- Terelle Jerricks
By Paul Rosenberg, Senior Editor
On Jan. 10, Gov. Jerry Brown announced the state’s first balanced budget since 2001, under Gray Davis.
“For the next four years, we’re talking about a balanced budget, we’re talking about living within our means,” Brown said at his press conference presenting the budget.
It’s the sort of fiscally conservative message that Brown, a reputed liberal, has always embraced, going back to his first two terms as governor in the 1970s.
“Fiscal discipline is not the enemy of democratic governance, but rather its fundamental predicate,” he said in a related press release.
But it’s the how and the why of the balancing that’s upsetting advocates for those who’ve been hurt the most in recent years.
“We’re extremely concerned about the budget,” said Vanessa Aramayo, director of the California Partnership coalition told the Sacramento Bee. “It’s all about choices, and he’s choosing to put Wall Street ahead of Californians and the state’s most vulnerable… We’re calling on him to put families first.”
“State policymakers could do more to restore the severe cuts made in recent years to child care and other supports that help families struggling to find and keep jobs,” said Chris Hoene, executive director of the California Budget Project, in a press release.
Hoene was generally supportive, calling Brown’s proposed budget “a major step forward on many fronts,” but also pointing out that “the state could scale back or end ineffective tax credits and incentives, such as the costly Enterprise Zone Program.”
California’s painful recovery should be seen in context. An analysis of all state governments combined by the National Conference of State legislators, finds that state revenues plummeted from $670 billion in 2008 to just $604 billion in 2010, and had only partially recovered to $645 billion by 2012. That’s four straight years of lower revenues compared to just one year after the 1990–1991 recession and two years after the 2001–2002 recession hit.
The one obvious bright spot of Brown’s budget was support for public education, primarily due to the passage of Proposition 30. Brown proposed $56.2 billion for K–12 and community colleges, up $2.7 billion over the revised 2012-13 funding level of $53.5 billion and up $8.9 billion from $47.3 billion in 2011–12. Brown also proposed a 5.3 percent increase in higher education spending, and would substantially expand Medi-Cal, thanks to federally-funded provisions of the Affordable Care Act. But the inertia still lies with cut-backs in the social service realm, for example, maintaining existing cuts in the CalWORKs program, as the time limit for parents eligibility is being slashed from 60 months to 24 months.
Given the total disaster that his predecessor, Arnold Schwarzenegger, made of the budget for most of the last decade, it was understandable that Brown’s announcement was met with widespread relief, and initial expressions of support from throughout the state legislature. Yet, it’s telling that the most unqualified praise came from a Republican leader, while top Democrats offered early signs of wanting to do more for those who’ve been hurt the most in recent years.
Republican Assembly Leader Connie Conway called Brown, “the adult in the room”—an unthinkable gesture when the GOP had more than one-third of the seats and the law required their votes to pass a budget. Now, lacking actual power, the GOP is playing psych-out politics.
“He may need us because our restraint agrees with his, and we believe that we may be more restrained than some of our colleagues across the aisle,” Conway told the Sacramento Bee.
But neglecting their base has long been the Democrats Achilles heel, both nationally and here in California. Thus, Assembly Speaker John A. Pérez, D-Los Angeles, called Brown’s budget “A good starting point,” then quickly added, “But it is that, it’s a starting point.”
And, Senate President Pro Tem Darrell Steinberg, D-Sacramento, said “The governor’s frame is solid.”
But he went on to say, “I can only add that we can’t forget and won’t forget mental health, dental care and subsistence for the elderly and disabled and other related issues as the year progresses.”
The view from outside Sacramento is more stark.
“While there is a surplus that the governor has identified, he is not recognizing how the surplus has gotten to this place,” Los Angeles-based Aramayo told Random Lengths.
She went on to cite two primary causes.
“One is the families that have already been impacted by cuts,” Aramayo said. “We have been able to identify a surplus because of all the cuts that we’ve made since 2008, severe cuts that practically obliterated our safety net. Childcare alone has seen a billion dollars in cuts. We have other programs, health and human services, in home support services, Medi-Cal, all in all in health and human services, we’ve seen $15 billion in cuts. And, the governor’s forgetting that these families continue to struggle. And this is a grave concern to us.”
Speaking technically, Aramayo may be mistaken. Brown’s budget press release acknowledges that “The 2011-2012 and 2012-2013 budgets provided three dollars of spending cuts for every dollar in temporary tax revenues approved by the voters.”
This three-to-one ratio of budget cuts to temporary tax increases stands in sharp contrast to the one-to-one ratios adopted by former Republican governors Reagan and Wilson when they faced similar budget shortfalls. But there appears to be a vast gap between technically recognizing how the balance has been achieved and morally registering that same fact.
The other reason Aramayo cites is the passage of Prop. 30 this past November.
“Proposition 30 allotted additional funding for education, which in theory is supposed to free up money in the general fund, that would reinvest in and restore some of these programs, particularly in health and human services,” she said. “And, the governor’s not doing that.
“The budget that he’s introducing does not look at the restoration of any programs, but instead prioritizes what he calls the wall of debt, or, what we call Wall Street,” Aramayo said. “And, so, what we’re do is we’re calling on the governor to put families before Wall Street.”
While not all the money devoted to paying down debt goes to Wall Street, Aramayo note, “The biggest issue with the Governor’s position is that he is attempting to pay off the debt sooner than we have to. This is at a time when 1 in 4 children in California are living in poverty. Women and children have historically be placed last in this state when it comes to the budget. It is important to meet our obligations, but we have to start thinking about low-income families, children, and people with disabilities as part of the people we are indebted to as well.”
“If the Governor wants to pay back its “Wall of Debt” he needs to also have a plan to pay back its 15 year “wall of debt” to low-income people and families that continue to struggle,” Aramayo added. “We all deserve the opportunity to thrive and choosing not to make restorations to services that help achieve this is denying people that opportunity”
Aramayo’s frontline perspective is reinforced by Robert Cruikshank’s historical overview at Calitics, the statewide progressive political blog. Just after the budget announcement, Cruikshank, a trained historian who’s a principal Calitics contributor, provided a quick overview of how California’s repeated budget woes are primarily due to Republican tax-cutting and demagoguery—and Democratic acquiescence or complicity.
“The story began in 1978 with the passage of Prop 13, but this particular chapter’s true beginning came in 1996,” Cruikshank wrote. “During the 1980s state government had cobbled together an unwieldy but workable fix to the devastation to revenues and public services that Prop 13 had wrought, aided by that decade’s economic boom.”
The boom ended, and deficits exploded in 1991, but “moderate Republicans and Governor Pete Wilson joined Democrats to pass a mixture of spending cuts and tax increases” which stabilized the budget, with projected surpluses into the future. However, the threat of shifting political fortunes—a Democrat, Bill Clinton, carried the state for the first time in decades in 1992—helped trigger a financially reckless response.
“Republicans figured the answer was to fan the flames of the tax revolt,” Crruikshank wrote. “The first step came in 1996 when Proposition 218 was placed on the November ballot. This measure required a 2/3 vote of the people to raise most local taxes, setting up widespread municipal financial woes in the coming years.
“But their main thrust came in 1998. As the dot-com boom gathered pace, the state had huge budget surpluses. Rather than use the surplus to fund new programs or new capital investments, Republicans, worried about their fortunes in the 1998 statewide races, decided it was time for a huge tax cut. Democrats, eager to appease the tax revolt, went along.
“The result was the creation of a structural revenue shortfall. Rather than a one-time tax rebate, tax rates were permanently lowered. The consequences became clear in 2001, when the country entered recession. As tax revenues declined, it became clear that the 1998 cuts had gone way too far, and Gov. Gray Davis found himself short nearly $30 billion in revenue.”
This crises, which came out of nowhere for those whose scope of vision had narrowed dramatically by following the right-wing’s lead, set the stage for the unprecedented recall of Davis in 2003, replacing him with Arnold Schwarzenegger.
“There were many issues driving the 2003 recall,” Cruikshank wrote, “but in many ways this was the final triumph of the tax revolt. Schwarzenegger ran against the restoration of the vehicle license fee to the levels it had been at from the 1940s to 1998, and blamed the state’s budget woes on overspending.”
Of course, Schwarzenegger diagnosis and his prescription both turned out to be disastrous failures.
“By 2009 Democrats finally agreed with what we progressives had been saying for years: that the only way to fix the state’s financial woes was not to cut spending, but to take power away from Republicans,” Cruikshank continued.
This included passing Prop. 25 in November 2010, ending the two-thirds budget rule, while sweeping all statewide offices. And then, in November 2012, winning a two-thirds super-majority, while passing Prop. 30, thus ending the structural revenue shortfall. But this hardly solves all the state’s problems.
“California has a lot of spending needs in the coming decades in order to build a sustainable society and to address global warming, as well as to finally overcome a century and a half of inequality,” he wrote. “But it is possible to begin solving those problems now that the Republican Party has been destroyed and the state budget crisis has ended. California has a future again – if the super majority decides to start building one.”
That last sentence clause linked to an earlier analysis in which Cruikshank wrote, “Here’s the key: For Democrats to hold these new seats, they have to keep that base happy and engaged in politics. If they disappoint that base, if they fail to solve the problems of that base, those voters won’t turn out in big numbers in 2014 and Democrats will guarantee they will lose the super majority they finally won.”
That’s exactly what happened to Democrats nationwide in 1994, and again in 2010—both elections in which “reasonable” centrist legislative strategies left the Democratic base dispirited and demobilized, with disastrous electoral results.