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GOP Govs. Who Can Count

Gov. Arnold Schwarzenegger is pursuing an orthodox conservative no-taxes-ever policy even as other Republican governors have abandoned it to save their states. Schwarzenegger’s colleagues in Nevada, Idaho, Georgia, Ohio, Indiana and Colorado haven’t turned Democratic, just realistic.

Schwarzenegger continues to insist on “balancing” the state budget by cutting programs, borrowing, and promising to get more money from Washington. He seeks a strict cap on state spending. A balanced budget is a pipe dream with a chronic shortfall of about $8 billion a year, the result of lingering recession, the lasting effects of Proposition 13 and spending decisions during the flush years that created obligations, such as health insurance for low-income children.

For the record:

12:00 a.m. April 3, 2005 For The Record
Los Angeles Times Sunday April 03, 2005 Home Edition Opinion Part M Page 4 Editorial Pages Desk 2 inches; 73 words Type of Material: Correction
GOP governors -- An editorial Wednesday on Republican governors’ approaches to taxes and spending misstated California’s bond rating history under Gov. Arnold Schwarzenegger in saying that the state had “watched its bond rating plummet.” Two of three major bond rating agencies sharply lowered the state’s general obligation bond ratings in December 2003, the month after Schwarzenegger took office, but raised them in 2004 to about the levels that existed before he took office.

Five other Republican governors, more willing to face reality, have resorted to higher taxes in recent years. Now Colorado Gov. Bill Owens, trying to avoid dismembering state services, is working with Democrats in his legislature to suspend the state’s famous taxpayer-approved spending limit. Owens, up to now a champion of spending limits, says that, considering federal cuts in aid to states, common sense dictates that Colorado increase spending for healthcare for the poor, higher education, transportation and public safety -- increases not allowed under the spending cap. Owens says he will seek increases of $3 billion over the next five years.

In 2003, conservative Republican Gov. Dirk Kempthorne of Idaho said he abhorred the idea of a tax increase, “but I’m not going to dismantle this state, and I’m not going to jeopardize our bond rating, and I’m not going to reduce my emphasis on education.” GOP governors in Nevada, Georgia, Ohio and Indiana have acted similarly.

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California under Schwarzenegger has watched its bond rating plummet. It has financed past debt with a $15-billion bond issue that will burden the state for years. Money is being siphoned from long-starved transportation programs and local governments, and education increases have been cut back. College and university tuitions are way up. By insisting on strictly cutting spending and increasing borrowing, Schwarzenegger damages the California dream he says he loves.

As for getting more money from Washington, that’s also a pipe dream. Washington is cutting aid to the states, especially in programs such as Medi-Cal, not increasing it.

Like other governors, Schwarzenegger should be in the trenches, negotiating a realistic budget with legislative leaders. Democrats, with their own protectionist strategies, need to offer more give on the governor’s proposals and remove the budget fences they’ve erected around sacred cows. Neither side can afford to please only its own special interests, mainly business on the governor’s side and unions on the Democrats’.

More cooperation would give Schwarzenegger cover for a modest temporary tax increase. That could mean broadening the sales tax base from just goods to services such as auto repairs and legal fees. Or restoring the old 11% maximum state income tax bracket first set by Ronald Reagan in the late 1960s and reimposed by Pete Wilson during the recession of the early 1990s.

California has successfully used taxes to get past a slump twice in the last 40 years. Business will not flee to Nevada. Executives who take a long view want to see the state investing in better highways and transportation and turning out productive workers from its education system. That’s the old California dream, which shouldn’t be regarded as dead and buried.


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