I told you so.
Yeah, I know, that is rude, but now that I am no longer in the Legislature, there are very few people who will relate the tale.
I voted for the 2004-05 budget, the Governor’s first budget, because I thought it was a responsible budget that dealt appropriately with the fallout from the Davis spending spree from 1999-2001. In those budgets, Gray Davis and the Democrats (with way too many willing Republicans), increased spending from $58 billion (general fund) to $79 billion (general fund). The next three budgets, 2001-04 moved spending from about $79 billion to $78 billion, and created a $13 billion debt, while revenue went from $66 to $76 billion over those same years. The voters passed the $15 billion bond to cover the Davis mistakes.
Governor Schwarzenegger, with the able help of his then Finance Director, Donna Arduin, brought spending under control in his first budget, increasing spending by only $100 million (as proposed in the May revise and passed by the Legislature). It was the right thing to do. Arduin then left, the Governor began his initiative campaigns, and, in the next six months, the wheels fell off the fiscal control wagon.
In June of 2005, as the Legislature was working on the 05-06 budget, DOF rejiggered the 04-05 numbers, and made the claim that the $78.1 billion general fund spending plan that I had voted for was really an $83 billion spending plan, and so the Governors proposed spending increase to $92 billion general fund was not a $14 billion increase (20% bigger than any Gray Davis plan), but rather only a $9 billion spending increase (20% smaller than Gray Davis). Several of my Republican colleagues in the Assembly and Senate bought into the falsehood, and voted for this outrageous spending increase. I stood in that Assembly caucus, voiced my anger at the deception, and, in the end, 15 of my colleagues listened, while 11 voted for the budget.
To be clear, I thought we had to put out the budget. We had picked the initiative fight in which we were then engaged, and a protracted budget fight threatened those initiatives. But, I argued, to preserve ourselves for the next year’s negotiations, the Assembly should put up only six votes to accomodate the Governor’s deal. We should not pile on. The 05-06 budget should be grudgingly passed, so the Governor would not think he could railroad us the next year.
Of course, the six to vote on that budget would have to defend that vote when their future primary opponents claimed that they voted for the largest spending increase in the history of the state. None of those six wanted to have to defend themselves as the deciding vote in that budget in future primary fight. So, cynically in my opinion, several freshmen legislators were misled into voting for a really bad budget.
History has borne out my prediction. After the Republican stampede in 05-06, the Governor railroaded legislative Republicans in 06-07, leaving the Senate Republicans to draw the line in 07-08.
The seeds were sown, however in 05-06, the single largest spending increase in the entire history of the state. At some point, Republicans will learn the lesson. If we go along with huge spending increases when times are good, the state will pay the price when times are bad. It happened in the late 1980’s, which led to the budget crisis of 1991-95. It happened again in 1999-2001 (see my article, The Perfect Budget Storm, California Political Review, May 2001), which led to the budget crisis of 2001-2005. It happened again in 2005-07.
It really is true. We have met the enemy of small government, and he is us.