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California budget fixes on May 19 ballot are mostly shams and frauds

Of the six propositions billed as solutions to the fiscal crisis, two would make things worse, one would be irrelevant to the budget, two would be mostly irrelevant and the last is wishful thinking.

April 27, 2009|MICHAEL HILTZIK

One can always tell that a California election is drawing near because commercials lying about ballot propositions start crowding commercials lying about detergents and pharmaceuticals off the TV.

So it is with the May 19 election. Every time I turn on my set, I can already detect the acrid stench of political mendacity billowing into the room. And nearly a month yet to go.

The May ballot features six propositions, dubbed 1A through 1F, that the Legislature concocted to end this year's embarrassing budget stalemate in Sacramento. The claim is that these measures will finally put state budget procedures on a sane path to "fiscal responsibility."

How? By undoing some of the excesses of the past and shuffling budgetary powers around a bit, mostly so the governor will get some powers he didn't have in the past and lose some authority he has today. Are we jazzed yet?

The propositions' supporters are many of the same interests that have long condoned the political charades that have yielded this year's $42-billion deficit. The California Chamber of Commerce and other business lobbies, which utter bromides about our children being our future while lobbying to starve public educational institutions of tax revenue, are very much in favor.

Opponents of the main initiative, 1A, include the big public employees union SEIU, while the biggest teachers union, the California Teachers Assn., favors all six. (Proposition 1B funnels some money to K-12 education but won't be implemented unless voters also approve 1A.)

"We're very supportive of trying to find solutions," Alan Zaremberg, president of the chamber, told me last week, adding that he thinks the chamber's proactive support is a positive change from its usual habit of "walking away and just saying no" to tax increases and other budget provisions it doesn't like.

He's especially enamored of 1A, because he believes it will restrict the spending of one-time revenue (income tax surges during boom years in the stock market, for example) to support or expand ongoing programs. "That's how the state's gotten in trouble," he says, arguing that 1A will require that excess revenue, which in the past has been spent as if it's permanent, be set aside as a budget reserve.

For all that the propositions are billed as keys to ending the state's dysfunctional budget process, in reality they're mostly shams and frauds. Of the six, one (1F) will be almost completely irrelevant to the budget process. Two others (D and E) will be mostly irrelevant. A fourth (1C) is based on wishful thinking that the state lottery will magically become much more profitable, and the two left over, 1A and 1B, will make things worse.

Let's take the key propositions one by one.

Proposition 1A is the Big Daddy, which we can tell because it's almost completely incomprehensible -- in fact, its opponents are fighting it by parading placards bearing its actual text around in public.

In essence, the measure would enlarge the state's rainy-day fund. It would require the Legislature to pay into it even in years when current revenue is needed to balance the budget. It restricts the conditions under which the reserve can be used and limits budget growth to a formula based on population growth and inflation. A sister measure, Proposition 1B, dictates how reserve funds are to be transferred to an educational reserve.

The bottom line is that 1A does nothing to narrow the existing budget deficit, and may make deficits worse in the future. As the nonpartisan California Budget Project points out, because the costs of many services provided by state government, such as healthcare, grow much faster than inflation, the formula will squeeze almost every other budget category. That makes Proposition 1A a time bomb.

Propositions 1D and 1E partially roll back two of the voters' crummier decisions from past years: sequestering a new tobacco tax for a child and family service known as First 5 (Proposition 10 in 1998), and sequestering a surtax on incomes of $1 million or more for mental health services (Proposition 63 in 2004). The new measures would effectively funnel some of that money into the general fund.

Now, there's nothing inherently wrong with tobacco taxes or surcharges on the wealthy, or with services for children, families or the mentally ill. The problem is locking in these arrangements via the ballot box -- as is proved by the fact that we're now being asked to undo two such deals.

If our political leaders are really intent on reforming ballot-box budgeting, they should place a measure on this ballot to outlaw it -- or at least to restrict tax and spending initiatives to regular general elections, so that highly motivated special interest groups can't rely on low turnouts to chisel their pet projects into the state Constitution. But if that were the law, of course, we wouldn't be having a special election next month in the first place.

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