California’s broken budget

The latest refrain in Sacramento’s inner wonkdom is that it’s time to eliminate the “big five” system, under which the governor and the majority and minority party leaders in each house of the Legislature disappeared behind closed doors to cook up the state budget deal late last month.

It is a crummy way of doing business. Once again, the budget was concocted with no review, hearings or access for any outsider (except, it seems, for a couple of lobbyists). Just five people in a room. The result, a sausage of untested ingredients designed to temporarily close a $42-billion deficit, was arguably better than continued stalemate, but not much.

When the deal was finally struck, attention went to the $15 billion in spending cuts for schools, healthcare and the poor; to the deal’s $12.5 billion in income tax and sales tax increases and other revenue hikes; and to additional borrowing -- but not to the hefty business tax cuts, amounting to $1.5 billion in later years.

The deal includes six ballot measures, to go to the voters May 19, imposing a complicated constitutional budget spending cap, changing the Proposition 98 school funding guarantee, authorizing raids on tax revenues that voters had approved for preschool programs and mental health services, and borrowing $5 billion from lottery revenues.

Those measures all come with Orwellian titles and summaries: The raid on the lottery is called the Lottery Modernization Act; the raid on the mental health money “ensures children’s mental health services”; the spending cap is the Rainy Day Budget Stabilization Fund; the raid on children’s programs is titled Children’s Services Funding. In legis-speak, to cut is to protect, to borrow is to modernize.

Gov. Arnold Schwarzenegger, campaigning in Fresno last week to get those measures passed, lauded the Legislature for an agreement that “had the Democrats and Republicans work together.” One of the people he singled out as a “great warrior” for the budget was David Cogdill.

What he neglected to mention was that Cogdill, who was the Senate GOP leader, got dumped by his caucus for supporting the deal. Also unmentioned was the fact that all that “working together” yielded just three Republican votes, the bare minimum needed, in each of the two houses.

On signing it, the governor line-item vetoed another $500 million from the University of California and the California State University budgets. He didn’t say anything about that at his campaign stop, much less about the effect of the budget on California’s already underfunded K-12 schools and community colleges.

Two more problems: There’s still the question of whether voters will approve the six ballot measures. And though it’s true that federal stimulus funds -- eventually expected to come to about half of the $15 billion in budget spending reductions -- will mitigate the cuts, they won’t be nearly large enough to offset them.

What’s therefore increasingly probable is that the budget deal so painfully achieved will unravel by May and have to be repackaged once again. What’s even more probable -- indeed, near certain -- is that the Mississippification of California’s public services and governmental policy, in progress for decades, will get even worse. Even now, California’s college graduation rates are among the lowest in the country, our per-pupil funding of K-12 education is about 34th among the states, and 47th as a percentage of personal income. Our roads, once a model for the universe, are rated among the worst in the U.S.

There have been almost as many diagnoses of our budget ailments as there are doctors. But there’s at least tentative agreement that the problem is in the structure of a convoluted supermajority system that, in the gridlock between Republicans and Democrats, and between the voters’ demands for services and resistance to higher taxes, has led to years of borrowing, fudging and deferrals that have now left the state with nothing but bad choices.

The governor is right in saying, as he did again the other day, that California has “a disastrous kind of a budget system; not any state in the Union has a terrible system like this.” Three days before the Fresno event, there was a conference in Sacramento of reform-minded activists to discuss the calling of a constitutional convention to fix not only the budget process but the whole dysfunctional California governmental system.

Whether such a convention is advisable or necessary is debatable, but the Sacramento conference was a strong indicator of the wide consensus that a lot was broken. Among the prime candidates for reform:

* The two-thirds-vote requirement in each house of the Legislature to pass a budget or raise taxes, which gives political minorities an effective veto and badly clouds accountability. California is one of the few states to have such requirements, and the only one to have both.

* Ballot-box budgeting -- the practice of putting spending measures on the ballot without a corresponding revenue source to pay for them -- which continues to drain the general fund and impede rational budgeting.

* Unreasonably tight legislative term limits that reduce legislative experience and long-term perspectives. When a politician is limited to six years, he or she doesn’t have much interest in the long-term consequences of today’s actions.

* An initiative process, again rare among the states, that allows no amendments by the Legislature or sunsetting of ballot measures once they’re passed, except by another act of the voters.

The list could be extended almost indefinitely. But what’s certain is that the muted cheers in Sacramento were fearfully premature. The budget deal solved almost nothing.

Peter Schrag, the former editorial page editor of the Sacramento Bee, is the author of “California: America’s High-Stakes Experiment.”