December 25, 2003


Arnold off to 'good start,' but toughest test ahead (Martin Kasindorf, 12/23/03, USA TODAY)

Conservative radio talk-show hosts are grumbling about betrayal on spending issues. But Schwarzenegger is beginning to hammer out two-party solutions to the problems of the nation's most populous state. Though he bypassed the Legislature last week in bailing out local governments, he was careful to get the approval of State Controller Steve Westly, an elected Democrat.

As California TV stations reopened bureaus in the state capital to cover the first newsworthy governor since Jerry Brown's 1975-83 tenure, Schwarzenegger drew bravura notices for what he and political analysts termed a major budget victory Dec. 12.

That day, the state Senate approved a compromise version of the governor's "California recovery plan." If voters OK the plan's twin proposals March 2, California would borrow $15 billion by selling bonds to cover the shortfalls of the past three years. A budget-balancing amendment to the state Constitution would forbid spending in excess of revenue starting in 2006. That proposal contains loopholes that could allow more spending than Schwarzenegger was willing to accept at first.

"I give him credit," Davis says. In getting this far toward braking future overspending, "he got done something I couldn't do. It's not perfect, but it's something." [...]

[Maria] Shriver, 47, who has returned to work part time as an NBC journalist, stepped in. She and her husband were attending a conference in Palm Springs with the California congressional delegation when she encountered Leon Panetta, who was former president Clinton's chief of staff. Panetta encouraged Shriver, a Democrat and part of the Kennedy family, to coax Schwarzenegger to reopen talks with Democrats.

Former secretary of State George Shultz, a Republican, gave the governor the same advice. Legislators from both parties persuaded election officials to extend the deadline to get measures on the March ballot.

Shriver told friends that it was vital to demonstrate early in her husband's administration that the regular government processes could work. In a speech to a Sacramento women's group Dec. 9, California's first lady urged legislators to meet her husband halfway. "If some of these legislators were children, we'd give them a timeout," she said. "We would teach them that with every person, you can find common ground; that you should play nicely with them, work to a common goal and work it out."

The result was the Dec. 12 compromise. The bonds, if approved by the voters, would be paid off over nine to 13 years. The modified spending limit, without a rigid cap, pleased Democrats. It roared through the Assembly, 80-0. The Senate passed it 27-12, but only two of the 15 Republicans voted for it. [...]

Next year's deficit may be even tougher to fix unless Schwarzenegger goes along with raising taxes, which he's been unwilling to do. Any tax increase needs approval by two-thirds of the Legislature. That would require Republican votes that may be hard to get even if Schwarzenegger asks for them.

The alternative to raising taxes is to cut spending from $86 billion to $72 billion, mostly by slashing health and welfare programs. Protesters have already picketed in Sacramento about the $1.9 billion in current-year cuts that Schwarzenegger proposed in higher education and aid for the developmentally disabled. [...]

Many politicians in both parties cringe at the potential outcry over $14 billion in cuts for 2004-05. "The hard part comes next year," Davis says.

"Maybe he'll agree to a temporary tax increase and can talk the Republicans into it. With heavy cuts alone, the news media will have a field day. Let's wait and see how he looks in March, April, after the budget comes out," Davis says.

And Democrats, of course, aren't pleased that Schwarzenegger acted on his own last week by declaring a public-safety emergency and ordering cash sent to local authorities to handle the problem until June.

Democratic lawmakers were miffed that Schwarzenegger hadn't consulted them. But at a news conference Thursday, he basked in the gratitude of local officials.

Brown, the former governor who is now Oakland's mayor, said Schwarzenegger's use of obscure executive powers "to the max" is "the only way you get anything done around here."

Any conservative would obviously prefer a Governor McClintock with unlimited power to pass his agenda, but given the reality of a Democratic legislature, Arnold was more likely to succeed in governing and is off to as good a start as could be hoped for. Now it's up to conservatives to help change the legislature.

Posted by Orrin Judd at December 25, 2003 10:32 AM

A cotnituned national economic growth rate anywhere near the current 7-8 percent range over the next three quarters will solve a big part of the upcoming budget shortfall, given how large a percentage of the national economy California represents. That's about the time that the Democrats in Sacremento will figure out the 2006 spending cap law is going to kill their hopes for another "drunken sailor" spending binge with tax surpluses, like the one that gave Gray Davis such a hangover this past fall.

Posted by: John at December 25, 2003 12:11 PM

I don't trust Democrats when they are praising bipartisanship. So I say screw em at the first chance you get.

Okay, Okay I'm joking.

Posted by: h-man at December 25, 2003 1:02 PM

I would say the same as h-man. Certainly at the national level. But I will settle for the Dems "having" to be "happy" with bi-partisanship in a state where they have an ironclad lock on every elected office (but one) and every representatitive body. Talk about leveraging a sole Republican.

Posted by: MG at December 25, 2003 1:59 PM

It often seems to me that the ignored compromise in this sort of situation is to just freeze spending for a year or two and let revenues catch up. But I suppose unions contracts get in the way.

I was also surprised and disappointed that Arnold's first proposed cuts were so poorly chosen. I mean, less money for handicapped kidsd programs? As good an idea as it may be, what a stupid thing to lead with. Talk about playing into the hands of your opponents. Instead, start with selling surplus state real estate or combining Californias's two tax agencies into one. Sheesh.

Posted by: PapayaSF at December 25, 2003 4:40 PM