In the wee hours this morning, the California State Assembly, following behind the Senate who had done so hours before, passed along to Governor Schwarzenegger a budget that represents the collision of two immutable forces — Democrats who simply refuse to reduce state spending to a reasonable amount, and Republican legislators who finally have said "enough is enough" and refuse to raise taxes any longer to feed the overspending.

The result is, as Jon Coupal of the Howard Jarvis Taxpayers Association calls it in a column on the FlashReport today, a budget that is ugly, but holds the line on taxes.  And we agree, this budget is an unfortunate one, because it doesn’t represent what Californians deserve, but it likely represents the best that they are going to get, given the dominance of the radical left in the building.

It is widely accepted that one of the items that actually moved the budget negotiations away from a "Democrats with Arnold" model to a "Big Four" legislative leader model was some capitol hi-jinks perpetrated by Assembly Republicans (h/t to Assemblyman Joel Anderson) who donned name tags when the Governor came to speak to their caucus.  I understand from several well-placed Capitol sources that when word of this made its way to legislative Democrats, it was a clear sign that any hope they had that the Governor would be able to "pick off" votes for his sales-tax scheme were off of the table.  Shortly thereafter this deal started to come together…

It is not surprising that long-term budget reforms that are desperately needed for California government were watered down in this document, and we agree with Governor Schwarzenegger’s assessment that the reforms contain a "fatal flaw" because true authority for California’s Chief Executive to make mid-year cuts in a bad year are not included.  As the politics of this budget debate have played out, Democrats have championed staving off more spending cuts, Republican Legislators have drawn a line on new taxes, and it was the Governor who ended up being the primary advocate for budget reform (though this was a constant demand of Republicans in the legislature, it was subordinate to the no-taxes issue).  When negotiations on this plan moved away from the Governor, his budget reform plans ended being sacrificed on the altar of compromise.  And that is bad for Californians.

Assemblyman Chuck DeVore, the lead Republican in the lower chamber on tax policy, pens a piece for the FlashReport today that succinctly goes through his take on where Republicans score policy victories in this budget.  He is right that Republicans can hang their hat on some significant "wins" in the document.

But we would be remiss if we didn’t point out some major problems with it, that, frankly, are all to be blamed on Democrats and their unwillingness to pare just a fraction more of the massive increases in spending over the last few years (over 40% in just four years, to be more precise).  These include a horrible scheme to expand the state lottery and then borrow against its future earnings (we oppose a state-sponsored lottery), hitting businesses hard by delaying write-offs for losses, using taxpayers as a bank by forcing them to pay their taxes earlier in the fiscal year (though as Coupal wrote, better to borrow this way than to raise the actual tax rates), and of course it is tragic that the real budget reforms needed for California (such as a true Gann-style spending limit) are no-where to be seen.

Of course this budget whizzed through the legislative process at such a high speed that we’ll still be finding out more of the details of what is actually in it for some time.  And so we’ll reserve final judgment on the plan.

That said, we come to the last remaining issue between this budget passing the legislature and its becoming law — the Governor and his threat to veto the document if it didn’t include some key points for him on budget reform.  In the end, the budget has fallen short of what he demanded in writing yesterday.  So the Governor really has no choice but to veto this document (then again, his reputation for changing positions is close to legendary-status).  After this happens, I would imagine that his veto will be over-ridden, though perhaps not.  It might be awkward for conservative legislative Republicans to vote to override the Governor when his issue is one so near and dear to their hearts.

If an override fails, then what?  Well, then we’re back to the drawing board, I suppose, as I suspect Democrats will fall off of the deal pretty quickly before supporting real budgetary reform.

n closing, I want to end this commentary with praise for legislative Republicans, and their elected leaders Dave Cogdill and Mike Villines.  The kind of solidarity and team-work we saw during this budget process by Republicans was impressive, and sets the plate quite well for the upcoming budget negotiations, which frankly need to start as soon as this budget is completed.  It’s clear now — there will be no new taxes for Californians.  So Republicans can move other priorities to the top of the list for the next negotiations…  Perhaps, someday, Californians will elect a majority of fiscally responsible representatives to Sacramento, and we actually get the "No new taxes, common sense budget" — but that won’t be any time soon.

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This entry was posted on Tuesday, September 16th, 2008 at 12:00 am and is filed under Blog Posts.