Spending limits a tough sell to state voters

Published online on Sunday, Sep. 20, 2009

Flanked by an aide dressed in a vampire cape and a skeleton behind the wheel of a '57 Ford, Gov. Arnold Schwarzenegger stood in a junkyard on Oct. 31, 2005, and talked about how California needed a spending limit.

"Let's make sure that our state lives within its means," he urged.

The governor's Halloween histrionics were aimed at getting voters to approve Proposition 76 on a special-election ballot the following week -- or face the frightening specter of future tax increases.

The measure would have limited state spending to an average of the previous three years' revenue and expanded the governor's powers to cut the budget.

But voters found the proposal too scary. They squashed it as they had every spending limit proposal -- save one -- since 1973.

"Spending limits have been a tough sell to voters," said Fred Silva, a veteran legislative consultant and state government analyst. "It sounds like a simple concept ... but it always seems to get complicated by other issues."

In 1973, a spending limit proposal by then-Gov. Ronald Reagan was rejected, even though Reagan campaigned door-to-door for it.

In 1979, voters did approve Proposition 4. Known as the "Gann limit" for anti-tax crusader Paul Gann, the measure limited year-to-year growth in state spending to the increase in the cost of living, plus population growth. Surpluses were to be refunded to taxpayers.

That finally happened in 1987, when the Gann limit kicked in for the first and only time, and taxpayers received rebates ranging from $32 to $272.

But the following year, voters blunted the limit by approving Proposition 98, which dictated that some surplus state funds go to schools.

In 1990, the limit's remaining teeth were pulled by approval of Proposition 111, which doubled the state's gasoline tax to 18 cents, exempted some state programs from the limit and declared it would take effect only if the state ran a surplus for two consecutive years.

The idea of clamping a tight constitutional lid on state government spending hasn't gone away.

In May, Schwarzenegger and legislators asked voters to approve Proposition 1A, which would have increased the minimum required size of the state's "rainy day" reserve fund and set limits on spending.

But it also included the extension of $16 billion worth of temporary tax hikes.

Voters found that scarier than junkyard vampires; 1A was overwhelmingly rejected.