Spending Limit Flaw: Gov. Would Get Upper Hand

A savvy lobbyist I know is fond of ending his conversations good-naturedly by saying: “Don’t worry. Things will get worse.”

I won’t identify the man -- he might not want to be publicly associated with what I’m about to write -- except to say that he has been working the Capitol crowd for about 40 years. And that throwaway line of his has been pretty much on target as a prophecy of government deterioration.

Blame everyone, including the voters.

First there was Proposition 13, which dramatically reduced property taxes, but switched the burden for funding schools from local taxpayers to state government. One result was less local control. Another was increased strain on the state budget.

Later came legislative term limits, which robbed the Capitol of knowledge and know-how, as evidenced by the current bumbling over a budget.

And there’s all that ballot box budgeting -- the most stifling being Proposition 98, which guaranteed minimum school funding that grows automatically each year. Rather than allow the governor and Legislature the flexibility to make major spending decisions, the law locks them into a complex formula adopted narrowly by voters 17 years ago.

No business could operate that way. No government should.

Now, the current budget brawl in Sacramento highlights a glaring flaw in Gov. Arnold Schwarzenegger’s ballot initiative to limit spending and “live within our means.” It will be on the governor’s special election ballot in November.

First, two good things about the initiative:

* It would enforce some fiscal discipline. Spending growth would be limited to the average increase in revenue over the previous three years.

* Proposition 98 would be amended to give the state more flexibility over education funding. Schools could be granted a one-time bonus without it becoming part of their annual guarantee.

But the flaw:

* There’d be a significant shift of power to the minority party and the governor, resulting in a disincentive to compromise with the legislative majority.

If the Legislature didn’t pass a budget by July 30 -- one month into a new fiscal year -- the previous year’s spending plan would be imposed. This means that, because of California’s draconian two-thirds vote requirement for passage of a budget, one-third of one house could stonewall and “pass” the old budget.

Minority conservatives looking to “starve the beast” of government could enact a budget that froze spending. This might sound fine, but it would not provide for California’s perpetual population growth.

Moreover, if a governor sensed a looming deficit, he could ask the Legislature to staunch the red ink. Fine. But under Schwarzenegger’s plan, if there were no agreement within 45 days, the governor could cut spending any way he wanted.

Again, one-third of either house could shift all the budgeting power to the governor.

Republicans might like that power shift if the governor were Schwarzenegger. But what if Democrats played the game and the governor were Gray Davis?

The current budget deadlock is aggravating and partisan enough. But if the governor’s initiative were in effect, the result could be absurdly 100% political. There’d be even less incentive for the minority, which is almost always Republican, to negotiate in good faith if it could transfer all power to a GOP governor.

Republican legislative leaders say this is tilting at windmills.

“Have you ever known us to relinquish power?” asks Assembly Republican Leader Kevin McCarthy of Bakersfield.

Says Senate Minority Leader Dick Ackerman (R-Irvine) about automatically reinstating the old budget: “In theory that sounds good, but I’ve seen Republicans who want to spend as much money as Democrats. Nobody wants the old budget.”

But Assembly Budget Committee Chairman John Laird (D-Santa Cruz) contends the Schwarzenegger proposal would “reward gridlock and eliminate a collaborative process.”

It hasn’t been so collaborative lately, however.

The two sides are within hair-splitting difference of a compromise. But Schwarzenegger and Republicans have been hesitant to negotiate a final agreement with Democrats.

For one thing, Republicans would love to blame Democrats for again failing to pass a budget by July 1. This would provide anti-Democratic fodder for Schwarzenegger’s budget “reform” campaign in November.

For another, Schwarzenegger keeps trying to dangle on-time budget passage -- which Democrats want more than he does -- as leverage to obtain a legislative compromise on all his ballot initiatives. The compromise package would be placed on the ballot as a bipartisan alternative to the controversial initiatives.

A compromise on budget reform could easily fix the power-shift flaw. The Legislature could retain all its power, but be forbidden to act on anything else until a budget were passed or fixed.

Nerves have been too raw for negotiating, however.

Schwarzenegger and Assembly Speaker Fabian Nunez (D-Los Angeles) blew up at each other during a meeting Tuesday in the governor’s office. Senate leader Don Perata (D-Oakland) also was there.

The governor talked about linking the budget to his “reforms.” Perata said the Legislature couldn’t rewrite the state Constitution in two days. Schwarzenegger countered that his proposals had been around for months and Democrats hadn’t responded.

Nunez complained the governor had been out campaigning. The governor accused Democrats of having to clear all their moves with unions. Nunez used a barnyard expression and stormed out. So did the governor.

As the lobbyist says, things keep getting worse.

George Skelton writes Monday and Thursday. Reach him at george.skelton@latimes.com.