Posted on 02/21/2004 5:29:05 AM PST by calcowgirl
SACRAMENTO -- Republican Gov. Arnold Schwarzenegger's $15 billion deficit-bailout bond on the March 2 ballot faces an uncertain fate largely because many normally bond-loving Democrats -- particularly in the Bay Area -- aren't sold this time around.
"This is unusual," said Mark Baldassare, director of the Public Policy Institute of California poll. "They're not buying it."
Analysts say the latest PPIC survey shows that many Democrats aren't embracing the assertions of Schwarzenegger and some top Democratic officeholders that Proposition 57, coupled with moderate spending cuts, is the key to preventing nightmarish slashes in government services.
The findings come as a Democratic foe of the measure, state Treasurer Phil Angelides, is offering an alternate plan that features modest borrowing and a tax hike.
PPIC found many Democratic voters would embrace tax hikes as part of the deficit solution -- a move Republican officeholders oppose -- and are worried about borrowing generally in this economic climate.
The poll shows some Democrats have chosen the $12.3 billion Proposition 55 school bond over the unprecedented Proposition 57 deficit bond and that some are skeptical of Schwarzenegger's measure simply because it's coming from a Republican governor.
"I know they (supporters) have said over and over again that we'll be in serious trouble if we don't do this. Do people believe it at this point? Apparently not if only a third of all voters and three-in-10 Democrats say it's very important," Baldassare said.
A PPIC poll conducted earlier this month and released Friday indicated 38 percent of likely voters statewide favor Proposition 57 and 41 percent oppose it, with 21 percent undecided.
In the Democratic-leaning Bay Area, support for the bond was softer (34 percent), opposition higher (48 percent), and undecideds fewer (18 percent) than the statewide average or compared to any other region of California.
With rejection of the measure a real possibility, Angelides and some Democrats in the Legislature are eyeing alternate proposals that incorporate tax hikes to blunt spending cuts.
Schwarzenegger is warning that state government services face draconian cuts if the measure fails but is continuing to express confidence it will pass. Supporters point, in part, to their TV ads that are softening opposition.
As part of his strategy to win over Democrats, the governor has begun campaigning for the first time with U.S. Sen. Dianne Feinstein, the most popular officeholder of her party in the state. Democratic Controller Steve Westly joined the pro-Proposition 57 campaign earlier.
"Do Steve and Dianne and I agree on every issue? Of course not," said Schwarzenegger. "Will there be times we find ourselves fighting just as hard as we are today, but on the opposite sides of an issue? Absolutely. But we are putting aside our differences to help pass Propositions 57 and 58."
Proposition 58, a companion measure to Proposition 57, would require a balanced budget. Both measures must pass in order for either of them to take effect.
Money from the Proposition 57 deficit bond would be used to pay off short-term loans that come due in June, as well as to help close next year's budget gap. Without the $15 billion from the bond, the state would face a $25 billion-plus problem next year, according to officials.
"It's time for Democrats and Republicans alike to put aside partisan politics and do what's good for our state," Feinstein said. "These two propositions, taken together, will help California's economic recovery, keep businesses and jobs from leaving our state and avoid devastating cuts to public safety, education and other critical programs."
"If California is unable to meet its bond amortization payments, it will effectively be in default. The damage from this default would ricochet across our entire economy," she said.
Schwarzenegger aides say that if Proposition 57 fails, they would fall back on a $10 billion borrowing plan left over from former Gov. Gray Davis' administration, despite a legal cloud over the proposal.
A taxpayer group has challenged the plan, arguing that borrowing of that size needs to be approved by the voters. Schwarzenegger's office has moved to defend Davis' bond proposal in court.
But if the state relies on the previous bond plan, it can't borrow as much and would have to make substantial cuts. And if the previous bond plan is rejected, along with Proposition 57, the state would face devastating service slashes next year.
Some Democratic officeholders said those kinds of cuts, coupled with the size of the loan, are unacceptable and have called for a backup plan -- something Angelides has now pitched to Californians.
"If we do not have an alternative, then the fiscal chaos that some have predicted could become a self-fulfilling prophecy," said Angelides, who is a likely Democratic gubernatorial candidate in 2006. "The state need not descend into fiscal chaos or face 'Armageddon' if there is such a contingency plan."
The treasurer said that his plan for internal fund shifts, short-term borrowing and a tax hike would wipe out the deficit in three years.
The proposal calls for the state to reinstate the 10 and 11 percent tax brackets on the state's top wage earners, affecting singles who make more than $140,000 annually and couples earning more than $280,000 a year.
Though proposition foes such as Angelides and proponents are far apart on Proposition 57, they agree on one aspect -- the pivotal nature of the March 2 election for key government services and for taxpayers' pocketbooks.
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