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Arnold Schwarzenegger was unfaithful to Californians

The former governor's unsound fiscal policies weakened the state.

May 19, 2011|George Skelton | Capitol Journal
  • Gov. Arnold Schwarzenegger addresses questions about the state budget from the Los Angeles Times editorial board in June 2009.
Gov. Arnold Schwarzenegger addresses questions about the state budget… (Allen J. Schaben / Los Angeles…)

From Sacramento — Arnold Schwarzenegger soiled his marriage and smeared his image, but he did it on his own time. What he did as governor was mess up the state, and that was while working for us.

Out of office, Schwarzenegger harmed his family and himself. His philandering may be entertaining to people, but it's not their problem.

However, Schwarzenegger's missteps as California's top elected official badly screwed up the state's finances. It affects us all — school kids, the needy, ordinary taxpayers. And that is very much our problem.

I'm trying to keep the man's sins in perspective: Some merely are injurious to those he purports to love. Many are damaging to the state he was entrusted to lead.

Gov. Jerry Brown now is tackling one of the toughest political jobs imaginable: trying to clean up the clutter of borrowing left behind by Schwarzenegger.

Brown called it "a wall of debt" Monday in unveiling his revised budget proposal for the fiscal year starting July 1.

"I don't want to continue the games and the gimmicks of the past," the governor told reporters, calculating the accumulated budget borrowing at $35 billion. That debt alone will eat up $2.5 billion of the general fund.

He pegged the general-fund deficit at $10.8 billion, down from $25.4 billion when Schwarzenegger left office.

"When I say 'gimmick,' it's a form of borrowing from the future," Brown continued. "And you keep piling that up and you weaken our finances. You take money away from solid programs because you don't face the music....

"There's something infantile about the idea that we spend and then we borrow."

Granted, Schwarzenegger had plenty of help in running up the credit card — from his predecessor Gray Davis, from the Legislature and from the voters.

The borrowing began with Davis in 2003, the year the Democrat was recalled and replaced with the Hollywood action hero. The new Republican governor promised to "end the crazy deficit spending" and "live within our means."

Instead, he went on a borrowing binge, joined by legislators of both parties and the California electorate.

Schwarzenegger's first mistake was to cut the vehicle license fee, leaving a $4-billion budget hole that gradually grew to $6 billion annually.

To pay for the tax cut, he borrowed, persuading the Legislature and voters to sign off on a $15-billion bond issue to meet daily expenses. That's like taking out a second mortgage to buy food and gas.

Schwarzenegger disingenuously called the note an "economic recovery bond." And after that borrowing, he promised, he'd "tear up the credit card and throw it away." But he got other cards.

That bond money is long gone. Only the debt payments remain — $1.3 billion annually, principal and interest. The state still owes $7 billion on the loan. At the current repayment pace, the bond won't be paid off until 2016. Brown said Monday he wants to pay it off much sooner.

But this amounts to only 20% of the budget borrowing that burdens the state. The vast majority was accumulated in recent years as Schwarzenegger and the Legislature sought to survive the recession with a minimum of both spending cuts and tax increases.

For most of the time — except when he didn't — Schwarzenegger proclaimed in denial that "we don't have a revenue problem, we have a spending problem." We actually had both. But voters wanted to believe him.

Led by Schwarzenegger, legislators took the easy way out. The governor complained about them just "kicking the can down the road" without taking the hard steps to solve the long-term budget deficit. But he was the most powerful kicker.

The politicians shifted money from one fund to another, delayed payments and stiffed local governments — all forms of borrowing. As of Monday, the state owed schools and community colleges $10.4 billion in deferred payments.

"People who have charter schools [and] can't borrow money go out of business," Brown said. "We have to pay our bills on time. It's not a good example for the state itself to be a scofflaw."

Brown is proposing that the state take a significant portion of the $6.6 billion in unexpected tax revenue and use it to retire debt. He earmarked $3 billion for the state's debt to schools.

"Paying off the remainder of budgetary borrowing should be the top priority of any new revenue received in the coming years," Brown said in his budget.

Should be, but that's easier said than done.

Borrowing has always been the politicians' second choice. Democrats prefer to spend but will borrow rather than cut programs. (This year, however, they've cut billions.) Republicans prefer to dish out tax breaks and will borrow before they raise taxes.

As for Schwarzenegger, it's hard to know what he really believed, if anything. We only know that he left the state in worse financial shape than it was in under Davis.

There has been much speculation about whether Schwarzenegger would have been elected governor if voters had known that he'd fathered a child with his family housekeeper. Voters were informed by The Times, after all, that more than a dozen women had accused him of being a serial groper.

That didn't detour him en route to Sacramento.

My short answer: Schwarzenegger would not have even run. He would not have been that stupid.

On second thought: The Austrian Oak hasn't always shown a lot of wisdom, in private or public life.

george.skelton@latimes.com

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