Chance for Consensus

Republican Gov. George Deukmejian and Democratic leaders in the California Legislature willfind plenty to fight about in 1989. They no doubt will start with some severe cuts that Deukmejian proposed in his 1989-90 state budget on Tuesday --like wiping out the state Office of Family Planning.

But the lawmakers should not let these disputes prevent their seizing on the governor’s offer to negotiate the reform of California government’s ramshackle structure of budgeting and finance. Even Deukmejian, the tightest governor with a dollar in recent California history, acknowledged Tuesday that his new $47.8-billion budget does not adequately provide for state programs, despite a healthy economy and record revenues.

Deukmejian talked of budget reform Monday night in a State of the State address that, for him, was remarkably conciliatory, and in effect said that it is time to get California moving again. After serving six years as California’s brakeman, Deukmejian seems ready to move into the engineer’s seat at last.

His address reflected the new cooperative mood of the governor since he announced last week that he would not seek a third term in 1990. Some of the glow of the Monday speech was dissipated Tuesday morning, however, when the governor’s budget hit legislators’ desks with a big thunk. In spite of California’s wealth, the budget provides no increase for many critical state programs and imposes real cuts on others, including such sensitive areas as health care for the poor.

The budget, though, illustrates the fiscal distortions created by voter-approved ballot initiatives like the Gann spending limits of 1979 and Propositions 98 and 99 of last fall’s election, which mandated that a flat percentage of state revenues go for education and raised tobacco taxes by an estimated $625 million to be earmarked for special funds not subject to Gann spending limits. In the new budget, general education gets an 8% increase in spending, thanks in large part to Proposition 98. The rest of the budget gets a 4.4% increase, less than the inflation rate projected for the fiscal year. The state universities and colleges would need 10% fee increases just to keep even.

Deukmejian complained that even if the state reaped some tax windfall, most of the money would go to education under Proposition 98 rather than to taxpayers in rebates as outlined in the Gann initiative. Since the limits no longer work as they were intended, they should be overhauled or junked, the governor said. Junking them should be the primary goal of this legislative session.

There is, of course, a hook to the governor’s proposal. The negotiations would encompass all money allocated for specific purposes, including automatic annual cost-of-living increases for welfare recipients and other entitlement programs popular with majority Democrats. Such programs do not enjoy the political support that they once had. Stripped of the statutory guarantees, they would be vulnerable to constant demands for cuts. The safety net must be safeguarded, but everything in the budget must be examined if there is any hope for real reform.

That examination should also extend to Proposition 13, the 1978 initiative that limited property taxes and restricted the tax-raising capacity of local government. Proposition 13 provided a massive shift of financing and power to Sacramento, and has resulted in major inequities in property-tax levies from house to house, and on residences compared with business property.

The budget and the tax system form the ledger in which state officials write government priorities to ensure equity in the allocation of government revenues. The initiative measures of the past decade have made achieving equity and setting priorities impossible. Unless the governor and the Legislature restore sense and balance to the budget process, other well-heeled and popular special interests will stake out new budget enclaves through ballot initiatives. The leftovers will provide even slimmer pickings than now.