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Proposition 1A, flawed but needed

The choice for California voters on Proposition 1A is clear -- either pass it or risk fiscal disaster.

May 01, 2009

Proposition 1A is irritating. Start with the fact that it's the central item on the May 19 ballot, a special election in a state that has far too many elections and far too little competent government. Add the fact that Proposition 1A is virtually incomprehensible to the typical voter, or even the especially attentive one; that it was hammered out behind closed doors, without public airing or input; that its terms are calculated less to be a perfect budget solution than to garner political sign-off from legislative leaders; that if it passes it won't resolve the state's budget problem; and that it would cause substantive changes in California law that are not reflected in the language of the measure itself.

In other ballot measures in other elections, each of those attributes has drawn strong rebukes and sometimes negative endorsements from The Times. Yet we support Proposition 1A, as explained in this space on Sunday and as reiterated here. That's because, unlike some opponents from the right, the left and good-government circles, The Times harbors few illusions about alternative steps California can take if Proposition 1A, and most of the other ballot measures, fail.

With the current fiscal year's budget out of balance and revenues dangerously off projections for the coming year, the state entered February facing a shortfall of almost $42 billion over two years. Gov. Arnold Schwarzenegger, the Legislature's majority Democrats and its minority Republicans were deadlocked. When the state should have been trying to stimulate the economy, it was instead killing construction projects, sending contractors and their workers home. Bonds had no market of willing buyers. Tax refunds owed to Californians were stopped. The state was approaching default.

Legislative leaders brokered the homely compromise they did because they were out of options. There simply was no way any Republicans, a few of whose votes were needed, were going to agree to tax increases without also getting a spending cap. But there was simply no way Democrats were going to accept a spending cap. The deal imposed some new, short-term tax increases but now requires voters to decide whether to extend their effect long enough to narrow the budget gap. Voters too will have to decide on the spending cap. That's the deal: This side can't do it, that side can't do it, so let's ask the voters to settle it.

Critics on the left complain that the deal does not squeeze enough in taxes from wealthier Californians and that it cuts too much from programs meant to help the young, the old and the poor. They argue -- correctly -- that deep cuts now will cost the state more in the long term. They are looking ahead to a day when, they believe, voters will get rid of the two-thirds supermajority required for the Legislature to adopt a budget or raise taxes. Or they look further ahead to a day when, they insist, Democrats will capture two-thirds of the Legislature anyway.

Critics on the right say Californians already are overtaxed and should not pay more when the economy is faltering, especially to bail out a failed government. They argue that the cuts aren't deep enough, that the state should no longer provide the services that voters have long demanded, and that Sacramento is crawling with waste, fraud and abuse. They want the state to hit the wall, and they tell themselves and one another that voters will then turn to a reinvigorated Republican Party to put the pieces back together in its small-government, low-tax image.

Good-government critics don't like the process, the spending cap or the jury-rigged budget formula. They hold out hope for a sweeping reinvention, such as a constitutional convention at which all of California's Gordian knots will be cut -- the two-thirds rule, the budget process, the ballot-box budgeting initiatives, the works.

A constitutional convention may well be coming, and The Times finds the prospect intriguing, but no such civic confab will have any bearing on the state's present-day dysfunction. Those populists who urge voters to let the state go bankrupt miss the very important point that, unlike Orange County or Chrysler, California is ineligible for bankruptcy protection. Instead of an orderly retooling, the state would face a slew of creditor lawsuits and consent decrees, none of them geared toward a fiscal fix. Default on obligations of the world's eighth-largest economy would extend and deepen the global recession.

Liberals and conservatives who are fighting to own what they believe will be Proposition 1A's defeat are still six months behind, struggling against the compromise that finally got the refund checks in the mail and the bonds to buyers, or they perhaps dream of some possible future in which one side (but which one?) finally subdues the other.

Instead, Schwarzenegger pushed legislative leaders to reach a real-world compromise that enlarges a reserve fund for fiscal emergencies and caps spending so that it can't exceed the state's growth. It extends the 1% sales tax increase by one year and the vehicle license fee and personal income tax increases by two.

It's messy. But it's no messier than the scores of inconsistent initiatives Californians have passed over the years. It will not end the state's structural problems. It will merely allow it to survive them long enough to choose the solutions of the left, the right, the good-government types, or something else that we can't yet imagine.

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