California Governor Arnold Schwarzenegger
Another moment of truth has arrived for California. Back in February, the budget deal crafted by Arnold Schwarzenegger and the state legislature temporarily kept the Golden State financially solvent. In Tuesday's special election, the electorate must choose among a range of propositions aimed at solidifying that compromise and helping shore up California's shaky finances. So far, however, nearly all the ballot propositions are trailing in the polls — and that could rock the state as hard as a major earthquake. (As if on cue, a sharp 4.7 temblor rattled Los Angeles on Sunday night, raining broken glass on the streets.)
Last week, Schwarzenegger issued a dire warning to voters that if they reject Propositions 1A through 1E, he will recommend severe cuts to education and social services, take back billions from local government and release nearly 20,000 incarcerated illegal immigrants to federal authorities for immediate deportation. "I understand these cuts are very painful," Schwarzenegger said. "This is the harsh reality of the crisis we face. Sacramento is not Washington. We cannot print our own money ... We have to only spend what we have." (Read about the big race to succeed Schwarzenegger.)
In addition to ending health care for 225,000 children, laying off 5,000 state workers, shortening the school year by a week and slashing university spending by $1.2 billion, the governor plans to sell some of the state's leading landmarks to raise cash. Among the properties being considered for the auction block: the Los Angeles Memorial Coliseum (home of the 1932 and 1980 Summer Olympic Games), estimated price $400 million; San Quentin state prison, estimated value $1 billion; and Del Mar Fairgrounds (the famed "Where the Turf Meets the Surf" race track north of San Diego), estimated value $500 million. (Read about how recession is threatening the original Surf City.)
Even if the controversial budget measures pass, state officials say California must still trim $15.4 billion from its budget. If the propositions fail, as the polls portend, Schwarzenegger says the necessary cuts climb to more than $21 billion. (His proposals do not include tax increases. The governor and legislators already filled a $40 billion budget hole in February in part with $12.8 billion in temporary tax hikes.)
The latest polls show all the propositions but one, 1F ("No Pay Increases for Legislators During Times of State Budget Deficits"), going down to defeat. Special elections are notorious for low voter turnout, and many Californians, including those who have bothered to read the 52 pages of pro and con arguments in the Official Voter Information Guide, are baffled by the hodgepodge of measures, a mixture of liberal and conservative ideas on budgeting that critics say is less than coherent. (Read about how the financial outlook for states is getting worse.)
The crisis is compounded by the way California's government works. In most states, the legislature can pass a budget by simple majority vote. The politicians haggle and horse-trade, but a budget eventually gets passed and life moves on. In the Golden State, bitter partisanship is exacerbated by a constitutional rule requiring a two-thirds majority in the legislature to pass either a budget or new taxes. Meanwhile, the state's nearly 100-year-old system of ballot initiatives has progressively tied state government in Gordian knots.
As a result, California's budget process has an Alice in Wonderland quality. One confused voter, in an online letter to the Los Angeles Times, quoted Winnie the Pooh: 'This all makes my head hurt a bit." Regarding Proposition 1A, which would place long-term spending restrictions on state government and extend already approved taxes up to two years, the voter wrote: "Why do they need a new rainy-day fund when we already have two? ... The rest of the measures are even more confusing and convoluted. How can they expect us — with our own lives to manage — to sort it all out for them?" Historically, when voters do not understand a ballot measure, it usually goes down to defeat. This is the likely outcome for Tuesday's election.
More expert organizations warn that even with the passage of the financial propositions, the future would bring more headaches. The League of Women Voters says that Prop 1A would "make it more difficult for future governors and legislatures to enact budgets that meet California's needs and address state priorities" and "could lock in a reduced level of public services by not taking proper account of the state's changing demographics and actual growth in costs." The Legislative Analyst wrote, "The fiscal effects of Proposition 1A are particularly difficult to assess."
Early in his term, Schwarzenegger tried to pass a series of conservative reform initiatives only to be soundly defeated by liberals led by the powerful California Teachers Association (CTA). This time around Schwarzenegger has let the CTA and other interest groups lead the effort to pass the budget measures. But the relatively few voters following the arguments largely remain skeptical of the proponents' basic message: "Trust us, these measures will fix the problem."
Now, the electorate that rallied behind superhero Arnold Schwarzenegger in the recall election in 2003 mostly views him as part of the Sacramento problem he had promised to fix. The most recent survey by the Public Policy Institute of California found Schwarzenegger's approval rating among likely voters under 35%, while the state legislature is seen in a favorable light by only one in five voters. (See pictures of the career of California's First Lady Maria Shriver.)
When times are good, California's diverse economy generates ample tax dollars, especially from income taxes on high earners. But when times are bad, the state's overreliance on income taxes can push the state's finances quickly into the red. Whatever the outcome of Tuesday's vote, Californians are bracing for sharp cuts in programs and services from their state government — and they will have to figure out how to recover from this fiscal earthquake.