Contributors
Michael New - Contributor

Michael J. New received his Ph.D. in Political Science from Stanford University and is currenty a post-doctoral fellow at the Harvard-MIT Data Center. Michael's research interests include tax limitations, campaign finance reform, and welfare reform. Michael's writings have appeared in a number of publications including Investor's Business Daily, National Review Online, and the Orange Country Register. He is a board member of The Stanford Review and an Adjunct Scholar at the Cato Institute. [go to New index]

A Governor Who Changed America
Laying the groundwork for a Presidency...
[Michael J. New] 6/11/04

In the days that have followed the passing of Ronald Reagan, conservatives have rightly extolled Reagan’s numerous successes while President. However, Reagan’s accomplishments as Governor have received relatively scant coverage. This is unfortunate because Reagan’s tenure as Governor had a profound impact on the country. His victories in California’s 1966 and 1970 gubernatorial elections rejuvenated and inspired the conservative movement. Furthermore, many of Reagan’s actions while Governor laid the groundwork for a number of conservative political successes.

First, Reagan’s victory in California’s 1966 gubernatorial election gave the conservative movement a much needed spark. Many conservatives were downtrodden after Barry Goldwater’s landslide defeat in the Presidential election just two years earlier. However, Reagan preached optimism, writing in National Review that the “majority did not vote against our conservative philosophy, they voted against a false image our liberal opponents successfully mounted.” Reagan’s victory in 1966 demonstrated that conservative ideas, when presented effectively, could enjoy broad appeal.

Indeed, Reagan made conservative ideas an important part of his campaign. He came out strongly in favor of property tax relief. Furthermore, Reagan opposed withholding of state income taxes because he felt that it would make subsequent tax increases easier. In contrast, his Democratic opponent, Governor Pat Brown had hiked taxes, increased state support for schools, and enacted a massive welfare liberalization package. Overall, the rising tax burden, coupled with the urban riots in Watts, and the unrest on college campus propelled Reagan to a surprisingly easy victory.

Now, during his entire term as Governor, Reagan faced Democratic majorities in both chambers of the California state legislature. This made it very difficult for Reagan implement a number of policy reforms. However, Reagan did sign a sweeping welfare reform bill in 1971. During this time, AFDC caseloads were rapidly expanding across the country. In California caseloads quadrupled between 1963 and 1970. In fact, by 1971 one out of 13 Californians was receiving AFDC. Reagan’s desire to both promote self sufficiency and reduce state spending led him to aggressively promote welfare reform during his time as Governor.

Indeed, the California Welfare Reform Act (CWRA) was one of Reagan’s landmark achievements as Governor. These reforms tightened eligibility requirements and implemented stringent antifraud measures. This bill also started a Community Work experience program which required fathers and mothers without young children to work at public sector jobs. Within three years, California’s AFDC caseloads declined by 17 percent, saving taxpayers $2 billion. Furthermore, because benefits were maintained for those unable to work, it earned plaudits from many across the political spectrum.

Unfortunately, Governor Reagan’s efforts to reduce taxes and spending in the Golden State met with less success. When Reagan was inaugurated in 1967, his first priority was reducing the sizeable deficit that he inherited from his predecessor Pat Brown. Reagan ordered a hiring freeze, a 10 percent budget cut from all state agencies, and other expenditure reductions. However, since he was unable to convince Assembly Democrats to support further spending reductions, Reagan reluctantly signed a tax increase in 1967.

This tax increase succeeded in reducing the state deficit. However, revenues from this tax hike would later generate more revenue than expected, pushing spending to record levels. Reagan wanted to reduce the flow of revenue coming into the state treasury and proposed tax cuts on a number of occasions. However, Assembly Democrats were not receptive. The best Reagan could do was to increase the size of the property tax exemption for homeowners and to issue temporary tax income rebates in 1969 and 1973.

As a result, Reagan decided to pursue another strategy to keep spending in check, a constitutional limitation on state expenditures. A blue ribbon commission of economists, including Milton Friedman worked together to craft a spending limit. Their final product called for the rate of budgetary growth to be slowed until state expenditures equaled 7 percent of state personal income.

The drafters of Proposition 1 were careful to avoid loopholes that could be exploited by the legislature. In fact, they were probably too careful. Many voters found the initiative to be somewhat confusing and, on a couple occasions, Reagan seemed unaware of a few of the details himself. In the end, Proposition 1 failed, winning only 46 percent of the vote.

However, Proposition 1 scored some impressive victories along the way. First, it marked the first time that a statewide initiative to limit spending had qualified for the ballot. More importantly, the fact that Proposition 1 came close to passing convinced many that the initiative could be an effective tool for placing limits on government. In 1978, California voters overwhelmingly approved Proposition 13 and in 1979 California residents enacted a spending limit. By the early 1980s, 30 states had reduced property taxes and 17 states enacted spending limits. The tax revolt had arrived.

Overall, Ronald Reagan enjoyed less success as Governor than as President. Still, many of his actions paid long term dividends for conservatives. His reform of welfare had a long term impact both in California and across the country. Governor Reagan’s willingness to use ballot initiatives to place limits on government, inspired others to do the same with even greater success. However, most importantly Reagan’s victories in 1966 and 1970 rejuvenated the conservative movement and rallied countless Americans to the conservative cause. Furthermore, Reagan’s ideas and leadership as Governor gave him nationwide recognition and played no small part in his successful bid for the Presidency in 1980. CRO

Michael J. New, is a post-doctoral fellow at the Harvard-MIT Data Center.

copyright 2004 Michael New

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