FROM SACRAMENTO — Gov. Arnold Schwarzenegger invoked Winston Churchill on Tuesday in trying to rally legislators to mop up the state's gushing red ink.
"Like Winston Churchill said," the governor told a rare joint session of both legislative houses as lawmakers sat passively and glum, "a pessimist sees difficulty in every opportunity. But an optimist sees the opportunity in every difficulty."
Yeah, yeah! You'd have to be a fiendish idiot to welcome this opportunity: a shot at shortening the school year and increasing class sizes; a chance to phase out financial aid for college students; an opening to cut poor people's health and welfare services so deeply that some end up dying.
Those are among the extreme options that confront legislators in their efforts to close a new $24-billion deficit hole for the fiscal year starting July 1 -- after having thought they'd covered a $42-billion gap in February and a $17-billion pit in September.
This is "the greatest economic crisis since the Great Depression," Schwarzenegger reminded the policymakers packed into the Assembly chamber. "In the past 18 months, one-third of the world's wealth has vanished. . . . Our revenues have dropped 27% in the last year."
He turned and pointed to charts behind him: "You can see right here. . . . We are now back to the same level of revenues we had in 2003. And when you adjust for inflation and population, we are back to the level of the late '90s."
OK, so there really is a golden opportunity here. And that is to go all the way back to 1978 before Proposition 13 passed and dramatically lowered property taxes. No, I'm not talking about going back to the old tax rates. Leave the rates alone. But reconstruct the tangled, unhealthy relationship between the state and local governments.
Prop. 13 shifted control over the remaining property tax revenue to Sacramento. Capitol politicians rationed it out -- they've been re-rationing it ever since -- and kicked in about $6 billion in annual state "bailout" money. The bailout has never really ended. The result is that roughly 75% of the state's general fund flows to local governments and schools.
Power was transferred from school boards, city councils and county boards of supervisors to the governor and Legislature. It's a mishmash of governance with the state dictating to locally elected officials and usually not providing enough money to pay for the mandates.
