislators to raise taxes. A not unintended consequence is that by giving legislators this new majority power to raise taxes, the measure effectively inoculates them against the stiff penalties described above.

With the legislature safely in Democratic hands, lawmakers will have no problem passing a budget every year. Penalties will be imposed in the rare case a Democratic lawmaker refuses to tow the party line. Instead of being applauded for voting his conscience, he will be punished and have to incur the wrath of party leaders who would rather be on their summer vacations.

Supporters are right that if Proposition 56 passes, Californians will get a budget on time. What they can't guarantee is that the budget will be responsible.

Last January, Governor Davis proposed a budget with $8.3 billion in new taxes. Democrats would have gladly passed this budget by June 15. But these tax hikes would have destroyed more than 590,000 California jobs over three years.

There are currently more than 80 bills before the legislature that would raise taxes and fees $65 billion annually. Without the two-thirds vote requirement, Governor Schwarzenegger will likely be handed a budget in June radically different from the one he proposed in January.

It is surprising that the governor has not spent more time urging voters to oppose the measure. He should, because supporters have thus far been able to frame the debate to their advantage.

According to the Public Policy Institute of California's (PPIC) January survey, 41 percent of likely voters support proposition 56, clearly within striking distance. Yet, when asked what they think of the two-thirds requirement for passing a budget, an overwhelming 73 percent say it's a good thing. This dichotomy in responses indicates how effective proponents have been in masking the true intent of Proposition 56.

By focusing on the consequences that lawmakers will have to face if they fail to pass a budget on time, supporters are playing to voters' frustration with the legislature, which continues to garner record disapproval ratings. But the remedy they propose does not address the heart of the issue.

In the January PPIC poll, just 27 percent of Californians said they trust the state government to do what is right all or most of the time. Fifty-six percent believe that the state government wastes a lot of the money we pay in taxes. Californians are frustrated with the quality of the work coming out of Sacramento, not the speed with which it is enacted.

Television ads in favor of the proposition claim, "proposition 56 would end partisan gridlock." Replacing gridlock with a tax-and-spend autobahn is hardly a solution. Significant tax raises would only further stifle economic growth, just as they did following Governor Wilson's 1991 tax increases.

If Proposition 56 passes, Governor Schwarzenegger will no longer be able to lead the debate in Sacramento, as he has done to his credit thus far. He will immediately be put on the defensive, forced to wield the veto pen to defeat a raft of fiscally irresponsible laws.

In the short term, Californians would not suffer the consequences, since the governor's veto requires a two-thirds vote to overturn. What could turn the tables in the future would be a governor more than willing to sign the legislature's blank check.

copyright 2004 Pacific Research Institute

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