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Herdt: Folding a winning hand?
A budget game that should be over drags on
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Imagine you're playing a game of Texas Hold 'Em and when the last card, known as the "river" card, is dealt it gives you three-of-a-kind — a sure winner.
What do you do?
Lay down your hand and rake in the pot, or tell the dealer to keep turning over cards?
If you live in the real world, you gladly take your winnings.
If you live in Sacramento, you apparently just keep playing the game.
That's as good an analogy as any to explain what's happened at the state Capitol since Gov. Arnold Schwarzenegger last week proposed a "compromise" budget plan that included a temporary sales tax increase and budget reforms that have real teeth but would not hamstring future state policymakers.
For Republican lawmakers, who have long sought such reforms, Schwarzenegger's play should have been the equivalent of drawing an inside straight.
For a relatively small concession, given the monstrous size of the state budget shortfall, here was the foundation of a deal that could deliver for Republicans one of their primary goals — reforms that would force the Legislature to put money aside in good economic times rather than reflexively use the windfall to grow government programs.
One person who got the significance of the proposal was California Chamber of Commerce President Allan Zaremberg, an old Sacramento hand who has been fighting these budget battles for decades.
"Out of adversity comes opportunity," Zaremberg wrote in an essay published on the Flash Report, an online political site run by and for California conservatives.
Schwarzenegger's proposal, Zaremberg noted, looked like a winning hand. It created the opportunity "to guarantee a mandatory budget reserve, to limit the growth of government and permanently reduce the state's tax rate."
But GOP legislative leaders didn't see it that way.
They rebuffed the governor, saying he had "walked away" from Republican principles.
The Democratic response wasn't any more encouraging. They didn't seem much interested, as Schwarzenegger suggested, in making another $2 billion in spending reductions on top of the $9 billion they'd already made. And they worried that a temporary tax increase, followed three years later by a permanent tax reduction would eventually leave the state in worse financial condition than it's in now.
Democrats, too, didn't seem to recognize that Schwarzenegger had dealt them a winning hand — a long-sought concession that it will, in fact, take a tax increase to close the remaining gap in this year's budget.
What are some things these lawmakers are not reading in the cards?
— "Temporary" means "temporary." This state tax hike would expire in three years unless the Legislature, by a two-thirds majority vote, acted to extend the increase. That doesn't mean the tax increase couldn't be extended, but it does mean that future lawmakers and a future governor would be accountable for any decision to extend it.
— "Permanent reduction" in rate does not mean "permanent reduction" in revenue. The basic statewide sales tax rate is now 7.25 percent. Schwarzenegger said he wants to see it go down to 7 percent three years from now. But he also said that he'd like to see by that time a change in tax laws that would subject some services to sales taxes. A lower rate over a broader tax base could produce the same amount of revenue.
— An achievable spending limit. Republican lawmakers would dearly love a hard spending cap that would limit increases in state spending to no more than increases in population and inflation. But when Schwarzenegger put a proposal for a less severe spending limit before voters in 2005, they rejected it by the largest margin of any of his special-election proposals: 62 percent to 38 percent.
Inevitably, hard spending limits bump up against the voters' desire for greater spending on public schools.
Schwarzenegger's proposal to require that 3 percent of the general fund be placed into a rainy-day surplus each year would not necessarily prevent school-spending increases. Just as important, it would not create a hurdle for future legislators, governors and voters who might want to increase revenues in order to fund significant new investment in education.
The governor's plan would deter future spending increases and divert unexpected surges in state revenue to the rainy-day fund, but still provide the kind of flexibility that voters could probably live with.
As Zaremberg wrote, "The governor's framework may provide a unique opportunity to establish some much-needed and lasting budget reforms."
To somebody who knows how to play his hand, that would be a signal to cash in his chips and go home.
— Timm Herdt is chief of The Star's state bureau. Read his political blog "95 percent accurate*" at http://www.TimmHerdt.com.
Posted by KatieTeague on August 27, 2008 at 8:29 a.m. (Suggest removal)
The budget fiasco is an embarrasment and we can thank the minority up in Sac that keeps prolonging the process. Unfortunately, due to the "safe" districts none of these people are accountable to their constituency.
Well, this is one Republican constituent who is sick and tired of the fiasco - get a move on and get the budget going!!!!!
Posted by Scapegoat on August 27, 2008 at 9:17 a.m. (Suggest removal)
But Katie, How do you deal with the libs in Sacramento? They have no brakes on their spending. How does a distinct minority deal with that? Safe districts indeed. I know your supporting Prop. 11, as I am. That appears, at this time, to be the best remedy.
Posted by KatieTeague on August 27, 2008 at 9:57 a.m. (Suggest removal)
I agree 100% - the citizens are not being represented by either party. Maybe that is why the Decline to State voter block is now at 18% and voter turnout continues to decline.
The passage of Prop 11 - Redistricting will go a long way to rectifying the current disinterest elected officials have in their constituency.
Posted by cassandra2 on August 27, 2008 at 9:58 a.m. (Suggest removal)
The minority have too much power to hold up the process, as the state's constitution is now constructed. Redistricting would be useful but the fundamental problem is it takes too many votes to tax and to approve the budget.
Posted by KatieTeague on August 27, 2008 at 11:20 a.m. (Suggest removal)
I agree with you Cassandra2 but redistricting would at least bring some competitive behavior back. Taxing/spending/cutting would at least have some vote ramifications.
Posted by nelsonknows on August 27, 2008 at 2:02 p.m. (Suggest removal)
Notice that NO ONE in Sacramento will touch the fact that we've been spending BILLIONS on illegal aliens for years. Illegals aliens deserve NOTHING in this country, no benefits, no health care, no jobs, NOTHING and I'm way past tired of paying taxes to support criminals.
Posted by HotModernMom on August 27, 2008 at 4:06 p.m. (Suggest removal)
cassandra2 - if it was not for the "too many votes to tax" provision you disagree with (the 2/3rd majority to raise taxes) our taxes would have been raised a long time ago, and the libs would still be complaining that taxes are still not high enough. In fact, the states revenues are up 24% since Arnold took office and they all still want more money to spend. I work too hard for my money to have it wasted by Sacramento politicians (that goes for D.C. as well)
Posted by ebrockway on August 27, 2008 at 7:55 p.m. (Suggest removal)
cassandra2;
You kidding? A 2/3 majority is too high to raise taxes? Try getting that kind of majority for anything, much less raising taxes on a people already paying the 7th highest;
http://www.taxfoundation.org/taxdata/...
When is it finally going to be enough? How about too much?
They scream in Sac "We can't do it, we need more tax money!". Ok, we cave and give it to them. Then "Yipee!" they start increasing spending on their individual "pet" projects, couple years later they scream in Sac "We can't do it, we need more tax money!". Give it to them again? What?
How much is too much? 10% on someone making $44,000 too much on top of fed taxes? Well it's close to that now! AND they want to trash the Child Tax Credit (have a child or two?), do away with mortgage deductions (own a house?). Did anyone mention to those losers we elect repeatedly that people are already losing homes left and right? Oh yeah, raise taxes again and bail them out, then raise their income taxes and put 'em under again!
This is insane! And I watch in shock as people march like lemmings toward the darkness that some politician said was the light.
Prop 11 huh? Got a link? Yeah, I'm skeptical. Getting a little sick of being lied to by Sacremento (and those who commute daily between LA and Sacremento on private planes).
Posted by KatieTeague on August 27, 2008 at 9:39 p.m. (Suggest removal)
I just posted the following on the Star hosted Brian Dennert blog. It was news to me that she endorsed it though others have said she has always been in support of it.
Now this is exciting news! I just found it over on Political Watch Central Coast.
www.politicalwatchcentralcoast.org
"19th State Senate candidate Hannah-Beth Jackson endorses Proposition 11"
CAPC is a strong supporter of Proposition 11 - Redistricting.
As she so accurately points out “Competitive elections are the lifeblood of democracy,” Jackson added. “The public interest is lost when incumbent politicians cannot lose."
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