Arnold's big hoax

ENDORSEMENTS: Props. 1A-1F would damage public services and lock the state in a fiscal straightjacket -- forever. Vote no
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The choice facing California voters May 19 is, to put it mildly, unpleasant. The budget deal hammered out by the governor and legislative leaders — which these six ballot measures will confirm and implement — at least kept the state solvent and prevented a financial catastrophe. But the solution is just terrible, and will lock the state into a budgetary nightmare for years to come.

State Sen. Mark Leno, who supports the deal, makes no attempt to soft-peddle what went on here. It was, he told us, the result of "extortion." Because California has an arcane and counterproductive rule mandating that any state budget and any tax increases must be approved by two-thirds of both houses of the Legislature, and because Republicans control just enough votes to block any budget, and because those Republicans have all signed a written promise never to raise taxes under any circumstances, and because Gov. Arnold Schwarzenegger can't get the GOP to go along with his compromises and is unwilling to accept Democratic proposals that might escape the onerous supermajority, budget stalemate in tough times is almost guaranteed. And in this case, because the state was running out of cash and hundreds of thousands of people were about to be put out of work as state-funded projects shut down, the Democrats were forced to accept a compromise none of them like.

A small number of Republicans insisted on vast changes in the way California does business — and because the Democrats saw no other options, the GOP faction got much of what it wanted. The result: the Democratic Party leadership is campaigning for a series of measures that reflect, to a significant extent, a Republican view of how the state should be run.

The opposition to the package comes from the far right (which is upset because the budget deal includes some new taxes, albeit regressive ones) and, increasingly, progressives, who argue that the measures will make it harder for the state to meet the needs of a growing (and aging) population.

We've listened to both sides, researched the measures in depth, and concluded that the best choice for Californians is to reject Propositions 1A through 1F. The proposal may address (most of) this year's budget woes and keep the state running for a while, but it will create a fiscal straightjacket on the order of Proposition 13 that will damage California and undermine any progressive policy hopes for many, many years into the future. If the voters accept this deal today, they'll come to regret it.

Proposition 1A doesn't quite reach the Republican holy grail — a cap on annual government spending — but it goes a long way in that direction. The measure would require the state to make annual contributions to a budget reserve fund until the reserve reaches 12.5 percent of general fund revenue. The state would have to set aside reserve money every year, even in very bad years. If next year's budget deficit is as bad as this one, Prop. 1A would make it worse. It restricts the use of "unanticipated revenues" — meaning the state can't spend money it might have in very good years. There's a really complicated formula for when the state can dip into the reserve, and how it can be used, but the California Budget Project, the respected policy watchdog group, points out that the measure amounts to a cap in spending, one that won't keep pace with California's needs.

"Prop. 1A would not address California's existing structural shortfall — the gap between revenues and expenditures — that exists in all but the best budget years," CBP notes. "By basing the new cap on a level of revenues that is insufficient to pay for the current level of programs and services, Prop.

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