(SH) - It's hard to count
the Republicans in the California Legislature who've rarely, if ever, voted for
a state budget, either under Gov. Gray Davis or his Republican predecessor,
Gov. Pete Wilson. But they're there.
For a few it's a matter of principle, either fiscal or religious: no vote ever
for a budget that includes abortion funding. But when an unpopular Democratic
governor is running for re-election, it must give special pleasure. California
is one of only a handful of states requiring a two-thirds vote to pass a
budget. That gives obstructionists extraordinary power.
What's certain is that there's little that's new in this year's crisis. Of the
eight budgets submitted by Wilson, who served from 1991-98, six were approved
after the June 30 constitutional deadline, the last two both on Aug. 11. Nine
Republicans voted for Wilson's first budget. The rest of the 54 votes to get
the necessary two-thirds vote were from Democrats.
Nor is there anything unique in this year's $24 billion deficit.
The deficit that Wilson inherited in 1991 from his predecessor and fellow
Republican, George Deukmejian, was more than $14 billion, which was roughly 30
percent of the general fund at that time, about the same proportionately as
this year's deficit.
Then, like now, recession took its toll both on state revenues and, by driving
up welfare and health costs, in requiring new spending.
To close the gap, Wilson split the difference with then-Speaker Willie Brown
and the Democrats: a $7 billion tax increase, combined with a similar amount in
spending cuts, plus a chunk in budgetary smoke and mirrors.
The increase included a boost in sales taxes, higher vehicle license fees and
business taxes, and a hike in the top marginal rates for high-income taxpayers.
Wilson, a moderate never beloved of California's conservatives, took a big
political hit from which he never fully recovered. Despite the tax increases
and the dire warnings that accompanied it, however, California recovered
handsomely.
What's most significant about that budget is that if the tax rates approved in
1991 were still in effect, the state, according to Jean Ross of the California
Budget Project, would have $10 billion more in annual revenues. There would
thus be no budget crisis - certainly none remotely close in magnitude to the
one that California now suffers. The "structural deficit" projected
by the legislative analyst for the next three or four years - $10 billion in
2003-4, $12 billion in 2004-5 - would vanish.
The difference is the string of tax cuts enacted in recent years - the sharp
reduction in vehicle license fees, now partially restored in the pending 2002-3
budget; elimination of the increased marginal rates in the income tax; cuts in
corporate and business taxes; and a rollback in the sales tax increase.
State spending has increased substantially in the past few years, with most of
it
going to schools. Yet California's per-pupil school spending still
hangs below the national average. And California's tax burden as a percentage
of personal income, which a generation ago was among the highest in the nation,
is now about average.
What might be most telling about this year's standoff is that the Republicans,
in the words of one observer "don't know what they want." On July 1,
a press release from Assembly GOP leader Dave Cox declared that Assembly
Republicans have stated "our position clearly - and we repeat it today -
we want a balanced budget with no tax increases."
The Senate budget does include tax increases - most in a temporary (and thus
shortsighted) increase in the vehicle license fee and in tobacco taxes - but
it's peanuts compared to what Wilson agreed to in 1991. Meanwhile, Republicans
such as GOP gubernatorial candidate Bill Simon have not been willing to fully
outline the cuts they propose.
The items on Cox's July 1 list amount to less than $300 million, most of it in
cuts to school programs. Additional items have been proposed by two other
Republicans - cuts in child health and disability funds, cost shifts (again) to
local governments, suspending cost-of-living adjustments to the sick and
disabled.
Not surprisingly, those proposals have generated considerable opposition. More
important, according to the California Budget Project, the two legislators'
proposals would amount to no more than $1.63 billion, less than 7 percent of
the gap.
The GOP is right to warn about the structural deficit in the out years - and
here Davis is compounding the problem with his dangerous decision to borrow
against the billions California eventually will receive from the national
tobacco suit settlement.
But here again, there are no helpful suggestions. The need almost surely will
be for higher, not lower, taxes.
Wilson became a GOP nonperson after his attacks on illegal immigrants, but in
1991-92 he was a statesman. If Republicans ever want to become less marginal,
the 1991-92 crisis would be a good place to start their lessons.