Commentary Author

Ray Haynes

Ray Haynes served in the California legislature from 1992 through 2006.


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Today's Commentary on the News


May Ballot Props - A Really Bad Deal


by Ray Haynes - State Capitol (bio) (email)

3-25-2009 6:39 am

I am going to vote no on all of the propositions in May.  Very simply stated, the so-called spending limit does not warrant the tax increases, or an extension.  As usual, our Republican friends in the Legislature got sold a bill of goods.  They really got nothing for the tax increases they voted. for.  The ballot propositions that are supposed to implement the budget solutions are either meaningless, foolish, or increase state spending.  As usual, the Democrats got everything they wanted, that is, no spending reductions at all (I am not going to argue about the baseline issues, there really are no spending reductions), all the tax increases they wanted, and no effective limit on future spending.  All in all, just another typical year for this Governor, who, after being given historic opportunities to revamp state spending, has done nothing.  He is not the Governator, he is not a terminator, he is the Capitulator, and through his capitulation to the demands of the Democrats and the special interest union thugs they represent, he has done more damage to the people of the state of California, and to the Republican party, than anyone can measure.

Let's start with Propositions 1B through 1E.  If one were to analyze the worst budget initiatives of the last thirty years, they would include Proposition 98, the lottery, the Reiner tobacco tax for children's programs, and Proposition 63, the mental healh tax.  Proposition 1B through 1E simply allows the state to continue spending general fund money on these failed programs.  Proposition 1B is bigger spending on education.  Proposition 1C simply eliminates the lottery money from education in the future, and allows the state to avoid spending cuts on other programs.  Proposition 1D takes money out of the Reiner initiative, once again to maintain state spending (and avoid necessary spending reductions) on unnecessary programs.  Proposition 1E simply takes money from a really foolishly enacted tax, and transfers it to mental health programs of dubious utility, once again to avoid real spending reductions for those programs.  I could get into the details of each of the programs, but suffice it to say, each of these programs were sufficiently funded in 1998 when the state's revenues were half of what they are today, and the increases since then have done little or nothing to increase their effectiveness, and completely undermined their efficiency.  These propositions are unnecessary, and quite frankly, counter productive.

Proposition 1F merely codifies existing practices in the awarding of legislative pay increases.  The commission has never given a pay raise in the midst of a budget crisis.  To enact 1F is no reform, and makes no change to existing practice.  More important, if anyone really knows how the funding of the Legislature works in the wake of Proposition 140 (the 1990 term limits initiative which also limited spending on the Legislature), they would know that everytime you limit or change legislator's pay, all that happens is that Democrat staffers, many of whom earn more than $150,000 per year, simply have more money for raises for them.  In practice, Proposition 140 has guaranteed a minimum amount of money be spent on the Legislature as a whole.  If that money is not spent on Legislator's salaries, it increases the pot for staff raises.  Since those staff raises rarely go to Republican staff, that means that evey dollar that is taken out of a Republican Legislator's pocket goes into the pocket of a Democrat staffer.  Good for the staffer, but not really budget reform at all.

Which brings us to Proposition 1A, the so-called spending limit.  I am not going to address the tax extension issue, that alone justifies the rejection of this proposition.  The bigger problem is that this "spending limit" is no spending limit at all."

I begin with a little story.  At the end of "Sense and Sensibility" the Jane Austin novel and movie, Miss Marianne Dashwood, who fell hopelessly in love with the romantic cad Willoughby expressed regrets about her behavior.  Her sister asked her "Surely you do not compare your behavior with his."  To this Marianne anwered "No, I compare it to what it ought to have been, I compare it to yours."

So I compare Proposition 1A to what it ought to have been, I compare it to the Gann Initiative, in effect until 1990.  We have a spending limit in this state, but the transportation initiative of 1990 blew the cap off, and we have been in constant problems ever since, since the current spending cap is no cap at all, as opposed to the Gann initiative, which truly limited state spending.  Proposition 1A contains no limits on spending for education, infrastructure and bonds, which means that legislature can take this money any time it wants, with little or no restriction, to increase state spending.  Second, once the limit on the Budget Stabilization Fund (the BSF) hits 12.5%, the state can spend its excess revenue on anything.  Understand that the 12.5% BSF requirement is fixed, it is 12.5% of the budget for that year, amounts deposited in the past do not accumulate.  The money deposited from last year counts towards this year's limit.  That means in really good years, where revenue is pouring in, as it did in 1999-2001 and 2005-2007, the BSF will fill quickly, and the transfers will be done.  Assuming that the Legislature doesn't spend it on the approved items (which it will), once it is full, the BSF is no restraint on spending.

The Gann initiative literally limited spending on programs.  It prohibited expenditures above specific approved levels.  Democrats complained about this limit all through the 1980's because it limited their spending ability.  The first time Republicans actually asked for something, that is, money to build roads, Democrats took the chance to write a spending cap that was no spending cap at all.

The Democrats also wrote this spending cap, and once again, it is no spending cap at all.  The Governor is promising that Proposition 1A will solve the budget problems of the future, just like he promised that Proposition 58 would solve the budget problems in 2004.  The Governor, who asked for a spending cap then, capitulated to the Democrats demands for a "balanced budget inititative" which, of course, turned out to be no spending cap at all.  Again, in this budget debate, the Chief Capitulator collapsed again, and agreed to tax increases from the Democrats for a fake spending cap.  No amount of justification or analysis can change the facts.  Proposition 1A is no spending cap at all.

How can you tell?  Compare it to Gann.  Gann was simple.  The growth formula was set in law, and based on population growth and inflation.  It was easy to determine.  This cap is based on historical spending patterns (over the last ten years, the fastest growth in spending in the history of the state), and has a number of exceptions and allowable spending catagories.  Analyzing its true effect is difficult because it is based on spending patterns, unknown factors, and legislative action by a legislature that has proven itself to lack all self control.  No one can point to a number and say "Spending will not exceed that amount."  With Gann, that was available.  This is too complicated, too convoluted, and too full of holes to be an effective limit.

The whole budget deal was a bad deal.  As usual, the Republicans who voted for the tax increase got nothing for their vote.  They got words, but no substance.  They cut the deal that Republicans always cut, a bad one.  The whole thing should be trashed, and we should start over again.  At the very least, we need to reject the Propositions.  Maybe then, they will get the message.

Care to comment on this post?  You can do so on its abbreviated entry on the FR blog here.

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