Ballot May Become Budget Battlefield

Sacramento

Legislators have been ducking and delaying, bumbling and mumbling. A lot of mumbling. But look closely, and you’ll also see important movement.

Monday, they opened a special session called by Gov. Gray Davis to confront the gargantuan budget deficit, now predicted to be around one-third of the state general fund. Then the lawmakers promptly recessed until after the holidays, except for some made-for-TV public hearings around California next week.

“We don’t want to rush into it,” said Senate leader John Burton (D-San Francisco). “We want to know who’s getting hurt. We want to know exactly what we’re doing.”

That’s mostly staff work, in legislators’ minds.

Davis last Friday proposed a $10.2-billion budget-cutting package to help plug a hole projected at $22 billion minimum, and probably closer to $30 billion. But Burton said it would “be stupid” to cut any spending before the governor sends the Legislature his full budget proposal Jan. 10. Nobody expects much action until at least late January.

Regardless of the slow motion, however, there have been significant stirrings inside the Capitol, especially by Republicans.

Republicans this week acknowledged publicly -- actually, they whispered it -- that it will be impossible to balance the budget only with spending cuts. As strange as it might seem, that’s progress.

They still don’t accept the Democratic doctrine as expressed by Speaker Herb Wesson (D-Culver City) during a brief admonition to the Assembly on Monday: “It’s time to recognize that we won’t solve this problem at the extremes. Not with tax increases alone and not with cuts alone....

“We cannot ask for sacrifices from those who can’t afford it, while asking nothing from those who can.”

Republicans won’t even think about a tax increase, they insist. And virtually any tax hike except a boost in the vehicle license fee (good for $3.8 billion) would require a two-thirds vote of each house, meaning some GOP support.

So the Republican alternative is to borrow from the Washington playbook and roll over the deficit into the next budget year. Shove the debt from the fiscal year beginning July 1, 2003, into the one starting in 2004.

The two Republican leaders -- Sen. Jim Brulte of Rancho Cucamonga and Assemblyman Dave Cox of Fair Oaks -- say they’re studying this possible rollover of red ink. “It’s consciously doing what the Legislature does anyway,” Brulte says. “We’d just be upfront and honest about it.”

Actually, there’s tantalizing language in the state Constitution implying -- to a layman, anyway -- that a governor could roll over the deficit simply by declaring a state of war. The Constitution decrees that no rollover debt may exceed $300,000 “except in the case of war to repel invasion or suppress insurrection.”

Aren’t terrorists invading? Maybe from Iraq?

Probably wouldn’t sell.

More likely, this idea is headed for the ballot at a statewide special election.

Democrats ordinarily might like the deficit rollover -- it’d keep the disabled in nursing homes, kids in manageable class sizes -- but there’s a GOP hitch: Republicans would demand a short-term spending freeze. They’d also insist on a permanent spending cap, perhaps tied to the growth of personal income.

That must be embedded in the Constitution, Republicans feel, because Democrats can’t be trusted to keep on any cap.

“There has to be a spending cap and one that’s real and acted on by voters,” Brulte says.

Meanwhile, he adds, “we should start with the governor’s [proposed] cuts. Freeze spending. Let revenues catch up. You can’t solve this problem in one year.”

Brulte also says Republicans will advocate a one-year moratorium on new business regulations and a delay in benefit increases for workers’ compensation insurance.

Says Cox: “What my colleagues and I are interested in is balancing the budget without raising taxes. What we really want to do is stimulate the economy.... And this is what we are thinking.”

“At least they are thinking,” concedes Burton.

Thinking outside the box. Mulling and moving. Wesson’s not particularly interested.

“Roll this over for a year? Big deal!” he says. “We’ve got a revenue problem in this state. We need to come up with something that’s stable.

“And a spending cap? Just because we’re in a fiscal crisis they want to handcuff the ability of future legislatures to do their job -- because they view this as an opportunity to handcuff [legislators] who are in the majority.”

Davis also is said to be leery of rolling over debt. He wants to bring spending and revenues into sync now with painful cuts and tax hikes.

Democratic legislators are considering ballot measures of their own to raise taxes -- perhaps on the highest income earners (above $260,000 for joint filers) and business property. They’d try to offer voters a choice: Sock old folks and poor kids, or tap the rich.

Also, they’re talking about a ballot measure that would allow legislators to pass budgets and raise taxes by majority vote.

Things at the Capitol seem slowly headed toward a special election, maybe next fall. If you’ve bemoaned ballot-box budgeting in the past, just wait.