Winning politics often turns on luck. If you’re in the right place at the right time, you’re already ahead of the game. That’s where lucky Gov. Gavin Newsom is now.
No California governor in 44 years has begun presiding over the state at a better time.
There was ample evidence of this last week when Newsom sent the Legislature a revised state budget proposal of nearly $214 billion for the fiscal year beginning July 1.
The economy continues to hum. Tax revenue keeps flowing — in fact, overflowing. There’s a $21.5-billion surplus plus a $16.5-billion “rainy day” reserve. General fund revenue is projected to be $3.2 billion higher than forecast in January.
With that luxury, the governor increased proposed spending by $4.5 billion over his January budget. His total general fund spending projection is $147 billion, up 2.6% over the current year.
Public schools — kindergarten through community college — are in for a record $81 billion. Of that, roughly $56 billion would come from the state and $25 billion from local property taxes.
No barrels of red ink. No agonizing program slashes. No reckless borrowing or politically risky tax increases to balance the budget.
And unlike governors prior to Jerry Brown, Newsom won’t need to wrestle a stalemated Legislature that can’t find a two-thirds vote for budget passage. It now requires only a simple majority. Moreover, Democrats enjoy supermajority control.
Newsom is in hog heaven, as my mom might have said.
Compare this governor’s good fortune with the mess that faced many of his predecessors.
The last governor that lucky was Brown when he first took office in 1975. Start with the fact that Brown wouldn’t even have been elected if his name were Green or White — something different from that of his father, Pat Brown, a respected two-term governor.
Jerry Brown was blessed with a budget surplus so huge that new state Treasurer Jesse M. “Big Daddy” Unruh called it “obscene.” Skinflint Brown’s mistake was that he continued to let the surplus grow obscenely.
Voters were easily convinced that the state didn’t need the money. They passed Proposition 13, drastically cutting local property taxes. And that forced Brown to quickly spend the surplus on suddenly starved schools. The state has been paying schools ever since — roughly 40% of the general fund.
Brown left Gov. George Deukmejian a small deficit that created some havoc. But the Republican handled it without raising taxes.
Gov. Pete Wilson, however, walked into a horror show: drought, floods, fires, a riot, a major earthquake and a recession. He faced a $14-billion deficit — gigantic for the time — and had to practically break fellow Republicans’ arms before some would vote for a tax increase.
Wilson finally hiked taxes by nearly $8 billion — on cars, candy, bottled water, practically everything — and was hanged in effigy at the next party convention.
Democrat Gray Davis inherited an envious fiscal situation. But it was his rotten luck to become governor just as the power pirates — Enron, for example — began gouging and crimping California on energy, causing rolling brownouts. That resulted from a disastrous electricity deregulation bill passed unanimously by the Legislature during the Wilson administration.
Then the economy slumped and a budget deficit emerged, creating chaos. Davis became the first California governor ever recalled.
Gov. Arnold Schwarzenegger inherited Davis’ budget mess and foolishly went on a borrowing binge rather than using his celebrity capital to do the prudent thing: raise taxes. Ultimately, the worst recession since the Great Depression crippled state financing.
Back again, Brown was drowning in $26 billion in red ink. He and fellow Democrats painfully whacked cherished welfare and healthcare programs. But what finally balanced the budget was his convincing voters to raise income taxes on the richest Californians — not themselves, of course.
Now California’s tax system is outdated and unstable. It performs worse than the economy in a recession. But in boom times like these, it overtaxes, especially on capital gains. But that’s another topic.
Newsom is floating in money.
He’s spreading it around.
There’d be $1 billion to treat the “homelessness epidemic.”
“This homeless issue is out of control,” he told reporters. “It’s a stain on the state of California.”
Also, there’d be $1.2 billion for the state’s earned income tax credit, tripling its size. Low-income families with children would be eligible for $1,000 in cash. Newsom calls it “a cost-of-living refund.”
The governor added $130 million to fund childcare for low-income families, financed largely by marijuana taxes. Not sure what the connection is there.
An additional $400 million was earmarked for boosting welfare grants.
“I am in the anxiety-reducing business,” the governor said.
Newsom stood at a lectern for 93 minutes, briefing the news media on his spending plan and answering questions. He seemed to revel in it, rapidly spewing numbing numbers.
“Forgive me,” he said. “Two times a year” — the January budget introduction and May revision — “I get to do what I love.”
Everyone loves to spend money. But wait until the economy sours and his luck runs out.
“We have a record amount of rainy day reserves,” Newsom said. “We have well over $30 billion-plus to weather a major storm — and I would argue we have much more than that…. We’ve never been more prepared as a state.”
Very good news.
One suggestion: When you’re lucky enough to have all that money hoarded, forget all thoughts of raising any taxes.
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