Monday, September 22, 2008

Day 84: CALIFORNIA’s BUDGET – Everyone is a Winner AND a Loser

by Jon Fleischman -Publisher  FlashReport | Fleischman is Vice Chairman (South) of the California Republican Party.


9-22-2008 8:36 am -- As Governor Schwarzenegger prepares to sign the California State Budget, we hear at the FlashReport are prepared to say that everyone involved in the process were winners AND losers.

The winners:

Legislative Republicans, led by Senate Republican Leader Dave Cogdill and Assembly Republican Leader Mike Villines, draw a bright line in the sand and said that the problems caused by massive over-spending in state government WILL NOT be resolved by increasing taxes on Californians. In the face of Democrats who made as a top priority a hike in the state's income taxes, and a Governor of their own party pushing a multi-billion dollar sales tax increase, GOP legislative solidarity won the day.

Legislative Democrats, due to their gerrymandered majority, managed to get through this budget season without a serious overhaul of California's government. Decades of dominance by liberals in Sacramento has grown state government into a grotesque and massive one - in need of serious reforms. Despite all of the hoopla, this new budget spends MORE than last year's - a testament to power of a party committed to growing government.

Governor Schwarzenegger's budget reform measures, after some political muscle-showing, were ultimately placed into this final package - which is to say that it will be placed before the voters (where presumably public-employee unions will pony up millions to try and kill it). While these reforms are short of the kind of absolute spending cap that is needed to reign in the insatiable appetite of Democrats to increase spending, they are certainly a step in the right direction.

Only in California are the winners also the losers...

The big loser was Arnold Schwarzenegger. First and foremost, the Governor demonstrated that his form of flip-flop governance only made him less relevant to the process. While he ultimately got a last-minute demand for some budget reform in the final budget, the only reason there is a budget is because eventually legislative leaders correctly saw the Governor as a nuisance and ineffective in putting together a budget deal. We'll write more on this in the weeks to come, but if the Governor wants to be relevant, he needs to be a part of a team, as opposed to trying to be all things to all people (or nothing to anyone, depending on your perspective). His gross violation of his no-new-taxes pledge has taken his credibility with the California political community, especially Republicans, to an all-time low.

The failure to increase taxes makes California Democrat legislators losers. Clearly Democrats were backed off of a strongly desired tax hike (or as they call it, "revenue increases") as part of a budget solution. They also caved to the Governor's demands for budget reform. Perhaps they are the biggest losers because this year's successful play by the GOP to fend off tax increases pretty much means no new taxes in the foreseeable future. Assembly Speaker Karen Bass was widely looked at as ineffectual and a "B" player in budget negotiations, with the more seasoned and spirited (despite being term-limited) Senate President Don Perata being looked at as the "King Fish" of the left.

Finally, legislative Republicans, despite the win on the tax issue, were forced to put up votes for a budget that increases total state government spending, fails to really include real reforms of the process, and largely continues the status-quo of California's modern-day welfare state. It is unclear if, given the partisan make-up of the legislature, any budget deal could have been better. But it doesn't change the fact that when you get passed the hoopla of holding the line in taxes, no Republican can be proud of the vote they were forced to cast on this budget.

No comments: