Better to declare victory than continue stalemate

George Skelton
Capitol Journal

February 19, 2009

From Sacramento — Any skilled warrior, financier or negotiator knows when to declare victory. A skilled politician plays all three roles.

An astute officeholder will fight for a cause, prioritize public money and negotiate the best deal possible. Then, at the right moment, declare victory before the gain erodes.

Republican state legislators have had a victory ready to be claimed for the last week, but they've sullenly balked. They've wanted a great deal more and have risked losing it all.

As then-Senate Republican leader Dave Cogdill of Modesto told his GOP colleagues, the $41-billion deficit-reduction package negotiated over a six-week span by Gov. Arnold Schwarzenegger and the four legislative leaders -- the so-called Big Five -- was the best deal they were going to get. And it would "keep the state from plummeting off the financial cliff," he said.

The Senate Republican Caucus responded by shooting the messenger. It dumped Cogdill as its leader Tuesday night and replaced him with an ardent anti-tax conservative, Sen. Dennis Hollingsworth of Murrieta. The negotiated deal included $15.1 billion in spending reductions, $14.4 billion in tax increases and $11.4 billion in borrowing.

Cogdill's problem was that he was a leader in name only. He apparently had only one follower willing to vote for a tax increase: Sen. Roy Ashburn of Bakersfield. Cogdill needed at least two out of the 15-member caucus, in addition to himself, for the package to conquer the two-thirds vote hurdle required for passage.

In the Assembly, Republicans have been less rigid. Minority leader Mike Villines of Clovis quickly rounded up the necessary two additional votes required there and probably could have found more if he needed them.

Villines and Cogdill both examined the budget books and realized that the only way to climb out of the historically huge deficit hole was to cut spending and increase taxes.

"There is not much wiggle room," Schwarzenegger told reporters Wednesday as he and Senate President Pro Tem Darrell Steinberg (D-Sacramento) continued to hunt for one more Republican vote. "Anyone that runs around and says that this can be done without raising taxes, I think, has not really looked at it carefully . . . or has a math problem and has to go back . . . and take Math 101."

The deal that Schwarzenegger and legislative leaders struck contained items long on the GOP's wish list -- not everything Republicans demanded, but more than ever would have been achievable had they not been bargaining with potential tax-hike votes.

Foremost is a new spending control and mandatory rainy-day fund. The spending control is key: Budget growth could not exceed a percentage tied to the previous 10-year revenue trend. Any excess revenue would go into the rainy-day fund and be saved for rough times.

The measure must go on the ballot for voter approval. And there's a good chance that because of the overall deal and other bargaining, public employee unions would not oppose the ballot proposition. But support for both the spending control and rainy-day fund would collapse immediately without the budget-tax package.

Another win for the GOP is $1 billion in business tax cuts.

The biggest is a $700-million annual break, beginning in 2011, to encourage nationwide and multinational companies to build facilities and hire employees in California.

Small businesses would earn a $3,000 tax credit for each new employee they hire this year and next, with a cap of $200 million.

And to keep moviemakers in Californians -- a goal of Democratic legislators as well as Republicans -- there would be $100 million in annual tax sweeteners starting in 2011.

Also, there was an after-deal concession to Ashburn to entice his vote: A tax credit of 5% or $10,000, whichever is lower, for people buying a newly constructed home.

"It's a time like this that we need some stimulus," Ashburn said, grinning as he presented the home-buyers bill to the Senate. He apparently was referring to stimulating not only the depressed housing market, but his vote for tax increases.

Normally, there would have been sufficient Senate votes for passage of the budget-tax package last week. Democrats should hold 25 seats, not 24 as they do now -- three short of a two-thirds majority. But Democrat Mark Ridley-Thomas of Los Angeles left his Senate seat last year to become a county supervisor. That seat is still vacant.

And if Democrats and Republicans had not conspired in 2001 to gerrymander a Ventura-Santa Barbara Senate district to make it safe for the GOP, Democrat Hannah-Beth Jackson would have easily won that seat in November. She lost by less than half a percentage point to Republican Tony Strickland, one of the anti-tax leaders.

Proposition 11, approved in November, will create an independent redistricting commission and end that gerrymander foolishness beginning with the 2012 elections.

Meanwhile, many Republicans have acted like they'd rather watch state government go over a cliff than vote for tax increases. Government is always good for ridicule or a laugh. Shut it down. But that didn't work out very well for congressional Republicans and House Speaker Newt Gingrich in 1995.

"I will never let this state go off the cliff," Schwarzenegger repeatedly vowed Wednesday.

Democrats could always resurrect their nuclear weapon: the plan to raise taxes on a simple majority vote by essentially calling them fees. It's legally suspect, but in December it frightened Republican leaders enough to drive them to the bargaining table.

Schwarzenegger vetoed that tax bill. But I doubt he would again -- not with the state he governs sinking into the abyss.

For Republicans, being irrelevant and ignored while a tax bill is enacted on a majority vote would be a huge loss. It's smarter to claim a victory.