What Happens on May 20 After the Ballot Measures Fail

There is an election one week from Tuesday and the electorate is angry.  And the electorate has every right to be angry. 

According to a recently released survey from the Public Policy Institute of California (PPIC), Californians are extremely pessimistic about the California economy, give the governor and legislature approval ratings that hover near record lows, and show less trust in state government than they have ever before. The PPIC survey found that a mere 16 percent of likely voters say they can trust the government in Sacramento to do what is right.   And they think the nation as a whole is in better shape than California.

One can make a good argument that neither party has done a good job of governing here.  And we need to be clear, both parties share some blame.  The Democrats control the legislature with just over 60% of the seats, but given the structure of government that’s not enough to actually govern.  They need two to three Republicans to join them in both houses of the legislature and they need to the Governor to join them.  That proved next to impossible in February.  It’s not going to get any easier after the Republicans took retribution deposing their leaders in both houses that made deals with the Democrats.
However, we also need to recognize that the two-thirds rule makes California ungovernable at this point and the ballot initiative process makes it even more difficult to get budgets under control.
It is against this backdrop that there will be an election held on May 19, 2009.  The election will codify the February budget deal that we already know is out of whack by anywhere from $17 to $23 billion.  And perhaps it is so out-of-whack that it no longer matters if the election succeeds or fails.  Yesterday we already showed what will happen to education in California and locally if the election fails.

A few days ago, the San Jose Mercury News had a pretty decent editorial on the election, “Editorial: Don’t be angry; be smart and pass most of the May 19 propositions.”

“So, you’re furious at Gov. Arnold Schwarzenegger and the Legislature for running up a mammoth deficit, and you’re frustrated that they’ve passed the buck – actually about $20 billion of them – to you. So, if the polls are right, you’re either going to sit out this election or vote down the propositions on the May 19 ballot out of spite or just plain contrariness.”

That pretty much sums it up.  But there are consequences for your actions.

“But wait. There are no free passes in a democracy. Just saying no to the reasonable budget compromises on the ballot will come back to bite you big time. “

But they make the good point that the voters are as much part of this problem as the politicians.  How can this be?

“Over the decades, initiatives you’ve passed have taken huge portions of the budget out of the Legislature’s hands – and then tied those hands by demanding that budgets be passed by a two-thirds majority. You tell pollsters you’re against raising taxes but don’t want to cut money for kids or take away meds from the elderly. No wonder only Rube Goldberg could love a state budget.”

This is a point that is rarely made–people love to put the blame on politicians and official Sacramento for our mess, but rarely do they accept their own responsibility.

“The Legislature and the governor should have solved this mess on their own,” we hear you saying.

Perhaps. But the reason much of their solution requires your approval is that it would change initiatives that you passed. For example, Proposition 1C, borrowing $5 billion from the lottery, changes the 1984 initiative creating it. Even in an emergency, legislators can’t alter what you created unless they get your approval. We say give it to them – except for Proposition 1D, which would go too far in dismantling excellent children’s programs funded by the tobacco tax.

They continue:

“Prop. 1A, setting up a rainy-day fund, is incomprehensible,” you say.

No argument there. But we’ve studied enough analyses to be convinced that the controls on state spending would be effective without being oppressive.

They address my concern that the economic downturn makes the propositions irrelevant at this point:

“But these propositions won’t even solve the budget mess.”

True. The economy has worsened since the Legislature passed its $40 billion package of cuts and tax increases in February. There’s a projected $8 billion deficit even if the measures pass. But things will get downright hellish if most of them go down: a loss of $6 billion immediately and an additional $16 billion a year later if the Proposition 1A rainy-day fund, which is tied to temporary tax increases, loses.

There is also an overriding sense that as bad as things are, we will survive and this will somehow force us to make the kind of changes needed.  The structure is not set up for that to occur and the Republicans have of course taken retribution against their leadership for compromise.

“Oh, we’ll get by. We always do. All the TV ads are hype.”

This time will be different. Billions of dollars would be cut from schools and community colleges. The state would withhold money from already besieged counties and cities. On Thursday, the Legislative Analyst predicted a cash crisis that could bring state spending to a standstill this summer.

“Let the props. lose anyway. We’ll finally cut spending to the bone,” you say if you’re a Republican. Or, if you’re a Democrat – “We’ll get voters to get rid of the cursed two-thirds requirement to pass a state budget.

We say: Brinkmanship is a dangerous game waged at the expense of students and the poor.

On Thursday, Assembly Republicans bounced their leader, Mike Villines, for the sin of compromise. Sides are hardening in the Legislature. Only you can head off the worst by passing the majority of the propositions and pulling the state back from the edge.”

I actually have not decided what I will do.  I go back and forth on this.  I think there are good arguments made on both sides primarily because both ways to go are almost equally bad.

I read our friend Wu Ming’s argument against Prop 1A with keen interest.  I often agree with him on such matters.  He certainly represents the view of much of the left.

“No on 1a. Send them back to the drawing board until they come up with a decent budget. If they can’t come to a decision on a budget yet again, the Democrats should call the CA GOP’s bluff and put forth a bunch of ballot initiatives to get rid of the asinine 2/3 requirements for both budgets and taxes, raise taxes on those making millions even in today’s crappy economy, strip commercial and corporate real estate from prop 13’s rolls, legalize pot and tax the heck out of it, and put a severance tax on oil like they do in liberal states like Texas and Alaska so that the state of California gets some benefit from the lucrative natural resource that gets pumped out from beneath our soil and then sold back to us.

And if Schwarzenegger tries to veto that, then force a recall election with those initiatives on the ballot. After all, it was good enough for Gov. Grey Davis, with a budget with a fraction of the service cuts or revenue shortfalls as the last several budgets under Arnold.

But for God’s sake, people, don’t make things worse just because they threaten to cut everything. I’ve been through this game before, and I’m getting tired of it. “

That all sounds good but let’s draw this out a bit.  As we reported yesterday, the LAO’s latest report suggests California will run out of cash on July 1.  That will force California to cut programs immediate.  If the budget battle were to get prolonged again, the state could not borrow money to keep going–it may not be able to even if does pass, but that will be certain.  The only solution is cuts, cuts and more cuts.  That is a fact.  Everything that Wu Ming suggests, I agree with as a long term solution, but we have to understand that none of that is going to solve the short-term cashflow problem that hits on July 1.

Remember everything that was going to happen in February if the budget was not passed–that will now happen this summer.  That means a halt to infrastructure jobs, a halt to health care for the indigent, a halt to funding for counties, possibly a halt to funding for education, certainly huge amounts of state job cuts, etc.  If you were to lose your job, there would be a very good possibility that you will not get unemployment insurance.

The soonest you could get a ballot initiative on the ballot to lower the two-thirds requirement would be November.  If you win, it would impact us next year.  Meantime we would have to find $23 billion, at least, in cash to keep the state going.  I am sorry, while I agree with all of that, it is at best a longer term strategy.

I would love to hear what Wu Ming proposes we do about the cash flow problem that will hit as soon as 40 days after the election.

The ballot initiatives are going down.  There is little doubt about it.  The only question at this point is how much of the state is going down with it and when it will impact something that people actually care about.

People like to speak in generalities, I’d love to hear the specifics about how people suggest we fix this.  I’m all ears.  But you have to address actual problems starting with how to get enough cash July 1 to keep the state from shutting down or at the very least coming to terms with what it will mean if the state does shut down.

—David M. Greenwald reporting

About The Author

David Greenwald is the founder, editor, and executive director of the Davis Vanguard. He founded the Vanguard in 2006. David Greenwald moved to Davis in 1996 to attend Graduate School at UC Davis in Political Science. He lives in South Davis with his wife Cecilia Escamilla Greenwald and three children.

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16 Comments

  1. martin

    Bankruptcy is the option. That will allow the State to change some laws and contracts that otherwise won’t be passed by the Legislature. If you reduce the number of legislators necessary to pass budget related legislation, you will just be giving money to the Democrats’ supporters, there will be no incentive to institute a reasonable budget.

    The answer is for the State controller to issue a copy of the budget with each program clearly identified with the total annual costs. If the State is funding programs, the voters need to know what their money is being spent for. Then, the debate can begin. Currently, the Governor is asking the voters to give him money and trust him to spend it reasonably.

    The voters did recall Grey Davis when Schwarzenegger promised to balance the budget. Then the voters voted for the initiatives that Schwarzenegger said would prevent another budget crisis from ever happening. Then, Schwarzenegger proceeded to spend wildly with no reductions. He never made any budget cuts. That is why the voters don’t believe any of the arguments being made to pass the current set of initiatives; they believe that this will just increase the deficit again.

    The State signed really bad employee contracts beginning in 1999. The engineers’ union got 30% pay increases and so did other unions. Most of the State employees don’t receive these high salaries and are qualified to perform the duties of the jobs, but the State agencies insist that the work be performed by engineers because then the supervisors receive engineers’ salaries.

    There are approximately 300,000 State employees, if their average individual cost to the State is $100,000 per year, that is $3 billion per year. So, if all State employees were fired, the budget problem would be about as bad as it is now. The annual deficit is over $20 billion.

    The only solution that I can envision is for the State to produce its own goods and services and require the State’s citizens to only buy locally produced goods and services. The outsourced jobs and supplies need to be eliminated from the California marketplace. This, of course, is a violation of federal law and the constitution, but what the hell,
    What else is there to do?

  2. alphonso

    As I recall we voted against the 2005 set of propositions.

    Also the salary calculation is $30 billion based on the $100K per employee assumption. Both the number of employees and the benefits (salaries & pension) are a significant part of the problem. There is too much money being given away – the ridiculous salaries and benefits being offered to the new UC Chancellors is a small example of the waste that is going on and it just filters down.

    We need a legislature that acts like a governing body, not one that relies on the voters to make the difficult decisions for them.

  3. martin

    OK David, just fire all the State, County, and City workers after the governmental bodies declare bankruptcy (do this quickly before Mariko’s bill passes precluding bankruptcy filings by municipal governments). Then negotiate new contracts. Is there anything else that you wanted to know?

  4. martin

    Better hurry with those contract renegotiations:

    http://www.calpers.ca.gov/eip-docs/about/board-cal-agenda/agendas/bpac/200905/item05.pdf
    “The payroll-driven rate increase of $262 million this July is said to be less than 0.4 percent of payroll. CalPERS warned last October that rates could increase 2 to 5 percent of payroll in July 2010, if the investment loss is 20 percent in this fiscal year.

    Simple math would seem to suggest that a rate increase of $1 billion or more is possible next year.”

  5. Harvesting an Angry Electorate

    Whose “brilliant idea” was it to schedule this complex budgetary election a mere five weeks after our frustrating federal and state taxes were due? May 20th will show that this incredibly poor timing will have subtracted ten percent or more from the positive votes for Propositions 1a-1e, and will have added at least ten percent or more to the positive vote for Proposition If. By harvesting an angry electorate, your “consultants” have practically guaranteed that 1a-1e will fail.

  6. the chickens are coming home to roost

    The voters are not the same, nor bear the same responsibility as their elected representatives in the legislative or executive branches. On the one hand, we did elect these people to office and we did vote to pass initiatives. But on the other hand during election after election we are told by candidates for the legislature or governor that if elected they will govern our state responsibly. But who over the past twenty years has put the vast majority of these statewide measures on the ballot asking the voters to support them which have determined the majority of spending and contributed mightily to the crisis at hand? Answer: the legislature itself! Who then campaigns for the passage of these statewide measures? Answer: why the same people who put the measures on the ballot, again the legislature itself! Why do they do this? Answer: (a.) the politicians from both parties pander to their constituencies by not having the courage to tell their voters we cannot afford all the programs the Democrats want with the low tax rates the Republicans want, and (b.) they don’t want to take final responsibility for these measures, so they pass it on to the voters. So instead of dealing with this in a truthful manner in the halls of the capitol past and the current legislatures in collusion with past and current governors pass irresponsible budgets and place initiative after initiative on the ballot that are not realistic or truthful about affordability. They pass the buck. And our counties, cities and school districts have learned the same behavior multiplying the problem.

    For over 20 years the politicians, the legislatures, the governors have played this game and the voters fell for it. The voters need to take responsibility for the foolish public policy that those we have elected to office have produced. And the voters of all stripes (liberals, moderates, conservatives) are finally beginning to wake up. Why, because they are out of jobs, out of money and the politicians in Sacramento are not doing the job. Enough is enough!

    The voters ultimately do bear responsibility and that is what the politicians are going to see on May 19—the voters taking responsibility by saying NO to the continuous passing of the buck charade the politicians like to call governance. By voting NO the voters are going to say to their elected representatives: get back to work and do the tough job that is long overdue to right the wrongs that you have put on the citizens and taxpayers of California. By voting NO the voters will be telling the politicians we are not going to fall for your arguments that we need to trust your advice to vote for your recommendations to pass 1A-1E when we have by and large trusted and voted to support your past recommendations which have brought us to the brink of the disaster that you legislators and governors have created and advocated for and told us to vote for, for years. Enough is enough!

    What is lacking in Sacramento is leadership. Leadership from politicians in the legislature and the executive to end the 2/3 vote to pass budgets as well as spending and taxing bills. Leadership to increase taxes on higher income individuals and corporations who have escaped paying their fair share. Leadership to say NO to and end the excessive pay, benefit & retirement packages for many state, county, city and quasi-governmental agency workers that are neither affordable or sustainable. Leadership to eliminate the outrageous 3% @ 50 public safety enhanced retirements packages for police, fire, prison guards and every other money sucking bureaucrat who can finagle tying his/her government job to that bankrupting retirement formula or another one similar to it.

    We are in severe crisis because the voters of California have trusted and agreed to the initiatives and status quo from our elected representatives of both parties for over 20 years. Now after trusting these politicians to do what is right, they come back to us with more of the same, measures 1A-1E. The time is now to say NO otherwise we will get nothing more from them in the future other than what they have served up in the past. The time is now to say NO to the “smoke and mirror” proposals that are offered up as “solutions.” And once we have said NO we need to insist that they do the job to correct the problem or deal them the same fate in 2010—defeat at the ballot box.

    Again, the chickens are coming home to roost.

  7. Rich Rifkin

    If you care to know my take on each of the props 1A-1E, look for my column in this Wednesday’s Davis Enterprise. Without spoiling the surprise, my take is not the same as Wu Ming’s.

  8. Caine 607

    I’m sorry, but the “investigative eye’s” attitude is typical of many politicians. Crisis managment. Now, we are desperate to save education because the problems have blown up such that new spending outside of education is now impossible. But there wasn’t a thought given to the debt when supporting that huge high speed train that we couldn’t afford. At that time, the environment was the most important thing. Dragging the state through the ringer financially is the order of the day in this state. There is never a thought given to the budget until it is too late so quite frankly I don’t want to hear more crocidile tears about saving education. The CA voters politicians and the investigative eye caused this mess together. If you really care about education, then you will support fiscal restraint when times are good to prevent an unmanageable crisis when times are not.

    However, lets assume the propostions do pass. Then another set of runaway spending will occur, and we will be right back where we started, only education will be on the chopping block again with a deeper debt than when we started with. There needs to be thought to making hard choices, which neither the investigative eye nor the politicians and quite frankly the voters will never do. If the voters don’t like this then kick out the politicians and start over. As Jigsaw from that crappy horror flick might say:

    “you have two doors. the door on your left contains that fancy train you have always wanted plus universal health care. It is yours for the taking. The door on the right contains the class full of children. Their fate is in your hands. if you take the key to unlock the door that lies to your fancy new train and health care program, they will pay the consequences. But you can save them. You will have to do without your new programs and train. You have 60 seconds to save the children. Live or die, make your choice.”

  9. Rich Rifkin

    [quote]However, lets assume the propostions do pass. Then another set of runaway spending will occur, and we will be right back where we started, only education will be on the chopping block again with a deeper debt than when we started with.[/quote] Caine, please study Prop 1A. It is designed to stop “the runaway spending” which you rightly deplore. You might change your views if you read the LAO analysis. You should also read my column on this, which will be published on Wednesday.

  10. I Told You So!

    “Caine, please study Prop 1A. It is designed to stop “the runaway spending” which you rightly deplore. You might change your views if you read the LAO analysis. You should also read my column on this, which will be published on Wednesday.”

    There are no guarantees that the slush fund created by Prop 1A will be spent on where it is most needed. Politicians will be given free reign to spend as they wish, and believe me, the money will never reach where it needs to go (it never does). As so many have pointed out, we have a bloated upper management in CA, that is collecting salaries that are ridiculously generous. Just two examples: the raises given to both Bruce Colby of DJUSD, and the head of UCD (whose salary was DOUBLED). Interesting how we are in the middle of a budget crisis of enormous proportion, yet DHS is renovating its stadium as is Pioneer HS in Woodland. UCD is building a huge convention center in partnership with I think its the Hyatt hotel chain. UCD just finished building a brand new stadium, new music hall. It is this sort of thing that is breaking the backs of CA taxpayers. Make no mistake, creating a new slush fund will solve nothing! Calling it a “rainy day fund” does not change what it is.

  11. David M. Greenwald

    “There are no guarantees that the slush fund created by Prop 1A will be spent on where it is most needed.”

    Actually if you read the proposition, there are no provisions for it to be spent at all. One of the complaints that opponents make is that even when its raining there is no clear provision for the “rainy day” fund to be used.

  12. wdf

    “Interesting how we are in the middle of a budget crisis of enormous proportion, yet DHS is renovating its stadium as is Pioneer HS in Woodland.”

    It makes for a cool rhetorical soundbite for you to mention it, but these are funded by facilities money (local taxpayer-voted bond measures).

    It is example of money being committed for what it was intended (facilities). In reading your argument, it sounds as if you would really wish politicians to have the freedom to spend local, taxpayer-voted bond measures however they want, so that it wasn’t being spent on those stadiums that you personally detest.

  13. Rich Rifkin

    [quote]the money will never reach where it needs to go (it never does). As so many have pointed out, we have a bloated upper management in CA, that is collecting salaries that are ridiculously generous.[/quote]That is not a logical reason to vote no on 1A. Prop 1A is designed to solve the problem, a very real problem, of the state greatly increasing its annual expenditures every time tax revenues increase due to an economic upturn (a boom), which then leaves the state in a precarious position in the following years when revenues decline due to a poor economy. The fact that 1A will not also solve problems of “bloated upper management” is a seperate issue. If you vote no on 1A, you won’t solve the problem of “bloated upper management” either.

  14. wdf

    “UCD just finished building a brand new stadium, new music hall.”

    UCD has not even started the new music hall. It is funded by bonds (already passed) and private donations. Again, would you argue for allowing politicians free reign over this so that there wouldn’t be a new music hall?

    I don’t know about other UCD construction projects, but I would imagine that they, too, are funded by bonds and private donations.

  15. inkblot

    It doesn’t matter whether they pass or fail.
    The state is headed to bankruptcy, along with the city and possibly the
    university.

    With Obama’s reckless spending, following Bush’s bad example
    but even more irresponsible, the Feds are heading to
    runaway inflation.

    We face hard times. All totally unnecessary. We elected these
    dolts, Bush and Obama, Davis and Schwarzenegger, Asmundsen and Greenwald.
    Fiscally responsible candidates never get past the starting gate.
    We can’t complain.

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