During the recall campaign, Arnold Schwarzenegger argued that the only way to end California's penchant for deficit spending was to change the state Constitution to place a firm limit on the amount the Legislature and governor could spend.
On Tuesday, the Republican governor formally proposed just such a spending limit, bringing immediate cries of alarm from Democrats.
Ironically, California has had a constitutional spending cap -- little known and of little effect -- for nearly a quarter of a century. Experience with the existing limit illustrates that capping state spending is far easier said than done.
The Gann limit, named after anti-tax crusader Paul Gann, said state spending could grow no faster than the rate of inflation and population growth.
The cap was approved by voters. But over the years, subsequent voters approved a string of new ballot measures that created holes in the limit.
Now, with Schwarzenegger's proposal, the state may come full circle, back to the concept that voters need to impose financial discipline on the political system in Sacramento. And Schwarzenegger's proposal faces some of the same criticism that eventually eroded the Gann limit: that it would harm schools.
"The education community will strongly oppose this proposal," said Paul Goldfinger, a Sacramento-based consultant to school districts. "It is a take-away from schools."
At his first news conference as governor last week, Schwarzenegger said that the spending limit was critical so that we "never again allow politicians to recklessly overspend." Similar anger at Sacramento led voters to approve the Gann limit in the fall of 1979. The anti-tax fever that had swept California a year earlier when voters approved Proposition 13 was still strong: The spending cap was overwhelmingly approved.
Gann's goal was to keep government in check by limiting any increase in spending to no more than the rate of inflation and population growth. At first, the limit had little impact on the state budget because of several years of high inflation and rapid population growth, which pushed the spending cap skyward.
During the recession of the early 1980s, revenues fell well below the spending limit. It took until the mid-1980s for state revenues to reach the spending cap.
The Gann measure required that excess revenues above the spending limit be returned to taxpayers, which happened only once: in the 1986-87 budget year.
