Governor’s Muscle Squeezed GOP First

The Legislature’s approval of Gov. Arnold Schwarzenegger’s budget recovery plan has provided California with the first clear demonstration of how the new governor will operate in office -- and the lesson has left many Republican legislators feeling bruised.

The conservatives who dominate the GOP caucus in the Legislature were caught off guard as a Republican governor they had considered an ally bypassed them to broker a deal with Democrats. The compromise abandoned a firm cap on future state spending that the conservatives had considered crucial

On Thursday, as the deal was being solidified, several Republican legislators urged Schwarzenegger to back away. They were too late. That night, in the face of appeals from the governor and his aides, nearly all Republicans in the Assembly voted yes, feeling they had no choice.

Many quickly had second thoughts, which worsened Friday as the Senate gave the plan its assent and Schwarzenegger signed the bill that will put the plan on the March ballot.

“It’s going to be hard to explain to the public as to why our position has changed,” Assemblyman Bill Maze (R-Visalia) said just after the lower house’s vote. Maze was one of those who had urged Schwarzenegger to turn the deal down.

The centerpiece of the plan is a $15-billion bond issue that would balance the current year’s budget with borrowed money. Republicans were never enthusiastic about the borrowing, but had said it would be acceptable if coupled with the spending cap.

But in the end, the plan contained the bond issue along with a requirement for a rainy-day reserve fund, not a cap.

“This is not even a spending limit,” said Assemblyman John Campbell (R-Irvine), who had advised Schwarzenegger on the issue.

“We might have done better toward controlling spending if we had left it where it was” a week ago, when the negotiations collapsed and Schwarzenegger’s aides talked of gathering signatures to place a much tougher spending cap on the ballot in November, Campbell said.

The bill “has no meaningful reform,” Sen. Sam Aanestad (R-Grass Valley) said during debate Friday in the Senate.

Schwarzenegger’s approach limited the role of Democratic legislative leaders as well as Republicans. Much of the action during the week involved negotiations between the governor’s aides and a bipartisan group of centrists in the Legislature who until recently had been marginalized when they tried to find common ground.

But in the end, Assembly Speaker Herb Wesson (D-Culver City) negotiated the final details with the governor Wednesday night, and most Republicans were not filled in on the deal’s terms until late Thursday, long after Democrats had been briefed by their leaders.

To conservatives, the fiscal crisis and Schwarzenegger’s election had created a rare opportunity to permanently shrink the size of the state’s government. The spending cap they wanted would have exerted downward pressure on government programs for years to come.

As it turned out, the governor had other priorities.

For Schwarzenegger, obtaining the $15-billion bond issue was more important than securing a hard spending cap.

Without the money from the sale of bonds, the state could run out of cash in June, forcing government services to shut down. Consultants to the governor warned him that such a scenario would erode his support among the public considerably and thus limit his ability to push through other reforms by ballot initiative.

In the end, he agreed to a plan that some partisans on both sides dislike but that appeals to those in the political center.

Schwarzenegger’s aides insist that was the point all along.

“The governor is very gratified that politics as usual has taken a back seat,” said spokesman Rob Stutzman. “I think the governor was able to lead [lawmakers] to a place where they were able to do something they have never done before.”

Clint Reilly, a Democratic political consultant, said a governor negotiating a deal without legislative leaders from his own party in the room is “kind of a new phenomenon.”

“He is confident enough of his right flank that he’s able to force compromises not just on the Democrats, but on Republicans as well,” Reilly said. “Most of the time, the leadership has wanted to avoid confrontation, avoid controversy. It’s very unique for a Republican governor to be sitting down, negotiating in hand-to-hand combat, with no Republicans in the room.”

The last time such negotiations took place was in 1991, when then-Gov. Pete Wilson largely bypassed the Republican leadership and cut a deal with Assembly Speaker Willie Brown (D-San Francisco) to balance the budget by raising taxes.

But Schwarzenegger rejected the idea that “no Republicans” were involved in the budget talks, according to a story Senate President John Burton (D-San Francisco) shared with reporters on Friday:

“I was told that Assembly Republicans complained that there was no Republican in on the negotiations, and the governor immediately corrected them and said ‘Yes, there was,’ ” Burton said.

Schwarzenegger, of course, was talking about himself.

That, however, may only heighten the anxiety of some Republican leaders, who worried during the recall campaign that Schwarzenegger might try to make the California Republican Party less conservative. Already, some national conservative leaders are talking of the need to pull him into the fold -- especially as he and lawmakers begin the work of balancing the budget next month.

Stephen Moore, president of the Club for Growth, a think tank in Washington that argues for lower taxes and a member of the team overseeing the governor’s audit of state finances, began warning last week that Schwarzenegger might be veering too far left.

In a newsletter published by the research firm Laffer Associates, Moore expressed concern that the governor had shown some inclination to raise taxes if the public agreed.

“Uh oh! This is extremely depressing,” he wrote. “Sounds suspiciously like papa Bush to me. I may need to do some reprogramming!”

On Friday, Howard Jarvis Taxpayers Assn. President Jon Coupal, who backed Schwarzenegger during the election, warned that his group may not campaign for the governor’s ballot measure.

“It would be hard to advise voters to vote for $15 billion in borrowing without something that actually restrains the growth of government,” he said.

Some Republican lawmakers suggested that the governor’s inexperience as a negotiator had allowed Democrats to convince him to give up too much.

“I believe some errors were made on behalf of the governor’s staff,” said Assemblyman Ken Maddox (R-Garden Grove). “He allowed the Democratic leadership a place at the table. I don’t think he expected them to eat the whole meal.”

But Republican political consultant Arnold Steinberg said Schwarzenegger had ample grounds for claiming victory.

“Here’s a guy who never held elected office, had a compressed transition period, managed to extend a deadline and then got a Legislature controlled by the opposite party to put on the ballot two measures for which he can take credit,” Steinberg said. “In that sense, the perception out there may become: He’s a leader.”

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Budget hurdles ahead

Financial measures endorsed by the Legislature and signed by Gov. Arnold Schwarzenegger on Friday were hailed as big steps toward balancing California’s budget. But the governor and state lawmakers are still confronted by major financial issues:

- Local governments demand that the state make up for about $4 billion lost when Schwarzenegger reversed an increase in vehicle license fees. Cities and counties used the car-tax revenue to help pay for public safety and other programs.

- Lawmakers must address $1.9 billion in midyear cuts to the current budget. Schwarzenegger has proposed cutbacks to higher education and to programs for the poor and the developmentally disabled.

- In January, the governor must submit a budget for next year that accounts for a projected shortfall of $14 billion. If new revenue is not found, program cuts are likely.

- In March, voters must pass the $15-billion bond and spending limit package approved by the Legislature this week. If either measure fails, the other is automatically invalidated.

- If the measures pass, the bonds must be sold in time to obtain funds by June, when about $14 billion in debts from last year come due.

Source: Los Angeles Times

Los Angeles Times