Greetings From California: Letter From a State in Crisis
"It's a perfect storm," said veteran political consultant Allan Hoffenblum, co-editor of the nonpartisan California Target Book, which tracks all of the state's political districts. With the high tide of the Great Recession battering the Left Coast, state government, instead of shoring up what it could, melted into what Hoffenblum calls "total dysfunction."
"During this crisis, no individual or institution has been able to assert any real leadership and bring people together for a common cause," he added. "This has created a power vacuum, allowing everyone to have a veto over everyone else. A weak Assembly speaker. A weak Senate leader. A weak governor. Arnold has flip-flopped so many times that there's nobody in Sacramento who trusts his word."
Nor is this by any stretch a strictly partisan issue. California is solidly blue. And although its Democrat-dominated legislature has a miserable 14 percent overall favorability rating, that rating rises to only 19 percent among Democratic voters. Californians are as liberal as anybody "at the federal level," said Mark DiCamillo, director of the respected Field Poll. "They're more supportive of national healthcare than the national average. But it's also true that Californians remain somewhat tightfisted when it comes to increasing state taxes."
California's political and economic crisis didn't begin with the current economic slump but has been brewing for decades. "You could go back to 1933, with the requirement approved by voters that you need a two-thirds majority to approve the budget," said Sherry Bebitch Jeffe, a USC-based political scientist. "Obviously there's Prop 13, which made things worse; there's the ballot-box budgeting--earmarking money for specific programs--that everyone from Arnold Schwarzenegger to Rob Reiner has used. And the runaway gerrymandering. It all makes flexibility impossible, and it empowers the special interests."
"No question the system is broken," said liberal Los Angeles Mayor Antonio Villaraigosa, who recently decided not to run for governor next year and whose city is grappling with a $530 million deficit. "It's a state on the brink, families falling through the cracks with IOUs as a safety net. It's mind-boggling to me how little controversy there is over the IOUs."
Maybe it's because Californians are so used to failure from Sacramento. For almost every one of the past twenty years, the state government failed to reach a budget agreement by the July 1 fiscal deadline. Indeed, in 1992 Governor Pete Wilson had to resort briefly to issuing IOUs. But this season's deadlock, finally (or more probably, temporarily) resolved after a near twenty-four-hour session of the legislature on July 24, took on high drama. "I don't know if it's fair to say, but it was like Arnold thought he was starring in his own Gunfight at the O.K. Corral movie and didn't give a damn that the movie house was burning down around him," said one LA City Council staffer.
In February the Democratic majority proposed to-the-bone budget cuts, but their offset measures to increase taxes on oil extraction, vehicle registration and tobacco enraged Republicans and evoked veto threats from the governor. Because California is one of only three states that require a two-thirds majority to approve a budget or even a tax increase, the small GOP minority had just enough votes to block passage. And entrenched gerrymandering makes their seats invulnerable, allowing them to take the most extreme positions. "For me it has been heartbreaking," said Democratic Assemblyman Kevin de Léon, one of ten conferees on the budget. "Back in February we came up with a good budget but with those two minor taxes--on oil and tobacco. That money would have gone right into education. But because of the two-thirds rule, and even though a majority wants it, we get handcuffed by a small group."
Aggravating matters, Governor Schwarzenegger took an intractable "no new taxes" position and then went a step further, saying the crisis was an opportunity to make "structural reforms." Translation: the governor demanded radical shrinkage of the public sector, including virtual abolition of CalWorks, the state welfare program, and a rollback of state employee pensions. He even threatened the "nuclear option": suspension of Prop 98, which requires that 40 percent of state revenues be channeled into schools. Four years ago, when Schwarzenegger attempted to impose a similar far-reaching conservative agenda through a set of referendums, he was mightily slapped down by voters and forced to apologize. Now, it seemed, he was trying to hold the state hostage to these draconian changes as the price of a budget deal. "He just got it in his head that his time is up and his legacy must be long-term reform," said Bebitch Jeffe. "So he's using the short-term budget as leverage. Either he doesn't understand, or he's taking a mammoth risk."
"Some of the cuts proposed by the governor are unimaginable," said Barbara O'Connor, political analyst at Cal State, Sacramento, a few days before the budget deal was reached. "In the end," she predicted, "it will be declared a win-win. No one will love it. Everyone will accept it."
Maybe. Because in the end, while Schwarzenegger was proposing Armageddon, the Democrats settled for mere catastrophe. When the budget details were unveiled, it was like viewing the emaciated corpse of a once great state. There are no new taxes. But hammer blows hit the poor, the elderly, the infirm and students and will keep them staggering for years. The deal called for almost $8 billion to be taken from education; more than $1 billion from state worker pay; an equal amount from Medi-Cal, the state's Medicaid program; $375 million from CalWorks; $226 million from home healthcare, in which patients and caregivers will now have to be fingerprinted; $124 million from Healthy Families health insurance, which means thousands of children will be wait-listed for coverage; and more than $4 billion confiscated from local governments, which will create a ripple effect of collateral damage. The proposed taxes on oil extraction, tobacco sales and vehicle registration were penciled out; the budget was balanced only through a set of accounting gimmicks, which merely kicked the crisis down the road a few months. The only winners in this deal were felons, who won a $1.2 billion cut in prison funding, which would reduce the prison population by some 27,000.