What’s in a State Budget? Values

Facing a potential $12.4-billion state budget deficit, Gov. Gray Davis has announced that he may end child-care support that helps keep 11,000 low-income parents in California on the job and off the welfare rolls. It’s symptomatic of how Davis may let his own opportunity slip away. Rather than carefully devising a coherent, pro-employment budget plan, Davis and his advisors are rushing about, plugging holes in the dike. Davis risks losing the chance to articulate what he really stands for.

President Bush offers a ready-made foil. The president and his Republican allies believe that moving mountains of cash to corporations and the wealthy will pull the economy out of its tailspin. The House recently approved a $100-billion tax cut bill, 83% of which would flow to corporations and rich individuals. Just 14% would aid middle-class taxpayers, and the remaining crumbs would go for jobless benefits. It’s warmed-over Reaganomics, although it may be moderated a bit by Senate Democrats in the conference committee.

Some of Davis’ biggest campaign contributors are among those lobbying for Bush’s welfare for the well-off. So maybe we shouldn’t be surprised that the governor’s initial budget cuts fell mainly on California’s most powerless families--slicing aid to parents trying to pay higher electricity bills, jettisoning support for schools in poor communities, putting child health insurance on hold. Instead, Davis could break cleanly from the Republican agenda, expressing an alternative set of economic principles and human values. How might his new budget better jump-start the economy from the bottom up?

* Equalize tax burdens. Wealthy Californians each will pay about $16,000 less in federal income tax next year, thanks to Bush’s first reform bill approved in the spring. His new stimulus plan would put another $5billion annually into the pockets of wealthy Californians. Davis could capture much of this windfall by making income and capital gains taxes more progressive and by taxing conspicuous consumption, such as the purchase of gas-guzzling sport-utility vehicles. New state bonds--in essence borrowing from investors--could further finance the budget gap.

* Bolster incentives for job creation. Temporary tax hikes on corporations could be tied to incentives that minimize layoffs or utilize job sharing. The state itself already has implemented such family-friendly, job-creation strategies. Davis also should protect essential job supports for low-wage workers, like child care.

* Institute temporary fee increases for affluent families. Many UC students come from well-off families who are effectively subsidized, via low fees, by middle-class taxpayers. Neither can we afford generous state scholarships, under the Cal Grant program, for kids entering pricey private colleges.

* Fairly distribute school cutbacks. The governor has no choice but to trim public school outlays because they make up 53% of the state’s $103-billion budget. But these cuts should center on well-off school districts, where teacher salaries range 40% to 60% higher than those of teachers working in tougher urban conditions.

Since 1980, the richest one-fifth of all Americans have enjoyed a 50% rise in real income, now pegged at an average of $121,000 yearly, according to the Congressional Budget Office. But the poorest one-fifth have seen their incomes stuck at less than $11,000. So a pro-jobs budget could be made appealing to voters as just and fair.

Davis’ new budget--his last before he begins his bid for reelection--will reveal much about his policy smarts and whether he can craft a clear economic alternative to Bush’s let-them-eat-cake strategy. It also will uncover the basic human values for which the governor stands.