How budgets get done -- or not

Posted: Jul 22, 2003 12:00 AM

SACRAMENTO, Calif. -- Pontificating in his Capitol office Tuesday morning, California Assembly Republican Leader Dave Cox succinctly assessed the budget situation. "Speaking for the Republican side of the aisle, we believe that the government spends more than it takes in. Our friends on the other side of the aisle believe that we have a revenue problem."

Spending did rise hugely under Gov. Gray Davis (as did tax relief). In 1999, Davis signed a $79 billion budget (and decreased the auto-license fees as part of a budget agreement made during Gov. Pete Wilson's last year). Two years later, he signed a $100 billion budget. State spending rose 37 percent in four years. The dot-com tax revenue dried up, but dot-com-level spending remained.

If voters should learn anything from the state's record $38 billion budget shortfall, Cox believes, it should be, "One party rule doesn't work."

Alas, the GOP has failed to come across as the party with a serious solution. Tuesday afternoon, Senate Republicans voted on their own budget proposals. Senate GOP leader Jim Brulte patted the Rs on their collective back for not raising taxes. True, the GOP bill did target some egregious small-ticket boondoggles. But in the name of cutting spending, the GOP also tried to raise spending by restoring Democrat-proposed budget cuts in the over-protected Department of Corrections. The net "savings" added up to just $2.7 billion. Bottom line: It wasn't a serious effort. They didn't even pass their own bill. None of the Senate's 25 Democrats voted for the measure. Worse, two of the Senate's 15 Repubs failed to support it.

Even some Democrats concede the GOP may win its quest to get a budget passed without a tax hike -- that is, other than the $4 billion car-fee tax raised administratively by Team Davis in June. Legislators have seen polls that show that voters oppose essentially any tax -- unless it squeezes smokers or rich people.

But Gov. Gray Davis told me he anticipated a budget with "a new revenue source" to finance borrowing $10.7 billion to help balance the budget, the most bandied-about source being a temporary half-cent sales tax.

After the Senate vote, Senate President Pro Tem John Burton spoke to me in favor of higher taxes. I mentioned the polls on taxes.

"So what?" Burton boomed. "People would repeal the Bill of Rights if you put it on the ballot."

This is important because the buzz in the building says that only Brulte and Burton have the juice to cut a budget deal. Forget the Big Five budget negotiators: Say hello to the Big Two.

The Big Two are now $2 billion apart -- and Brulte spokesman H. D. Palmer insisted, "I don't know how much clearer Republicans can possibly be in their statement that they're not going to support a budget predicated on a tax increase."

I called former Gov. Wilson to ask what he would do in similar circumstances. Indeed, Wilson found himself in similar circumstances -- although Wilson is quick to point out that he inherited his $14 billion shortfall when he was elected governor in 1990.

To start, Wilson rejects the move to borrow $10.7 billion to balance the budget (an idea first proposed by Republicans, Davis noted). "Essentially what they're doing is violating the constitutional prohibition against deficit spending," Wilson explained.

After prolonged negotiations with Democrats, who wanted borrowing instead of spending cuts, Wilson agreed to cut spending by $7 billion and raise taxes temporarily by the same amount.

When Republicans balked, Wilson made it clear they'd have to cut school funding -- and take the heat for it -- to prevail. And that's how he got the budget done.

Wilson told me he advised the newly elected Davis that "this Legislature requires a strong hand. They will be utterly irresponsible without the governor constraining them and will spend all the money they have and more, if you let them, so you can't let them."