Voters’ chance to rescue state

While some may want to punish politicians by rejecting the budget package, that tactic would also damage the state even further.

April 29, 2009 

We all know that Democrats and Republicans in Sacramento have severely mishandled the state’s budget crisis the past several years. Unfortunately, their ineptness has forced voters in the May 19 special election to consider solutions to California’s fiscal problems that are less than perfect.

The choices didn’t have to be this bad, and that has increased the cynicism toward state government. But now we need to work our way out of this mess. It would be easy to let our anger at the politicians prevail, and vote “no” on the six ballot measures the Democrats, Republicans and Gov. Arnold Schwarzenegger put on the special election ballot.

But while some may think they are punishing the politicians by rejecting the budget package, that tactic would also damage the state even further, and leave it with a much larger deficit.

It would be irresponsible to take the path offered by some to just let the state fail financially, and then restructure it from the rubble. Too many Californians would be hurt by such reckless public policy.

Voters have a chance to help close the budget gap and limit California’s out-of-control spending. Once these imperfect fixes are in place, voters can continue with the governmental changes they started when they passed redistricting reform last year. We will soon see a better Legislature as competitive elections rid the state of the “safe seats” that have made lawmakers unaccountable.

If voters want to express their deep dissatisfaction with state legislators, they can do that when they are up for re-election next year. “Throw them out” could be the theme of the 2010 legislative elections.

But something must be done now, and that’s why we are supporting five of the six measures on the May 19 ballot. We recommend “yes” votes on Propositions 1A, 1C, 1D, 1E and 1F. We urge a “no” vote on Proposition 1B.

Vote ‘yes’ on Proposition 1A

This measure is the main piece of the budget compromise agreed to in February by the governor and lawmakers. The passage of Proposition 1A is essential for California to get through the current crisis and avoid more financial pain in the future.

Proposition 1A has three key elements:

It would extend the various taxes that lawmakers approved in February on retail sales, vehicles and income. The taxes would generate an estimated $16 billion between 2011 and 2013, helping to bridge future deficits and preventing deeper cuts to schools and social services. We reluctantly support these temporary taxes, while realizing the increased burden they put on Californians.

The measure would make spending cuts by giving the governor additional authority to order mid-year cuts during times when state tax revenue decreases unexpectedly. A spending limitation would slow down expenditures and bring them in line with the growth of inflation and population.

It would establish a rainy day fund that would force lawmakers to put away surplus revenue during good times, so it could be used in lean years.

During a recession, no one wants to raise taxes. But the options are limited given the magnitude of the financial crisis caused by the politicians. Several billions of dollars have been cut from state programs. That leaves a temporary tax hike to complete the overall solution. The spending limitation is a trade-off for the temporary tax increases.

Vote ‘no’ on Proposition 1B

Proposition 1B promises more money for schools in future years when the state’s financial picture has improved. That seems like good public policy, and we support increased classroom spending. But it’s not that simple. This proposition makes spending commitments that could be a substantial burden on the state as soon as 2011. That concerns us enough to recommend against this measure.

Proposition 1B was developed out of political necessity. To get the budget deal passed, the governor and lawmakers needed to reduce school spending along with that of other state programs. To make a tax increase palatable to Gov. Schwarzenegger and a few other Republicans, Democrats reluctantly agreed to place a spending limitation measure, Proposition 1A, on the ballot.

The trouble was, both of these actions — reduced school spending and a future spending limitation — drew the opposition of the politically powerful California Teachers Association.

To keep the CTA from either upending the budget deal or opposing Proposition 1A, the governor and legislative leaders cooked up a sweetener, and that is Proposition 1B.

This measure would settle a long-standing legal dispute over how much the state owes public education under Proposition 98, a convoluted school spending measure voters passed in 1988. Proposition 1B pegs the amount owed at $9.3 billion and directs annual installments on this amount to begin in 2011. That would generate payments that, according to the Legislative Analyst’s Office, would be billions higher than current law allows.

While we support public education, ballot-box budgeting threatens even the most worthy programs. Measures such as Proposition 98 have compounded our fiscal woes and done little to ensure stable school funding. Within two years, Proposition 1B would create spending obligations the state couldn’t afford.

Vote ‘yes’ on Proposition 1C

We have always questioned whether the state should be so deeply involved in gambling. But since we have a state lottery, it might as well be a good one. Clearly, the California Lottery could be run more efficiently, and that’s one of the reasons we are supporting Proposition 1C.

The state lottery is one of the lowest-performing in the country, and needs to be modernized. Lottery experts say better marketing and higher payouts to players could boost revenues in the future and provide an infusion of cash now.

If Proposition 1C passes, the state would be authorized to borrow against future proceeds that a revamped lottery would bring. The governor and lawmakers are counting on that loan to plug $5 billion of the state’s budget hole.

Without it, they would be forced to make more cuts in social services, education, law enforcement and health care. There’s also this reality: Since lawmakers struck a budget deal in February, the state revenue shortfall has grown to at least $8 billion. Rejecting Proposition 1C would widen the gap to $13 billion. That’s another reason to support Proposition 1C.

Vote ‘yes’ on Proposition 1D

This proposition would redirect tobacco tax funds from early education programs to the state’s general fund. It is another unpleasant but necessary step for balancing the state budget. We reluctantly support this measure because the budget package fails without all of the funding pieces in the various propositions.

At issue is the money the state collects under Proposition 10, a 1998 initiative that taxed tobacco to curb youth smoking and pay for early education. Over the years, it has funded a range of worthy First 5 programs, and they are important to the San Joaquin Valley.

It has also generated a large amount of unspent tobacco tax money, roughly $2.5 billion statewide as of June. Proposition 1D would redirect up to $608 million of that money this year and $268 million yearly through 2013 to the general fund. That diverted money could go a long way toward avoiding tough cuts to health and welfare programs that are outside of the First 5 realm, including programs that help children and families.

Proposition 1D wouldn’t come without pain. It would make planning harder for local First 5 programs. But we have to balance that against more cuts that lawmakers would have to make in programs affecting families.

Vote ‘yes’ on Proposition 1E

This measure is the twin of Proposition 1D. It would redirect unspent mental health funds to the general fund, to backfill money that would otherwise be cut from health programs. While we support this proposition as part of the overall budget deal, we are concerned about its impact on mental health programs in the state.

Voters passed Proposition 63 in 2004. It increased the income tax on California’s top earners to pay for expanded mental health programs. Now, in 2009, Proposition 63 has been generating cash for a number of worthy programs, but most of them are in the development stage and roughly $2.5 billion remains unspent.

Meanwhile, without a source of funding, the state could be forced to cut several hundred million dollars from mental health programs that existed before Proposition 63 was passed.

Proposition 1E provides a solution. It would divert $230 million annually for two years so the state would not be forced to reduce screening for mental health problems.

Vote ‘yes’ on Proposition 1F

This proposition would prevent legislators and other state elected officials from receiving pay raises if the state budget was expected to end the fiscal year in a deficit. This is a no-brainer and we support it.

The measure is one of the concessions that Sen. Abel Maldonado, R-Santa Maria, extracted from Democrats and the governor as the price for his budget vote in February. Maldonado, exploiting an issue that is likely to play well with outraged voters, says it’s unacceptable that lawmakers would receive pay hikes in years in which they can’t balance the state’s books.

Proposition 1F, which would apply to the governor and lawmakers and, oddly, elected officials who have no budgetary duties, such as the secretary of state.

Pundits have dismissed Proposition 1F as a cynical ploy by a politician hoping to curry favor with voters. It’s hard to argue with that assessment, but this measure also makes sense.

There’s no real down side to Proposition 1F. There are other ways to accomplish budget reform, but lawmakers need to be held responsible for their inability to get a balanced budget.

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