‘91 Budget Crisis Seems Like the Good Old Days

California legislators used to talk about “Mae West” bills -- legislation that signaled lobbyists to “come up and see me sometime.” When Gov. Gray Davis unveiled his proposal for closing a $35-billion budget gap, it was a “Mae West” invitation aimed at Republican legislators. Hoping to lure them to support tax increases to narrow the budget gap, Davis invoked the name of his GOP predecessor, Pete Wilson.

In 1991, Wilson and a Democratic-dominated Legislature closed a $14-billion deficit with roughly $7 billion each in spending cuts and tax hikes. The message in Davis’ rhetoric was, “Republicans stepped up to the plate then; do it again now.” But now is not then.

In fact, yesterday’s fiscal crisis provides a good measure of how structurally flawed the budget process has become.

The most obvious outcome is the effect of term limits, particularly in the state Assembly. Six years, the maximum time an Assembly member can serve, is not enough time to master the intricacies of the annual budget dance. Furthermore, there’s no pressure on incumbents to use anything more than blue smoke and mirrors -- bonds, borrowing and fiscal shell games -- to delay economic pain until they are termed out.

The 1991 budget crisis foreshadowed the obstacles created by term limits today. Ross Johnson, who was dumped as Assembly Republican leader after opposing Wilson’s budget, told the California Journal that Proposition 140, the term-limits measure approved in 1990, “exacerbated problems within the Republican caucus by fueling the ambitions of younger members. Coupled with the Republican inability to punish dissidents, it means ... that members may act with impunity, and without fear of retribution.”

Today, the Assembly speaker, once the second-most-powerful politician in Sacramento, is similarly hamstrung. A still-green Assembly member invariably comes to the speaker’s office as an instant lame duck with few carrots and sticks available to line up budget support. (In the 1960s, by contrast, then-Speaker Jesse Unruh had the tools to handle “uncooperative” legislators. For example, he banished conservative Republican Floyd Wakefield to a makeshift office in a Capitol men’s room, with the threat that Wakefield might languish there for years.)

In 1991, Democratic Senate President Pro Tem David Roberti and Republican minority leader Ken Maddy buttonholed reluctant members of their caucuses to approve Wilson’s tax plan. Today’s legislative leaders, especially in the lower house, tend to be less trusting of their opposite number, in part because they have little time to learn how to work together.

Twelve years ago, no single political party controlled Sacramento. Governing as a moderate Republican, Wilson was able to leverage enough GOP lawmakers to join with Democrats and pass the state’s $55.7-billion budget -- taxes and all.

But Democrat Davis can’t even leverage his own party’s legislators, despite the fact that California today is as close to being a one-party state as it has ever been. Term limits are not solely to blame; Davis’ aloof personality and leadership style hardly mobilize the troops. No legislator has volunteered to fall on his or her sword for this governor.

The 2000 reapportionment has not made compromise easier. In the ‘90s, legislative districts were more competitive; therefore, there was more ideological flexibility in Sacramento. Conservative Republicans rebelled against Wilson’s tax proposal in 1991, but they didn’t control the GOP caucus as they do today. “The San Diego delegation of [Republican] wimps,” groused then-Assemblyman Gil Ferguson, “passed the [1991-92] budget.”

The reapportionment created safe districts for both parties. Coupled with the return of closed primaries, it tends to favor the parties’ extremes. Any Republican who “wimps out” on taxes becomes fair game in the GOP primary -- and that’s the election that counts. Similarly, Democratic legislators are wary of slashing funding for social programs important to their constituencies.

The 1992-93 budget standoff also presaged this year’s struggle -- in another way. The deficit then was “only” $11 billion, and California went 64 days into the new fiscal year without a budget, resorting to IOUs to pay state workers. That handy dodge is not available today, because a federal court ruling has barred the practice.

However, then as now, the state’s economy was hurting -- in the early ‘90s because of the end of Cold War spending, today because the high-tech bubble burst. Revenues lagged then, and GOP legislators fiercely resisted tax increases. Then-Assemblyman Jim Brulte said: “This year we are paying the price for years of bad budgets that didn’t control our runaway spending.... It’s time to do it right, no matter how long it takes.”

Wilson was striving for a national profile and courting conservative votes. But his approval ratings were plummeting. So, he slammed the door on tax hikes -- right in the face of Democratic legislators. Assembly Speaker Willie Brown roared: “Pete Wilson is more anti-Legislature than any governor with whom I’ve served.”

There are some short-term fixes now in play, and eventually the planets, Wall Street and public outrage may align to force Davis and state lawmakers to swallow a mutually repugnant budget package. Then again, Sacramento may just punt, leaving voters to provide budget direction via the initiative process.

In 1992, Wilson tried the initiative route to circumvent the Legislature. Proposition 165 would have cut welfare grants and given the governor “broad emergency budget powers,” allowing him, among other things, to make cuts after a budget is signed. The California Tax Reform Assn. and unions placed a “tax the rich” initiative on the same ballot. Both failed.

This year, GOP legislators suggested that the governor be given budget powers similar to those requested by Wilson -- and Davis’ own party balked, just as Democrats did in 1992.

Several ballot propositions are surfacing to either raise taxes or make it easier to raise taxes at the state and local levels. Among them is an initiative that would lower the two-thirds majority vote now required to pass the state budget to 55% and would dock the pay of legislators and the governor if they were late in approving a spending plan.

The primary process itself may play a role in shaping budget priorities. There is a new “split primary” scenario floating around Sacramento that would schedule the 2004 presidential primary in March and shift legislative contests to later in the year. If the presidential primary is the only candidate race on the March ballot, the electorate is likely to be heavily Democratic and much more likely to support pro-spending, tax-friendly ballot initiatives.

More ballot-box budgeting is unlikely to fix the system that the initiative process helped to crash.

In 1991, Wilson predicted that demographic shifts, population increases and skyrocketing education, welfare and health-care costs would steer California toward “a fiscal train wreck” by 2000.

His timetable was just a few years off.