Arnold's big hoax - Page 2

ENDORSEMENTS: Props. 1A-1F would damage public services and lock the state in a fiscal straightjacket -- forever. Vote no
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1A would limit the state's ability to restore reductions made during the current downturn out of existing revenues."

The guidelines for future spending don't take into account the increased demand for public services California will face in the next few years. The population will increase by 29.4 percent over the 2000 level by 2020, state officials project, but the number of people 65 and older will increase by 75 percent. That will put a huge new demand on state services — and if Prop. 1A passes, the budget won't be able to expand to meet those needs.

The budget compromise included some temporary tax increases. The sales tax is slated to go up by one cent on the dollar, the vehicle license fee will rise slightly, and there's an across-the-board increase in income taxes. Sales taxes are the most regressive way to raise revenue, and the income tax hikes hit the rich and the middle class evenly — hardly a fair or progressive plan.

But that money is needed to close the horrendous budget gap, and the propositions are designed to make it hard for progressives to say no. If Prop. 1A and Prop. 1B go down, the taxes expire after two years. If those measures pass, the taxes continue until 2012.

Prop. 1B is part of a deal that the governor cut with the California Teachers Association, the largest union of educators in the state. It shifts some more money to the public schools to make up for what was cut this year and last. It's a complicated formula, but in effect it probably does nothing more than what Prop. 98 — the state's mandate to fund education — already requires. The problem is that the governor and the school districts disagree on what Prop. 98 says, and without 1B, it's unlikely that money will be forthcoming. The money California's public schools get under 1B is still woefully inadequate; and again, this does nothing to address the structural problems.

Prop. 1C allows the state to borrow $5 billion from future lottery revenues to help balance the current budget. Of course, that money won't be available in future years — unless, as 1C suggests, the lottery can find ways to sell more tickets. The idea here: increase lottery revenue through better marketing, thus taking more money from poor people (the lottery is an overwhelmingly regressive source of income).

Prop 1D's title, "Protects children's services funding," is a complete lie. Instead it redirects money earmarked for early childhood programs into the general fund, essentially de-funding some of the most effective and inexpensive programs California offers. Prop. 1E is a similar deal — it temporarily suspends the program that funds mental health services with a tax on the very rich, and puts that money into the general fund instead.

Prop. F is just stupid — it prevents lawmakers and the governor from receiving pay increases when there's a budget deficit. That's not going to change anything in Sacramento.

We're acutely aware of the risks inherent in voting down this intricately orchestrated budget compromise. In effect, the Legislature, which has been paralyzed by the two-thirds rule, will have to go back and try again. The governor, who is ineffective at best and a severe roadblock at worst, will be little help. And the anti-tax forces will claim that the voters have vindicated their position.

But let's look at reality. The tax increases will be in effect for the next two years anyway. The state's budget position has worsened in the past month, so the Legislature will have to figure out how to deal with an $8 billion additional shortfall no matter what happens.

And in the fall of 2010, state voters will almost certainly have a chance to repeal the two-thirds budget rule — and have a good chance to elect a Democratic governor.

California needs major, structural budget reform.

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