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Sunday, December 14, 2008

Legislative Game of Chicken Imperils Local Governance

Friday the Vanguard primarily looked at the fiscal crisis the school district now faces which is due entirely to the state budget situation at this point. The school district is not alone in receiving bad news this week, the county faces an $18 million deficit next year which is something on order of one-third of their general fund budget. The city is actually off relatively light facing only a $1.2 million deficit this year, $3 million next year, and $5 million down the line. Did I say light? Well, at least I qualified it with relatively.

Time to be brutally honest here. The state is facing a problem of such severity that I do not believe most people grasp the magnitude of it. First it was $10 billion (that's with a "b"), then $28 billion, now the latest is perhaps $40 billion.

Speaker Karen Bass deserves credit because she seems to recognize the magnitude of the problem. She is afraid her colleagues do not.

She said on Monday:
"I think that some of my colleagues on both sides of the aisle are in denial, frankly. And feel that this problem is not as big as $11 billion right now or $28 billion over the next few months, or feel that we can solve this through cuts alone or that we can solve this through revenue alone."
She continued:
"I'm saying that on both sides of the aisle, in both houses, and I'm also saying that for the new members especially who come here with wonderful ideals that they need to hear the reality."
Since that point we have seen the GOP legislative leaders have it out with the Governor. The Governor clearly has no clout with his own party. He is a man without a base. Some people will hear that and say good for him. The fact of the matter is it is good for nobody. I prefer a moderate governor to a conservative governor on an ideological basis, but we need someone here who can be a deal broker, who can get the votes. The Governor has no ability to do that. At this point he might as well not exist.

Let me lay out the implications of what the Speaker is saying because from my perspective she is the only one making sense.

On Thursday she acknowledged that in order to stave off something far worse than we are already facing, that Democrats have to be prepared to cut programs that they do not want to cut.
"They said that they came up here because of what they believed in and they believed that there should never be a tax increase. All of us came up here for what we believed in. I came up here to make sure that I would protect programs that now I have to recognize have to be cut. We all have to do things that we never thought we would do because California is in a catastrophic situation."
The Speaker may see the reality here, it is questionable as to whether her colleagues recognize the truth with which she speaks. It is doubtful that the Republicans understand that they are going to have to do likewise.

The Sacramento Bee this morning has an article called "GOP hangs tight on taxes as red ink rises."

The Bee writes:
"California is hurtling toward a financial abyss, projecting a $40 billion shortfall by July 2010, and no deal can be struck without at least three Republican votes in both the Assembly and Senate.

GOP officials clutch that trump card with relish as the state braces to pull the plug on $5 billion in public works projects and warns it won't be able to pay all its bills by February or March.

Democrats and Republican Gov. Arnold Schwarzenegger want to shrink the gap through a combination of program cuts and tax increases – but Republican lawmakers adamantly oppose raising taxes and nearly all have signed national pledges to hold firm.

Democrats say the GOP is holding California coffers hostage."
Republicans want to see structural changes as the Assembly Leader Mike Villines said:
"The point is, if you don't make structural reforms now, I don't know when we can ever do it in this state."
The Republicans are right in a sense, we do need to make structural reforms now. But what needs to happen and quickly is that both sides drop the posturing and put their cards on the table. Republicans are going to have to accept tax increases, there is no way to make this work without increasing revenue. Democrats are going to have to accept program cuts--figure out which programs can be cut (which is a problem onto itself) and then how much money can be saved from them.

State Treasurer Bill Lockyer is exactly right:
"State Treasurer Bill Lockyer, a Democrat, characterized the high-stakes showdown between legislative Democrats and Republicans as political "chicken," with each party expecting the other to blink.

"I think they're going to run off a cliff," Lockyer said."
The problem is that at this point both sides are pointing the finger at each other. Republicans see Democrats as the roadblock and Democrats believe that three Republicans are holding up what the majority of the legislature wants.

The Bee writes:
""What we see is a gun being put at the head of the California taxpayer, they're being told, 'All right, look, it's time for you to dig deeper, pony up more or you're going to suffer even more pain,' " said Senate Republican leader Dave Cogdill.

Villines said the GOP is willing to discuss revenue increases – not specifically tax hikes – after a deal is struck on a state spending cap, permanent budget cuts, trimming waste, and amending some environmental regulations and labor laws to bolster business."
The problem here is that the Republicans are in fact making a demand--spending cuts be placed on the table first, they need to be willing to discuss both simultaneously. Until both sides recognize they have to work together, this stalemate is going to continue.

Ordinarily, I would say so be it, but these are not ordinary times, each day that there is a deal that is not struck to actually fix rather than bandage the problem, the problem will get worse.

This is not the time to play politics. They have two years until an election and the actual problem outweighs any political benefit that one side would receive by winning.

The Bee article sums it up by quoting Claremont McKenna Government Professor, John Pitney:
"Sometimes games of chicken end in a crash."
Unfortunately if they do, it is a crash that would harm the voters and taxpayers of all Californians, regardless of their party affiliation. Time for both sides of the aisle to step up, work together, and fix the problems. Then they can figure out who won.

---David M. Greenwald reporting