FLASHREPORT

THE CURTAIN RAISES ON THE 2008 LEGISLATIVE YEAR

An exclusive column penned by FlashReport State Capitol Correspondent Dan Schnur.

Arnold Schwarzenegger and Don Perata don’t like each other very much. Unlike Arnold’s strong personal relationship with Perata’s predecessor as Senate leader, John Burton, or his growing rapport with Assembly Speaker Fabian Nunez, the governor has never been able to bond with the irascible Perata, much to the detriment of both men and their respective political agendas.

But as Arnold’s Year of Health Care Reform oozes into its thirteenth month, Perata is now poised to do a huge favor – albeit unintentionally -- for Schwarzenegger. When Schwarzenegger and Nunez joined hands to pass health care reform legislation out of Nunez’s Assembly last month, Perata went out of his way to throw cold water on both the package’s substantive attributes and political prospects. When he grudgingly agreed to Senate hearings in early 2008, it was widely assumed that he would hold Arnold’s policy priority hostage, and would agree to send it forward only in exchange for concessions from the governor on budget, water or term limits considerations.

Of course, the Schwarzenegger-Nunez health care plan doesn’t become law simply as a result of Senate approval. Because of fierce opposition from legislative Republicans, the billions of dollars needed to fund the package can only be made available by a vote of the California electorate. Given the difficult history of past health care ballot initiatives here, the overwhelming defeat of a similar measure last year in Oregon, and the deep-pocketed interests preparing to spend millions of dollars to defeat the governor’s plan this year, prospects for passage are doubtful at best.
Schwarzenegger has other priorities to accomplish this year as well. It’s clear he’s interested in playing some type of role in the presidential election, and he has not yet given up on possible ballot measures on water policy, transportation, and redistricting. Despite the obstacle of a difficult budget season, he intends to move forward on an education reform package, and the budget itself will become an almost all-consuming matter for him in the months ahead.

So let’s assume that the governor is not going to get health care reform in 2008. Given the choice of a loud, noisy and expensive defeat on the November general election ballot, or a quiet death in a Senate subcommittee in February, it’s clear that Schwarzenegger’s other policy and political goals would be better served by clearing the decks of health care as early as possible. So when Perata puts the governor’s bill into deep freeze, he may end up unintentionally doing Arnold’s dirty work for him.

The result would be to allow the debate over the state budget to have center stage in Sacramento all to itself. Schwarzenegger doesn’t deserve blame for the state’s real estate meltdown any more than he deserved credit for the economic expansion that helped him through his first years in office. But as the man in charge, it’s his responsibility to deal with it. Ironically, his own previous actions (promises not to raid local government funds, agreements with the higher education community, Proposition 57 restrictions, etc) will make it harder for him to paper over the deficit than it had been for his predecessors. And in addition to relentless demands from the Democratic legislative majorities to raise taxes, he will be fragged just as relentlessly by Republican members for not doing more to rein in state spending during the boom years.

So far, Schwarzenegger is doing the right things. He’s declared a budget emergency designed to force early legislative action upon their return to the Capitol. He’s begun to lay the groundwork for a long-overdue discussion of reform of the budget process and plans to renew his push for public-private partnerships for a range of government services.

Most importantly, he’s made it clear that this budget can be balanced without raising taxes. Whether he can sustain that position through a long spring and summer of budget negotiations is an open question, and there are doubts in both parties about his stomach to fight for unpopular spending cuts. But as the debate begins, he’s lined up squarely against the need for tax increases, a position that will require months of hard work to convince voters reducing government spending is the better of the two alternatives.

Even a salesman as talented as Schwarzenegger can’t pull that off by himself.  So this puts the Republicans in the state legislature in a critical position. If Arnold is going to win the taxes vs. spending argument, he’s going to need plenty of allies. In the past, the Assembly and Senate GOP caucuses have devoted much more energy to making the case to voters against tax increases than on behalf of the difficult process of shrinking or eliminating government programs. If Schwarzenegger is going to maintain his current position all the way to budget resolution, Republican legislators must commit themselves to a year-long public campaign on behalf of budget discipline and spending reductions. The determination that Senate Republicans demonstrated last August must begin in January: it must be public and it must be loud.

Schwarzenegger may be able to take the first steps toward meaningful school reform this year, even if the process is not completed until the next economic expansion. There are decent prospects for compromise on water and transportation policy. And maybe a smaller children’s health program can be a face-saver for everyone involved.

But for the most part, this year is going to be about the budget. With three years left in office, the difficult decisions that Schwarzenegger makes now can have the state in calmer fiscal waters before he departs in 2011. But even Arnold needs allies – both responsible Democrats and a number of Republicans willing to put aside the temptation to say “I told you so”. This may not be the definition of post-partisanship that Schwarzenegger originally intended, but it’s the best alternative available in a budget fight that’s likely to be nasty, brutish and long.