Gov.’s Trust Is Limited

Gov. Arnold Schwarzenegger has crafted a political career around the notion that voters know best. “Trust the people,” he said in his State of the State address.

But to Schwarzenegger, some decisions by the people appear less equal than others. Three ballot measures passed by California voters have become inconvenient to the governor as he tries to balance a budget that has an $8.6-billion shortfall.

Those propositions require a certain level of spending on schools, guarantee money for roads and freeways, and impose government spending restrictions that Schwarzenegger himself promised would forever end the state’s money problems.

But the governor wants to tinker with those laws this year, causing Democrats in the Capitol to question his commitment to the people -- and to agreements he made with legislators just a year ago.

“He is extremely schizophrenic in his behavior,” said Gale Kaufman, a Democratic political consultant who works with the Legislature. “I’m not sure anybody knows yet which version of reality they should be dealing with.”

Schwarzenegger’s populist rhetoric could not be clearer. He is consistently enthusiastic about the people of California, whom he thanked in his State of the State address for saving “the state from bankruptcy” by passing Proposition 58, his 2004 measure on spending restrictions.

If the Legislature fails to fix the government even further, he said in that speech, “the people will rise up and reform it themselves. And I will join them. And I will fight with them.”

Days later, when he unveiled his proposed 2005-06 budget, Schwarzenegger suggested undoing or modifying the three voter-approved measures:

* Proposition 42, which requires the sales tax on gasoline to be used to build roads and fix freeways. Schwarzenegger says he wants to borrow $2.6 billion from that fund over two years -- delaying scores of transit projects and angering transportation experts.

The measure passed in March 2000 with 69% of the vote. It passed in each of California’s 58 counties.

“That is a very strong will of the people,” said Michael Lawson, executive director of Transportation California, a coalition of business and labor groups. Now, Lawson added, “The only way you are going to get around the state’s transportation infrastructure is either Hummer or Learjet.”

* Proposition 98, approved by voters in 1988, which set up a formula for ensuring that schools get a big chunk of the budget. Few initiatives are more politically charged than this one. During his campaign for governor in 2003, Schwarzenegger promised that it would be changed “over my dead body.”

Now, he has proposed giving California schools $2.2 billion less than the Proposition 98 formula requires. School groups are livid; they say he reneged on a deal.

“Trust the people, he said,” Barbara Kerr, president of the 335,000-member California Teachers Assn., said. “Prop. 98 was passed by the people to make sure education had a minimum guarantee of funding.”

* Proposition 58, the budget-balancing measure Schwarzenegger crafted with lawmakers last year. In exchange for their support, he told Democrats there would be no hard cap on government spending. Proposition 58 passed with 71% of the vote, and Schwarzenegger declared: “Never again can our state spend more money than it takes in.”

The optimism didn’t last, however.

Schwarzenegger’s proposed budget contains automatic across-the-board cuts to kick in any time that tax revenues won’t pay the state’s bills. It’s exactly the thing Democrats say they didn’t want and were promised they wouldn’t get.

The governor hasn’t said it, but implicit in his plan to bypass certain propositions is the notion: Sometimes the people make mistakes.

The governor’s office said voters made a clear choice when it came to Proposition 42, but the budget shortfall is forcing a temporary shift.

Proposition 98 is far more complex, however, said Schwarzenegger spokesman Rob Stutzman. He described it as a web of formulas that under certain circumstances forces the state to spend more than it can afford.

“There was not necessarily a mistake made by the voters,” Stutzman said. “The governor is just asking, ‘Did you clearly understand this element of Prop. 98?’ He’s going back to the people and asking them, ‘Do you want to fix it?’ ”

In a news conference after releasing his budget, Schwarzenegger said he sees government spending dictated by formula as “autopilot” spending and “the elephant in the room.” Such a budget system “has removed our ability to make the best decisions for California.”

He offers a solution: more voter-approved laws, ones more in line with his views.

Larry J. Sabato, director of the Center for Politics at the University of Virginia and editor of a book on initiatives, described Schwarzenegger’s style as “elite direct democracy.... It’s ‘Trust the people, after I have informed them.’ ”

Schwarzenegger’s allies in the business community are writing a series of government changes intended for the ballot. He has asked the Legislature to write its own ballot measures on the same subjects: merit pay for teachers, a new way to draw voting districts, the automatic spending cap and a new pension system for state workers.

Some political analysts say altering the state budget process through the ballot can be deadly. There are unintended consequences. Details get lost. Circumstances change. It’s difficult to change ballot initiatives after they’ve been passed.

“They end up mandating inflexible rules for a process that to be successful must always be flexible,” Sabato said. “That is the problem: These things are bad ideas that sound good.”

California voters have been fiddling with the state budget since tax-limiting Proposition 13 passed overwhelmingly in 1978. Since then, voters have approved billions in bond debt despite multibillion-dollar budget shortfalls. They have raised taxes, limited taxes, approved spending caps, broken spending caps, forced spending on specific government programs and limited spending on others.

A big question this year will be how much Schwarzenegger intends to compromise on the ballot measures being crafted by the Legislature.

Or will he, in the end, rely on the initiatives being written by Citizens to Save California, a group of his allies in the business community?

He has started negotiations with the Legislature on the spending cap without much room for compromise.

Speaking about his proposal last month, Schwarzenegger said: “The only thing is that this formula doesn’t leave any room.... As soon as our spending goes above revenues, we have to cut across the board, because we have to live within our means.”

The governor also wants to remove the flexibility from Propositions 42 and 58. He is proposing a constitutional amendment that would prohibit the Legislature and the governor from ever raiding transportation funds from Proposition 42 -- after he takes from it one more time.

Similarly, Schwarzenegger has proposed eliminating the state’s ability to bypass Proposition 98 in the future. It’s a change school officials would like to have now, not after he borrows from the schools again this year.

Democrats and others see inconsistency here: Isn’t the governor himself proposing “autopilot” spending? Aren’t his across-the-board cuts -- blind reductions to be made throughout government services in a crisis, without distinction for priorities -- autopilot budgeting?

The state legislative analyst, Elizabeth G. Hill, said in a report last week that Schwarzenegger’s budget-cutting formulas would be “a serious diminution of the Legislature’s authority to appropriate funds and craft budgets.”

The governor says he is not opposed to formulas when they are applied to the budget. Schwarzenegger said he wants budget-cutting that is “fiscally responsible -- formulas that make us spend money and live within our means rather than formulas that make us always spend $1.10 on every $1.”

He did not mention, however, an initiative he conceived and campaigned for in 2002. It was his biggest political accomplishment before being elected governor. That initiative -- Proposition 49 -- requires more than $500 million in spending on after-school programs if the state budget increases.

The spending is expected to start automatically in 2008.