Governor’s GOP divide grows wider

After five years as governor, Arnold Schwarzenegger came full circle on Friday: The film star who promised to rescue California from its fiscal wreckage without raising taxes signed into law $12.5 billion in tax hikes.

With that, the Republican governor broke one of the few bonds left between his shrunken party and California’s mainstream voters, marring its hard-won image as a guardian against higher taxes.

“Their last gasp has been taken from them,” said Larry N. Gerston, a political scientist at San Jose State, citing the unpopularity among most California voters of the party’s conservative stands on abortion, illegal immigration and other touchstone issues. “It puts them in a very precarious position.”


By repudiating the thrust of his candidacy in the 2003 recall -- “I will not raise taxes,” Schwarzenegger stated flatly the day after he won -- the governor has also enraged the conservatives who dominate the party.

For Republicans convening at a state party convention this weekend in Sacramento, it is a wrenching moment. Schwarzenegger is skipping the event to attend a governors’ conference in Washington. But his turnaround on taxes has darkened the mood of the hundreds of party loyalists venting their frustration in a hotel where the governor often stays in a penthouse suite.

To be sure, none of the GOP lawmakers who demanded that the state close its $42-billion shortfall without raising taxes detailed the doomsday cuts that approach would entail, nor did the activists who lobbied against the tax increases. If the state had laid off its entire workforce of 238,000 -- every prison guard, firefighter and clerk -- it still would have fallen billions shy of a balanced budget.

Still, in a nod to the GOP’s internal realities, two of the party’s top contenders for Schwarzenegger’s job in the June 2010 primary have split with the governor over the tax hikes.

One, former EBay Chief Executive Meg Whitman, said they will “kill jobs, hurt families and make future deficits even worse.” The other, state Insurance Commissioner Steve Poizner, called the budget a “fiasco.” The heavier tax burden, he warned, will increase unemployment.

The party’s lone gubernatorial contender defending the tax hikes is Tom Campbell. A former Silicon Valley congressman and state finance director under Schwarzenegger, he all but guaranteed himself pariah status among the party’s rank and file by saying the governor and Legislature did the right thing.

“It was essential, because otherwise you would have no public works in the middle of a recession, and that’s suicidal for the state,” said Campbell, whose fortuitously timed move to Orange County this weekend will spare him the face-to-face hostility of convention delegates.

Like the governor, the six Republican lawmakers who joined Democrats in approving the tax increases are also facing vitriol within the party. Chief targets include Sens. Dave Cogdill of Modesto, whose support of the budget led to his overthrow as Senate Republican leader, and Abel Maldonado of Santa Maria, who cast the deciding vote.

Conservative blogger Matthew Cunningham has started a Facebook group, “Never Elect Abel Maldonado to Anything, Ever Again.” More threatening, Ernie Konnyu, a former Bay Area congressman, has launched a campaign to recall Maldonado.

Efforts to recall other GOP lawmakers for their break with the party on taxes have sprouted. Conservative purists are pushing the state party to censure them Sunday.

The party’s turmoil over taxes comes as Republicans nationwide are still reeling from their 2008 defeat. Their White House nominee, John McCain, lost California by more than 3 million votes in the party’s worst presidential rout in the state since the 1930s.

Their ranks diminished, Republicans in Congress are trying to restore the party’s reputation for fiscal restraint. They demanded less spending and more tax cuts as they fought President Obama’s $787-billion plan to stimulate the economy.

With his pledge to hold the line on taxes, Schwarzenegger took a similar approach in his run for governor during the budget crisis that fostered the recall of Gov. Gray Davis.

Now, Schwarzenegger allies say he had no choice but to break his promise.

“In 2003, nobody was saying that in 2009 this country would go through the worst economic crisis since the Depression,” said Adam Mendelsohn, a Schwarzenegger advisor.

“There’s nothing Gov. Schwarzenegger hates more than raising taxes. If there was a way to realistically do this budget with $42 billion in cuts and not raising taxes, Gov. Schwarzenegger would be the first one to go and fight for that. But it’s totally unrealistic.”

Critics, however, say Schwarzenegger long ago abandoned any serious commitment to fiscal restraint. Among other things, they say, twin ballot measures that Schwarzenegger and his Democratic allies marketed to voters in 2004 as an economic recovery package worsened the state’s long-term troubles.

Tucked into Proposition 57 were billions in new debt obligations. And the $5 billion in lottery borrowing that Schwarzenegger approved Friday belied his characterization of the 2004 companion measure, Proposition 58, as a move to slice up the credit cards of Sacramento politicians.

To Ted Costa, an anti-tax advocate and leader of the drive to recall Davis, the historic ouster of a California governor has proved to be a waste.

“There’s a village back there in Austria right now that could sure have their idiot back any time they want,” he said.

Others are less caustic but nonetheless point to the identity crisis that Schwarzenegger’s advocacy of tax hikes has visited on the party. If the de facto leader of California Republicans is a socially liberal governor who raises taxes, many wonder, what exactly does the party stand for?

“He’s not comfortable being a Republican, and Republicans aren’t comfortable with him being a Republican or being governor,” said Shawn Steel, the California committeeman for the Republican National Committee.

Some Republican leaders, like Steel, are somewhat forgiving toward Schwarzenegger but livid at the legislators who broke with their party on taxes in return for election reform measures and other pet causes.

“I’m far more disappointed with Republicans who actually voted for this monstrosity,” said Steel, a former state party chairman. “Sadly, for the 30 pieces of silver, if that, we had some otherwise pretty good guys collapse. Their entire political careers are now threatened.”




What’s ahead for Californians

The temporary tax increases in the budget take effect at different times:

April 1, 2009: Sales tax hike

May 19, 2009: Vehicle license fee increase

2009 tax year: Personal income tax increase and dependent credit reduction

Ballot measures

These budget-related ballot measures will go before voters May 19:

Proposition 1A: Would put restraints on state spending and force above-average revenues to be put into a larger rainy-day fund during good economic times for use when the economy sours. Passage of the measure would extend the temporary tax hikes signed into law by the governor Friday.

Proposition 1B: Would require supplemental payments to local school districts and community colleges to address recent budget cuts.

Proposition 1C: Would allow the state lottery to be modernized, with higher payouts, enhanced marketing and better management. Would permit state officials to borrow $5 billion against future lottery revenue.

Proposition 1D: Would temporarily redirect $608 million in tobacco-tax money, raised by a 1998 voter-approved initiative for preschool programs. The money would go to services for children, including those in foster care and those with developmental disabilities.

Proposition 1E: Would allow $226.7 million to be moved temporarily from voter-approved mental health programs to healthcare for children.

Proposition 1F: Would bar legislators and statewide officers, including the governor, from receiving pay raises in years when the state runs a deficit.

Other measure, number undetermined, will be on the June 2010 ballot: Would change the primary election process for congressional, statewide and legislative races. In primary elections, would allow all voters to choose any candidate regardless of the candidate’s or voter’s political party. The two candidates receiving the greatest number of votes would face off in the general election, regardless of party preference.

Source: California secretary of state


Taxes going up

Tax hikes in the new state budget will likely affect families with children most, because of the $210 reduction in the value of the dependent child credit.

Estimated annual tax increases for

$498: A single mother with two children and no car, making $15,000.

$553: A married couple with $50,000 in income, $14,000 worth of vehicles and one child.

$763: The same couple, but with two children.

$753: A single man with no dependents who earns $100,000 a year and owns a $40,000 car.

$1,493: A married couple earning the same amount owning a $20,000 car, but with four children.

$1,583: A childless married couple earning $250,000 with vehicles worth $40,000.

$2,003: An identical couple, but with two children.

Sources: California Legislature, Tax Foundation, Census Bureau. Graphics reporting by Thomas Suh Lauder


Your tax bill

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