May 6, 2005

Arnold Aims For A Power-Grab in Solving His Budget Woes

By Donal Brown

Desperate to make inroads in solving California’s fiscal crisis, Governor Arnold Schwarzenegger wants to give his office unregulated power over the budget by eroding the state’s system of checks and balances and shortchanging education.

The governor’s ballot initiative to limit state spending, seductively entitled Live Within Our Means Act, shifts budget power from the legislature to the governor, guts the review process and allows the governor to make cuts without explanation in funding crucial programs such as education.

California’s governor can already propose a balanced budget and work the legislature to get it passed. He can veto any item in the budget and call a special session of the legislature to deal with budget emergencies.

But those powers aren’t enough for Schwarzenegger. He believes he knows best how to spend the people’s money and wants to bypass public review and the legislature. “(His) initiative would radically change the balance of power between the legislature and governor,” warns Jean Ross, executive director of the independent California Budget Project.

In the Federalist Papers, James Madison warned against granting excessive power to any branch of government and outlined a system of checks and balances to deal with human fallibility and the resulting abuses of government.

Schwarzenegger’s initiative would strip the legislature of the power to override the governor’s veto with a two-third’s vote. Thus, the governor could veto spending provisions at will.

“The initiative further limits the legislature’s power by eliminating their ability to defer transportation spending in tough economic years,” adds Ross. This puts more spending on “automatic pilot,” adding to the logjam of other mandates that hamper the legislature’s flexibility in balancing the budget.

The initiative would enable the governor to declare a fiscal emergency and unilaterally cut General Fund spending if revenues fall 1.5 percent or more below forecast levels.

In a brief for the California Budget Project, Ross wrote, “Studies show that the revenue and expenditure forecasts prepared by the Department of Finance are subject to considerable errors.” The initiative does not provide for revoking the spending reductions even if errors emerge. “Nor does it require the governor to provide an analysis of proposed spending reductions or their impact to the public or the legislature,” Ross wrote.

Schwarzenegger may want to avoid the messy give-and-take of the political process, but it would be a mistake for the Californians to vote Schwarzenegger the power to reduce the legislature’s role in government.

Balancing California’s budget takes Herculean powers, but should not be done by incurring more debt, which is part of the governor’s current budget, or by gouging education.

His initiative would weaken Proposition 98, which guarantees a minimum level of funding for the schools, K-14. California schools have the highest standards for both English (ranking second in the nation) and math (ranking first). But in spending per student, the state is $600 below the national average; one recent study by Education Week ranked California 44th in per-pupil spending. The state’s teacher salaries rank 32nd nationally when adjusted for cost of living.

There is enough money in California to allow the state to live within its means. New taxes would certainly accomplish a lot to reverse the trend of dumping the state’s bills on future generations. That does not mean higher taxes for the middle class, which is reeling under diminishing job prospects, reduced health coverage and soaring gasoline bills.

Instead, it means the governor needs to sell business and corporate interests on the importance of investing in education, the key to a strong state economy in future years. The wealth is there. California’s economy ranks fifth in the world, just below Britain and above France.

Just the top 5 percent of the taxpayers control 40 percent of the wealth in California. Any move to solve the budget problems, even taxing the wealthy, may hurt the economy. But the wealthy will survive the taxes relatively unscathed, while contributing to a robust economic future for California.

It is unlikely, though, that Gov. Schwarzenegger will ever include taxes on the wealthy as part of his budget. After all, the governor called on two of his business friends to write the Live Within Our Means Act — Allan S. Zaremberg, the president of the California Chamber of Commerce and William Hauck, president of the California Business Roundtable.

Donal Brown, has taught in California’s public schools for 35 years.

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