More Money, More Problems in California

Gov. Jerry Brown’s plan to demolish California’s wall of debt can’t get around GOP’s wall of doubt.
by | May 17, 2011

This week in California, the theme is “what to expect when you’re NOT expecting.”

I'm not talking about how the state was rocked by the bombshell that former California Gov. Arnold Schwarzenegger secretly fathered a child with a member of his household staff. On a more government-related note, an unexpected $6.6 billion (over two years) suddenly landed in California’s lap.

Announced Monday, this windfall in revenue reportedly came from taxes on the wealthy. Gov. Jerry Brown wants to use it to get education spending under control and close the state's monstrous deficit. But of course, it’s never that simple.

According to GOP lawmakers, this news confirms what they’ve been saying all along: tax hikes are unnecessary. As a counterpoint, Brown released a revised budget plan Monday morning, which raises education spending by about $3 billion more than he proposed in January. Brown declared that the revenue boost would help put a dent in the state’s “wall of debt,” but not enough to knock it down.

Therefore, the rest of the extra revenue would reduce the tax increases ($2 billion less than the prior proposal), create jobs through tax incentives and eliminate 43 boards, commissions, task forces, offices and departments that represent frivolous spending, to name a few items from the revised budget. His new plan comes just days after it was announced that, due to budget cuts, 70 state parks will close, including the state’s historic Governor’s Mansion, which housed Ronald Reagan and a host of other governors.

The windfall represents a silver lining in a red-ink cloud, but Brown still believes renewing tax increases set to expire will get the state back to black.

“California’s finances were plunged into turmoil by the Great Recession and a decade of short-term fixes and fiscal gimmicks,” Brown said in a statement. “This is not the time to delay or evade. This is the time to put our finances in order.”

His plan to demolish the state’s wall of debt, however, can’t seem to get around the GOP’s wall of doubt. "The news that our budget deficit continues to shrink and that California continues to take in unexpected tax revenue is further proof that we don't need to impose tens of billions in higher taxes on overburdened taxpayers to balance the budget and protect core priorities,” Assembly Budget Committee Vice Chair Jim Nielsen, a Republican, said in a statement. “I cannot approve of a budget which holds to the dangerous realignment plan that will put our citizens at risk and which increases the size of government by 31 percent over the next three years."

So the stalemate continues. It’s hard to see how this will shape out if neither side budges, but according to the Orange County Register, Brown’s GOP hurdle is as big as ever:

Brown's charm and political acumen were no match for Republican legislators, who argued that voting to put a tax extension on the ballot was tantamount to voting to raise taxes.

Brown's claim that he could breach the partisan gridlock was "nonsense," said Joe Mathews, Irvine Senior Fellow at the New America Foundation and co-author of "California Crackup: How Reform Broke the Golden State and How we Can Fix It."

"(It was) this magical solution, 'I'm this person who can do this impossible thing,'" Mathews said. But nobody can fix the budget under the current system, he said. "It's this game that's set up to lose," Mathews said. "The only way to win is to change the game." Brown would be better off proposing some fundamental reforms, like remaking the entire tax code, Mathews said. Then he might actually get somewhere.

Since taking office, Brown and the legislature have sliced spending by $9 billion. The fiscal year ends on June 30. Don’t expect any compromises any time soon.