Legislature May Read From New Governor’s Script

The Republican candidate for governor, a Hollywood celebrity and a political outsider, campaigned against politics as usual and promised to “squeeze, cut and trim” spending to resolve California’s budget deficit. Once elected, he learned that no cuts would do the job and put his imprimatur on the largest tax increase of any governor in the history of the United States. To push the tax hike through a skeptical state Senate, he relied on the political skills of the savvy Assembly speaker, a leading Democrat.

Republicans and Democrats alike were surprised by the boldness of the governor, a former movie actor named Ronald Reagan who blandly blamed the tax increase on the deficit he had inherited from his Democratic predecessor. Jesse Unruh, the Assembly speaker who helped Reagan pass the tax bill, thought it would come back to haunt him, but it never did.

Reagan’s drive for higher taxes came in 1967, the first year of his governorship.

Will history repeat itself in 2003?

Arnold Schwarzenegger followed Reagan’s lead in campaigning against the political system and promising to restore California to an even fiscal keel by eliminating “waste” in the state budget. If anything, he sounded more anti-tax than Reagan, perhaps because conservative state Sen. Tom McClintock (R-Thousand Oaks) was nipping at his heels. But, also like Reagan, Schwarzenegger left himself an escape hatch by refusing to rule out raising taxes if required to do so by an “emergency.” Tuesday’s election was, in other respects, a mirror of the past: Now, as in Reagan’s day, Californians are disenchanted with their quality of life, discontented with gridlock in Sacramento, worried about the economy and concerned over American military casualties in a foreign war.

Schwarzenegger, like Reagan, won in a landslide against an unpopular Democratic governor who had overstayed his welcome. In Reagan’s case, the victory came against incumbent Pat Brown, elected governor in 1958 after a Republican schism and reelected in 1962 after gubernatorial candidate Richard Nixon waged the only inept campaign of his career.

Davis was, until the recall campaign, a lucky governor with an overrated political reputation. He was elected governor twice against conservative Republican opponents who opposed abortion and gay rights, untenable political positions in libertarian California. In his only campaign against a quality opponent, Davis was soundly beaten by Dianne Feinstein in 1992 for a U.S. Senate nomination. Once the recall drive began, Davis never led in any poll.

That is not to take anything away from Schwarzenegger, an impressive winner who obtained nearly half the vote against a field of 134 official opponents. By outpolling Davis (as reflected in the anti-recall vote), Schwarzenegger established his legitimacy as a candidate with broad appeal. Exit polls showed that he won roughly one-third of Latino votes, the best showing for a Republican since Reagan.

But the outcome, although decisive, did not match previous populist uprisings -- such as the 1978 vote for the tax-limitation initiative, Proposition 13 -- in rousing the passions of the electorate. Sixty-nine percent of registered voters turned out for the Proposition 13 vote. Despite widespread predictions of a record vote in the recall election -- one CNN poll forecast a 79% turnout -- the actual turnout of just under 8 million voters was only slightly higher than in 2002, when Davis won a second term. Fifty-five percent of the state’s 15.3 million registered voters and a little more than one-third of the 21.5 million eligible voters cast ballots. The rest did not care enough about the recall, one way or the other, to vote.

Now, the conventional postelection wisdom is that Gov.-elect Schwarzenegger won’t turn out to be an action hero in Sacramento, where the harsh realities of balancing the budget and Democratic control of the Legislature supposedly preclude a Hollywood happy ending. The prognosticators may be as wrong about this as they were in their predictions of a record turnout.

In the wake of the election, some Democratic legislators were derisive. Sen. John Vasconcellos of Santa Clara, an ardent liberal, called Schwarzenegger a “boob” and said voters had made the wrong decision. But Vasconcellos will be forced to step down in 2004 anyway because of term limits. Other Democrats with a potential political future were more accommodating. Senate President Pro Tem John Burton of San Francisco, the most powerful of all state legislators, said he expected to have a “good relationship” with the new governor despite their differences on the car tax.

Burton, who worked with Reagan and former Gov. Pete Wilson despite their political differences, is the key to the Senate. In the more fractious Assembly, Darrell Steinberg of Sacramento, the chairman of the Assembly Appropriations Committee, held out an olive branch to Schwarzenegger and said, “We need to work together.” With jurisdiction over the budget, this committee is crucial to Schwarzenegger’s success.

Steinberg has a reputation for reasonableness, but even Democrats less inclined to compromise have reason to cooperate. As a key Democratic aide said, speaking on condition of anonymity: “The size of Arnold’s victory is going to terrify everybody.”

The fear factor contributed to Reagan’s success. His celebrity status and ability as a communicator made legislative foes reluctant to go after him directly in the early days of his governorship even though they complained of Reagan’s supposed “ignorance” behind his back.

“Schwarzenegger could do very well with the Legislature,” said William Hauck, president of the California Business Roundtable and a former advisor to Wilson and two Democratic Assembly speakers. “The key to his success is his ability to go to the people directly.”

An intangible element that benefited Reagan and may also help Schwarzenegger is the public’s willingness to forgive early mistakes by political outsiders.

Reagan knew little about the legislative process when he was elected -- “We were not only amateurs; we were novice amateurs,” said his communications director, Lyn Nofziger -- and he made many mistakes. His first budget, dubbed a “cookie-cutter” plan because it made a 10% across-the-board spending reduction in all departments, was dead on arrival in the Legislature. Within weeks, however, Reagan submitted a new and more realistic budget and endorsed a $1-billion tax package, more than $5 billion in today’s dollars.

Schwarzenegger may have less running room than Reagan because Republican legislators are more dogmatic in their opposition to tax increases than in Reagan’s day. On the other hand, Schwarzenegger faces a less daunting economic situation than is widely believed -- or than he asserted in the campaign. Because California government is heavily dependent on the income tax, even a small change in the economy can have an enormous effect. Currently, state revenues are running about $100 million more a month than budget forecasts. Over a two-year period, this could cause a big chunk of the projected $8-billion deficit to disappear.

Schwarzenegger does face a revenue problem if he persists in his promise to reduce the car tax, most of which pays for local police and firefighting services. This would add $4 billion to the deficit unless replaced with other tax increases.

But the Schwarzenegger team is aware of private polls that show public acceptance of small increases in the sales tax and in taxes on tobacco and alcohol if coupled with spending cuts and perhaps a constitutional amendment requiring future fiscal discipline from the Legislature.

The door to political success is open to the Terminator if he is willing to walk through it.