Schwarzenegger follows Brown's route

Both changed direction when California voters rebelled.

George Skelton
Capitol Journal

May 25, 2009

From Sacramento — Gov. Arnold Schwarzenegger must be reading the playbook of a previous California governor in trying to recover from his thumping in last week's election.

That governor was Jerry Brown, the current attorney general and early front-runner to recapture his old office next year when Schwarzenegger is termed out.

In 1978, Gov. Brown was the leading opponent of Proposition 13, the revolutionary measure that sharply cut local property taxes. Brown called the ballot initiative, sponsored by anti-tax crusader Howard Jarvis, "the biggest can of worms the state has ever faced."

He was correct, of course. Prop. 13 not only reduced property taxes -- which was all the voters cared about that spring -- it set up an unfair assessment system. Property would be taxed based on its length of ownership, rather than mostly on its value. Two similar, adjacent houses could have vastly different tax bills.

More important for state and local governments, Prop. 13 shifted control over the remaining property tax to Sacramento. That meant transferring more governing power and financial burden to the state.

Another "worm" was the requirement of a two-thirds majority vote for legislative passage of a tax increase.

California government has been sliding downhill ever since Prop. 13's big shove. There also are other culprits, but that's for another column.

Back to Brown, who recently told me: "I'm not going to advocate messing with 13. That's a big fat loser."

After Californians overwhelmingly passed Prop. 13 with 65% of the vote -- roughly the same margin that voters rejected Schwarzenegger's budget proposals last week -- Brown quickly began to implement the measure. So enthusiastically that he earned the nickname "Jerry Jarvis" and became a self-described "born-again tax cutter."

"We have our marching orders from the people," announced the premier practitioner of Darwinian politics. He called it "a great opportunity" for governments to get more bang for the taxpayer's buck.

Within a month, a Times poll found that a majority of Californians even believed that Brown had supported Prop. 13. Jarvis, a Republican, was so enchanted with the Democratic governor that he cut a TV spot praising him as he ran for reelection. (He won easily.)

Brown's chief of staff, Gray Davis -- the future governor who was recalled and succeeded by Schwarzenegger -- recalls writing the ad script for Jarvis, who told viewers: "I wrote Proposition 13, but it takes a dedicated governor to make it work."

Fast-forward 31 years.

The fatal flaw of Schwarzenegger's Proposition 1A, the spending control linchpin of the ballot package, was that it would trigger a two-year extension of tax increases he and the Legislature had agreed to in February. That sparked a Prop. 13-like anti-tax rebellion among voters.

For months, the Republican governor had been asserting that anybody who thought the state's gargantuan deficit hole could be filled "with just cuts doesn't know math. And they should go back to Math 101. . . . I despise tax increases, but mathematics is much more powerful than ideology."

But the voters' voice apparently is even more powerful than math.

Although the electorate's rejection of his proposals put the state $6 billion deeper in the hole -- a pit of perhaps $24 billion that seems to grow every day -- the governor is swearing off higher taxes.

"The message was very loud and clear," Schwarzenegger has been reiterating. "One thing is for sure. There will be no revenue increases. This means cuts, cuts, cuts and living within our means."

Schwarzenegger has experience reinventing himself. After his "reforms" were adamantly rejected in a bitterly partisan 2005 special election, he morphed into a gentler "post-partisan" governor who enjoyed his most productive year in 2006 and easily won reelection.

But now he faces a more difficult dilemma -- and one much tougher than Brown's. Before this fiscal fiasco is resolved, Schwarzenegger will need to fill deficit holes totaling tens of billions, mostly with mutilated programs for schools, the poor, parks -- fired state workers, freed prisoners. Nothing escapes.

Brown only had to shovel out money. The state was sitting on a $6-billion surplus, which state Treasurer Jesse Unruh called "obscene." The cache was used to bail out the locals and schools -- a bailout that never ended. Now the chickens are roosting. And the state probably will be "borrowing" -- raiding -- $2 billion from the locals for its own bailout.

Time is also running out for this lame-duck governor, whose successor will be elected in just 17 months. His power to sway voters and legislators already has atrophied.

Like Brown, he's trying to react to the voters. But unlike in Brown's case, the voters this time sent a mixed message: Don't tax, don't cut, solve it yourselves. And, by the way, we don't trust you.

The politically practical response is to cut unmercifully and show people the carnage. Maybe they'll change their mind about taxes. Maybe not.

"There's only one thing he can do and if he does it his legacy will be restored," says Steve Merksamer, who runs a big political law firm and was Gov. George Deukmejian's chief of staff. "He needs to follow through with what he said he'd do. There will be a lot of screaming and demonstrations, but he has to show bold, tough leadership. And, frankly, that is what the public expects."

I asked Davis.

"This is the closest we have come to a Prop. 13 revolt," the former governor said. "This was a smack-down. Now is the time you take to heart what the public is saying. What it's saying is, 'Look, you've already taxed us. We don't have any more money budgeted for Sacramento.' "

Schwarzenegger must become a born-again slasher.