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Governor keeps Prop. 1A simple

CAPITOL JOURNAL

April 27, 2009|GEORGE SKELTON

FROM SACRAMENTO — Gov. Arnold Schwarzenegger is concerned the public may be confused about Proposition 1A, the spending control measure he's backing on the May 19 ballot.

That's because the Republican right, he asserts, is being "disingenuous" in spinning 1A as a tax increase.

It's also because people like me, he says, write about how complicated the measure is.

"It's already complicated as it is," the governor says, "but the more you write about how complicated it is, the more complicated you make the complication."

"Explain it a little bit simpler," he urges in a phone chat.

And how would he explain it, I ask.

"We should just simply describe 1A as a measure that will fix the broken budget system once and for all so that you never have to make those severe cuts again," he answers. "And you never have to go back to the people for tax increases again. That's it."

OK, that's a stretch, but it gets close to the measure's intent.

There is a tax element, however, that can't be ignored and is widely known because of news reporting and talk radio. And it should have been addressed candidly by the Prop. 1A campaign weeks ago.

It's that if Prop. 1A passes, separate legislation -- not on the ballot -- automatically will continue sales, income and car tax hikes for up to four years.

The governor explains that when he and legislative leaders were negotiating how to fill a $42-billion deficit hole, they agreed to raise taxes for four years. But they inserted "a little tweak" to discourage public employee unions from pouring money into a ballot fight against the negotiators' spending cap proposal. They decreed that if 1A lost, the tax hikes would be cut off after two years.

"It's not fair, really, to say that [1A] raises taxes," he insists. "I understand that the right spins it that way. But it's disingenuous."

In fact, however, the tax hikes will last longer if Prop. 1A passes than if it doesn't. What's he tell people when they point that out and complain? He answers:

"You ask people if they want to take that money instead from education. They say 'No.' Well, then, do you want to let out prisoners. They say, 'No, no, no. We don't want to do that.' You want to take it from law enforcement? 'Oh, no.'

"I say, 'There's only so much money to go around. You've got to make a decision.' They say, 'I'd rather pay a little extra in sales taxes and those things.' "

Schwarzenegger notes it's the time-tested tactic of anti-prop strategists to confuse voters.

"Make them feel like the status quo is safer," he says. "Special interests will always side with the status quo because . . . they can push the legislators around to spend more money and to live beyond our means."

In this case, Schwarzenegger' definition of a special interest is any labor union opposed to the 1A spending cap.

"And then the Republicans, of course, are total ideologues," he continues. "They just care about one thing: Let's defeat this and let's see how much power John and Ken have.

"Are John and Ken running the state or is the governor running the state? Who is running the state here?"

John Kobylt and Ken Chiampou are popular talk radio hosts on KFI-AM (640) who regularly rail against taxes, 1A and Sacramento. They rile up the right. Does the governor ever listen? "No. I don't have time to listen to radio."

One huge hurdle for the budget-fix ballot measures is the voters' mistrust of Sacramento. And one contributor to the mistrust was a previous Schwarzenegger "spending control."

Five years ago, Prop. 58 was supposed to have fixed the budget for all time too. Like 1A, it had a "rainy-day fund." The new governor vowed to "tear up the credit card and throw it away."

"We now recognize," Schwarzenegger says, that the Prop. 58 rainy-day reserve "was not strong enough. It was used always as a slush fund. . . . I should have stayed tougher."

Under that measure, 3% of annual general fund revenue was supposed to have been transferred into the rainy-day reserve. But the governor could stop the transfer, and twice he did. Also, the reserve could easily be used for any purpose, and it was. So it operated like a petty cash box.

The Prop. 1A rainy-day fund would be bigger and more protected. It ultimately would equal 12.5% of the general fund, roughly twice the size of the envisioned Prop. 58 reserve. The governor could only stop feeding it if money were needed to match the previous year's spending, adjusted for inflation and population growth.

Again, 3% of general fund revenue would go into the new reserve. But this time it would be harder to raid.

If both Props. 1A and 1B pass, schools will receive half the annual payment -- 1.5% -- until $9.3 billion in previous budget cuts are restored. If Prop. 1B doesn't pass, that 1.5% will be spent for infrastructure or bond repayment. Beyond that, the reserve could be tapped only during an emergency, such as an earthquake.

Spending growth would be capped based on the previous 10-year revenue trend. Any excess revenue would go into the rainy-day fund. Prop. 58 lacked such a spending limit.

The idea is to prevent Sacramento from blowing all its money in boom times and to require it to stash a pile for when the economy goes bust.

Sorry, governor, Prop. 1A is complicated. It defies a simple explanation, especially when linked with a tax bill and school funding prop.

There's stuff to hate for the right and the left. The state Republican Party opposes 1A because of the taxes. The Democratic Party at its state convention Sunday went neutral, fearing the spending control.

But for the broad center -- if it bothers to vote -- the choice should be simple: Trading temporary taxes for permanent spending constraints is a bargain.

--

george.skelton@latimes.com

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