A Welcome Task: Divvying Up the State’s Bounty

Give away money and they’ll line up. The state never has had so much money to give away. And the line never has been longer than it was Monday in the Capitol.

The line of lobbyists and their gofers curled for 150 feet, from the budget-writing Finance Department near the Capitol’s north door, through a corridor containing all the county exhibits to the main intersection, ending near the governor’s office.

Amid the school tours and tourists, the special interests awaited release of a 70-page booklet outlining Gov. Gray Davis’ annual state budget revision--known colloquially as the “May revise.”

Who was getting all this new money? How much still was available to fight for? Better be first with the news, good or bad.

“We’ve all got to know everything that’s going on, because we think we can’t afford to say, ‘Gee, I don’t know,’ ” says George Steffes, one of Sacramento’s most veteran and successful lobbyists. “We’ve got to be all-knowing.”

There was a lot to know about--clues about tapping into riches--and the long line was indicative of a fiscal phenomenon.

California very likely is about to see its first $100-billion state budget, starting July 1. Davis’ new proposal is for $98.4 billion in spending, and before every check is written, that budget undoubtedly will hit the 12-digit mark. Of this, $12.3 billion represents a surplus of unprojected tax revenues, fueled largely by stock market profits.

To put this in perspective, California’s entire state budget was smaller than the current surplus in 1975-76, Jerry Brown’s first full year as governor, when Davis was his chief of staff.

More history tidbits: California didn’t reach its first $1-billion budget until 50 years ago under Gov. Earl Warren. It didn’t spend $5 billion until Ronald Reagan’s first year as governor, 1967. The first $50-billion budget was just 10 years ago.

Then the recession hit. In Pete Wilson’s first year as governor, 1991, he faced a $14-billion deficit. And Sacramento, he later observed, “put the people of California through hell.”

*

Fearful lobbyists lined up that year to learn whether their clients had been targeted for tax hikes. Most had, but no more so than ordinary citizens. Schools and local governments also paid with program cuts; most still haven’t recovered.

“People were walking around shellshocked,” recalls Senate Republican Leader Jim Brulte of Rancho Cucamonga, then a freshman assemblyman.

“Term limits had just passed. We were in a [legislative] redistricting year. And we had this huge budget deficit. It was like the triple crown of friction.

“No one wanted to believe that the state was in such a severe financial crisis. Republicans did not want to raise taxes, period. Democrats absolutely didn’t want to cut government spending.”

In probably his most statesmanlike act as governor, Wilson faced up to the crisis at the May revise by proposing a $7-billion tax increase, plus $7 billion in program cuts and fiscal sleights of hand. The governor cursed at Republicans and “dragged them kicking and screaming” to get a budget passed, Brulte remembers. But he refused to vote for it.

“The governor called me off the [Assembly] floor and goddamned me on the phone,” Brulte says. “I point out on tours, ‘This is the phone where Pete Wilson goddamned me and slammed down the phone.’ I told him I didn’t get elected to raise taxes.

“But that’s where I developed the attitude that saying ‘no’ to a governor of your own party is not a habit you want to develop. I was on his [bad] list for a long time.”

This year by contrast, Brulte notes, “we find it hard to believe there is so much revenue. We’re in a much better mood. We have to figure out how many groups we get to say ‘yes’ to. . . .

“I think this budget is relatively easy to do, if people are prepared to deal.”

*

The dealing mostly will be over tax cuts. Virtually everybody’s agreed there’ll be some. “Absolutely, no question,” says Assembly Speaker Bob Hertzberg (D-Sherman Oaks). The fight will be over how and how much.

Davis is proposing $1.9 billion in one-time tax cuts, primarily for $300-per-couple rebates. Republicans won’t quibble with that, but liberal Senate leader John Burton (D-San Francisco) thinks even poor people should get a check, regardless of whether they paid the income tax. Republicans also are demanding another $2 billion in permanent tax cuts.

Back in 1991, Wilson even was forced to parcel out water in a drought. This cheerful spring, hills are green, reservoirs are full and the state treasury is overflowing. The line’s long and there’s plenty to go around.