Dancing Close to the Fire at Budget Time

Today is New Year’s Eve in the Capitol--the end of another fiscal year--and again they’re doing “The Dance of Death” trying to concoct a state budget.

“Everybody dances around the fire. They throw stuff at us. We throw stuff at them. Everybody falls over dead and we start all over,” a legislative strategist once told me in explaining this ritual that the lawmakers believe is necessary to break gridlock.

The dance began Monday night in the Senate. The house leader, Sen. Bill Lockyer (D-Hayward), proposed something that Republicans instinctively rejected. More important, he warned that Democrats won’t dance to the Republicans’ tune and threatened to stay in session all summer--forcing another embarrassing round of state IOUs--if there’s no compromise.

On Tuesday, Assembly Speaker Willie Brown (D-San Francisco) declared: “We’re up a creek without a paddle. I’m serious. . . . I don’t see a budget solution.”

But on Wednesday, the dance continued with less stuff being thrown. The Senate narrowly passed a budget, while leaving for today a crucial decision on backup financing.

That was clear progress, although in the Assembly, where the dancing was just beginning, everybody fell down and started all over.

*

A new, intriguing twist has been added to this year’s dance: The tune really is being called by a syndicate of international bankers.

California is in the role of a Third World country begging the superpowers for a bailout. The financiers--led by Bank of America and including Japanese, Canadians, French, Swiss--are in town closely watching the Legislature.

Cutting through the jargon, the state is asking this syndicate to co-sign a $4-billion loan from Wall Street, which is nervous about Sacramento’s ability to repay the money when it comes due in April, 1996. The syndicate is demanding that the Legislature pass a “trigger” bill that will automatically set in motion a predetermined repayment method if revenues again fall short.

Democrats don’t want to take the money only from health care, welfare, prisons and universities. They’re demanding revenue increases, which Republicans call the T-word--taxes--although it’s only the richest people the GOP is protecting. Republicans are eager to eliminate the renters tax credit, used mostly by low-income people.

A lot of this can get very complicated, but some important facts for taxpayers are these: The syndicate is charging roughly $30 million to co-sign the loan. That’s on top of interest to be charged by the lenders. Actually, the state needs to borrow $7 billion in all over the next 22 months. And this will cost Californians roughly $500 million in interest.

State government is in a lousy mess.

“California is reaping what it sowed,” says Controller Gray Davis, the Democratic candidate for lieutenant governor. “It lived beyond its means for more than a decade. And the banking community is saying enough is enough.”

Davis must certify the feasibility of any backup financing plan--or trigger bill--and he warns, “I’m not putting my name on any turkey. A wink and a nod is not going to do it.”

*

As the Dance of Death continues, Democrats will enjoy pointing their fingers at Gov. Pete Wilson.

Lockyer offered a preview Monday night of what the Republican governor can expect if he and the Legislature get bogged in another summer budget deadlock, as they did for 63 days in 1992.

“What we have before us is the price of procrastination, the price of postponement and avoidance of tough decisions--starting with the captain of the ship,” Lockyer said loudly and slowly for emphasis. “We all know it. Everyone here knows that we have not had adequate executive leadership to address our fundamental problems.”

Interestingly, no Republican stood to defend the governor.

Politically, Wilson is perched in the best position he’s been in since that disastrous IOU summer of 1992. After trailing Democratic Treasurer Kathleen Brown by landslide margins last year, the governor has steadily pulled even and clearly has the momentum in his reelection drive. But the situation still is precarious.

Brown couldn’t ask for a better political gift than a summer stalemate that again raised questions about Wilson’s leadership and reminded Californians of why they’ve given him the lowest job ratings of any modern governor.

With the dance, there’s a game of chicken. Wilson and the GOP believe Democratic legislators have the most to lose if voters rebel against Sacramento. That’s because more Democrats face tough reelection races. But Democrats know the governor is vulnerable.

They’re all dancing dangerously close to the fire.