Hypocrisy on State’s Spending Mandates

Gov. Arnold Schwarzenegger’s fiscal policy team evidently has taken to heart one of the important dramaturgical lessons taught by William Shakespeare: If you’re going to subject an audience to a lengthy tragedy, it’s worth leavening the bad news with the occasional outburst of farce.

Such is the conclusion I draw from the recent expression of amazement by Tom Campbell, the governor’s new budget chief, at the degree to which legal imperatives place much of the spending in the California budget beyond the control of the governor and Legislature, a phenomenon he called “the autopilot.”

Campbell will be overseeing the nightmarish task of trying to close the budget gap this year. During a briefing for a group of state capital reporters, he complained about the autopilot, noted that his $8.1-billion estimate for next year’s deficit outstrips all previous counts, came out strongly against raising taxes -- and yet vowed to produce an “honest” and “realistic” budget. All of which suggests that he’s as comfortable with absurd inconsistency as the funny gravediggers in “Hamlet.”

I don’t doubt Campbell’s sincerity. He’s an accomplished veteran of the Legislature and academia, and any thinking person would be appalled at the accretion of spending mandates and fiscal formulas in the budget.

But the way these embedded prescriptions can be used to evade responsibility for spending decisions has been an open secret in Sacramento for years; indeed, I believe it’s covered in Chapter One of “California Governing for Dummies.”

Campbell himself observed that once you account for all the spending formulas etched into state law, there aren’t many areas where you can whack costs other than health and human services. (He didn’t mention that these are also programs whose beneficiaries are least able to speak up for themselves.)

Campbell carefully avoided assigning blame for the growth of mandated spending. That’s just as well, because if he wished to point fingers the best place to start would be with his new boss: Mr. Schwarzenegger.

On the November ballot, for example, the governor endorsed two bond issues (a hospital bond and the stem cell initiative) that will add nearly $4 billion to the state’s capital debt, not including interest. Ultimately, the sale of those bonds will trigger automatic debt service payments of as much as $250 million a year.

That was on top of Schwarzenegger’s endorsement of another pair of initiatives last March: Proposition 55, a $12.3-billion bond for school facility construction and maintenance, and the big daddy, Proposition 57, the $15-billion deficit mortgage act.

Those two measures will eventually add more than $2 billion a year to the state’s autopilot account -- part of the projected explosion in annual debt service commitments from $2.7 billion in fiscal 2002 to $6.8 billion in 2010, as documented recently by my colleague Evan Halper.

Let’s also not forget the measure that Schwarzenegger used to catapult himself into California politics: Proposition 49, a 2002 mandate for after-school programs. During the initiative campaign, Schwarzenegger pretended that this measure wouldn’t much affect state finances because it wouldn’t kick in until the budget recorded a certain level of growth. (That point is now expected to arrive in 2008.)

Schwarzenegger didn’t advertise that once the threshold was reached, Proposition 49 would trigger nearly $450 million a year in spending, based on a formula carved into the state budget as permanently as the epitaph on a tombstone.

This is not to criticize such worthy goals as building hospital and educational facilities, promoting advanced medical research, expanding after-school programs and balancing the budget. These were all decisively approved by the voters -- in fact, as much as 85% of the state budget is accounted for by such voter preferences, according to the non-partisan California Budget Project.

But the promoters of these programs only conceal their real cost by dressing them up as bond issues or claims on a future surplus. Sooner or later the bills come due. So let’s call those who endorse such uncontrollable spending, then swan about like fiscal conservatives merely because they’re dead set against raising taxes, by their right name: hypocrites.

Our leading business lobby, the California Chamber of Commerce -- which evidently has a gold-plated key to the governor’s office -- perfected this charade long ago. It endorsed the same initiatives as Schwarzenegger, and campaigned vehemently against a March measure that would have given the Legislature better control over the budget. That one, not the billions of dollars in spending initiatives, they labeled a “blank check.”

Marching in lock step with the chamber, Campbell told the press corps at his briefing that he opposes a tax increase because it would “discourage business coming and staying in California, and that means discouraging jobs.” The implication is that businessmen are too dumb to be discouraged by budgets that increase the misery of our poorest residents, undermine the educational system at all levels and push our fiscal reckonings off to a distant but ineluctable future.

On a more promising note, Campbell did hint that he agrees with the need for structural change in the state’s fiscal policy, a phrase that generally means reconsidering not only the way we spend money but the way we raise it. Only by watching how he and the governor address those issues in the weeks and months ahead will we learn whether the administration is really in favor of budgeting realism and honesty, or just the same old comedy.

Golden State appears every Monday and Thursday. You can reach Michael Hiltzik at golden.state@latimes.com and read his previous columns at latimes.com/hiltzik.