Compromise seen as elusive in budget battle

John Wildermuth,Carla Marinucci, Chronicle Political Writers

Monday, May 25, 2009

Conservative commentator Rush Limbaugh called last week's shattering defeat of five budget-related measures a "political nuclear bomb" hitting California, while one of the state's most progressive legislators, Democratic Sen. Mark Leno, appeared to agree for entirely different reasons.

"This is as serious and as desperate as the governor is suggesting," a weary Leno said at the end of a week in which Gov. Arnold Schwarzenegger proposed eliminating huge swaths of children's health care, welfare, education and social programs - which the San Francisco legislator has ardently supported.

"The bottom has fallen out. ... There is just no money. We have to make deep cuts, first and foremost," Leno said. "It is just a fact of life."

With conservative opponents hailing Tuesday's special election as an anti-tax victory - and supporters decrying it as the defeat of a last-chance legislative compromise budget plan to close a yawning deficit - one thing is clear: California's finances are in chaos, raising questions about whether compromise is possible in an increasingly partisan state.

"It will take someone like a King Arthur to pull the blade out of the stone," said Michael Semler, a political science professor at Cal State Sacramento. "The governor and the Legislature have a few months, a short time, to come to a resolution."

It was just three months ago that a bleary-eyed Schwarzenegger emerged from closed-door negotiations to tell reporters that all-night meetings had brought a solution to California's budget deficit.

The historic agreement, the governor said, "required Democrats to compromise on their opposition to spending cuts and required Republicans to compromise on their fierce opposition to tax increases" in an effort to do what was right for the state.

But voters slapped down five out of six of the fiscal measures by nearly 2-to-1 ratios and ordered legislators back to the drawing board to find a way to close a deficit that has today ballooned to more than $24 billion, according to a report by the nonpartisan legislative analyst last week.

Voters want more answers

A poll taken May 16-20 by David Binder Research showed that voters not only were tired of legislators going to the ballot with political gimmicks and temporary budget fixes, but a majority of them think legislators "do not make the necessary compromises to get things done."

Voters have very specific ideas of what constitutes a compromise, and February's budget agreement wasn't it, said Mark DiCamillo, director of the Field Poll. While Schwarzenegger and legislative leaders called their agreement a compromise, it didn't solve the state's budget woes at a time when voters wanted answers, not more problems, he added.

"What was brought to the voters (in the special election) looked like a hodgepodge, not a coordinated effort to close the deficit," DiCamillo said.

The Legislature's long-running history of partisan squabbling, combined with the state's growing economic problems, helped push voter approval of the Legislature to an all-time low of 14 percent in a May 1 Field Poll. Against that background, even a budget agreement billed as a landmark compromise wasn't greeted with loud cheers.

"If it comes from the Legislature, it's already suspect," said Tracy Weston of the nonpartisan Center for Governmental Studies in Los Angeles.

But the new budget negotiations forced by last week's election and the continuing deterioration of the economy are guaranteed to be painful. While voters talk about the need for compromise, Democrats and Republicans agree they typically want to see it on someone else's issue.

"Are we ungovernable? Right now we are," said Ted Costa, a conservative anti-tax crusader whose People's Advocate group has been a regular sponsor of state initiatives.

"There will be a knock-down, drag-out fight," he predicts, should liberals try to do away with the two-thirds majority needed to pass budgets and taxes in California - a requirement that conservatives insist has kept finances at least partially in check.

But Leno argues that with the looming possibility of "the state safety net dismantled," the school system funding raided and health care programs destroyed, "Californians will have to communicate to their leaders that this cannot be all about just cuts. The price is too high."

Bill Whalen, a Hoover Institution research fellow, said liberals and conservatives share one value: their anger with the Legislature.

"They see the Legislature has 1,800 aides," generous pensions, state-funded cars and more, Whalen said. "They want to know (politicians) think times are tough, too."

But even February's budget compromise might be harder to duplicate this time around because legislators can see what that agreement cost the people involved.

Both GOP legislative leaders, Assemblyman Mike Villines of Clovis (Fresno County) and Sen. Dave Cogdill of Modesto, lost their leadership posts, largely because they agreed to back a tax increase. Assemblyman Anthony Adams, R-Hesperia (San Bernardino County), is facing a recall effort because he supported the compromise plan.

On the Democratic side, state Senate President Pro Tem Darrell Steinberg, D-Sacramento, lost some friends and political allies when he supported taking money from Proposition 63, a mental health measure he co-wrote. Assembly Speaker Karen Bass, D- Baldwin Vista (Los Angeles County), is battling her supporters in labor over her backing of spending cuts.

Chance to change government

There are plenty of questions about whether legislators will be willing to take the heat any new budget compromise will involve, especially when there's no guarantee they'll win in the end. But some legislators, watching the fallout, see a chance for opportunity - and good.

"We, as voters, have created this Winchester House of governance - it's our responsibility," said state Sen. Mark DeSaulnier, D-Concord, who is proposing a constitutional convention to redo government in California.

Even in crisis, he argues, California may yet find its silver lining.

"This has stark opportunity to change the way we govern for the better," he said.

Ideas for fixing the state budget

	Cut the budget across the board.	Change Proposition 13.	Get rid of the two-thirds rule for passing a budget.	Lay off state workers, and cut their salaries.	Legalize marijuana, and tax it.	Scrap the state Constitution, and start all over.	Reinstate Proposition 187, and deport all illegal residents.
Pro	Fast, easy to understand and sure makes the math easier.	Since 1978, residential property has been picking up more of the tax burden.	Prevents a minority of legislators from holding a budget hostage.	Cutting workers saves the state money for years to come.	A new tax on pot could raise as much as $1 billion a year for the state.	California's got big problems, so the state should look at big solutions.	Undocumented workers cost the state billions in unreimbursed services.
Con	Do we really want to build 90 percent of a bridge?	Prop. 13 is still ground zero for the tax revolution and remains mighty popular.	Majority party could ignore the opposition completely.	Even huge employee cuts aren't enough to cover California's budget deficit.	Users and sellers would have to be persuaded to pay the tax.	Be careful what you wish for.	Those same undocumented workers bring billions to California's economy.
The bottom line	All government isn't created equal. While almost every program in the state is likely to get trims, expect more cuts in health and welfare than in the California Highway Patrol.	Expect to see a ballot initiative to change Prop. 13's reassessment rules for commercial property. Don't expect it to pass.	This is almost guaranteed to show up on a ballot next year. Voters overwhelmingly turned down a similar plan in 2004, but may be angry enough to back it now.	Gov. Arnold Schwarzenegger already has cut 5,000 workers' positions and could renegotiate some state worker contracts. But as the economy gets worse, there's more demand for state services and the workers who run them.	There's surprising mainstream support for this, but as long as marijuana is considered an illegal drug by the federal government, expect more talk than action.	Support for a new state constitutional convention is growing and could go on the ballot next year. But any changes would have to be approved by voters, which opens the way for more expensive ballot fights.	Prop. 187, which banned most state services for illegal aliens, was rejected by the courts and isn't coming back. Until the federal government comes up with a national solution, expect California to concentrate on clearing illegal residents from state prisons.

E-mail Carla Marinucci at cmarinucci@sfchronicle.com.