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| I'd really like you to rub my ears, or help out FR. |
Posted on 10/08/2003 5:18:35 PM PDT by calcowgirl
Arnold Schwarzenegger made a lot of promises on the campaign trail, but if there was a centrepiece to his campaign - an issue that galvanised supporters - it was the previous governor's supposed "mishandling" of the people's money.
To hear Mr Schwarzenegger tell it, California's budget is in crisis because Gray Davis, the Democratic governor who was sacked in Tuesday's recall election, was inept at handling the state's public finances.
Now the people of California expect the former bodybuilder and movie action hero to tackle the state's budget crisis. But after promising not to raise taxes or cut education spending, the Republican governor faces a much tougher challenge than he ever did as an actor on the big screen.
"I don't see how he is going to do everything he has pledged to do," says Kim Rueben, budget analyst at the Public Policy Institute of California, an independent think tank.
The first crucial test for Mr Schwarzenegger will come in early January, when he must submit a proposed budget to the state legislature.
Mr Davis plugged a $38bn (?32bn, £23bn) gap in the current $99bn budget through a combination of tax increases, one-time spending cuts, creative accounting and nearly $11bn in deficit financing. But Mr Davis's plan created an $8bn shortfall for the coming budget, with no easy options for erasing it.
Mr Schwarzenegger could start off even deeper in the red if he lives up to his pledge to rescind a very unpopular threefold increase in the state vehicle registration fee. Mr Davis was blamed for tripling that fee this fiscal year. In fact the increase was due to a trigger mechanism - installed by the previous Republican administration - that would reverse earlier tax cuts if the state ran a deficit.
Budget experts say repealing the car-tax increase, which may be impossible without legislative approval, would add another $4bn to the deficit. Moreover, revenues from this tax are earmarked for local services, such as fire and police departments; cutting them would almost surely infuriate voters.
Optimists hope an improving economy will help pull California out of crisis. But experts say the state is so constrained that the new governor will not be able to balance the budget without either raising taxes or making politically unacceptable spending cuts.
More than half of the state's discretionary spending is earmarked for education. And to honour his pledges to maintain education spending, the governor would have to make massive cuts in other areas - such as health and social services - to bring state finances into balance.
"If you don't cut education, then you would have to cut 20 per cent across the board with what's left, but you can't do that because there are a number of provisions that would prevent that," says Jean Ross, executive director of the California Budget Project, an independent policy analysis group.
Mr Schwarzenegger's room to manoeuvre will be further limited by a number of factors. California's governor cannot pass a budget or raise taxes without two-thirds approval from the state Senate and assembly, both currently controlled by Democrats. He will also be curtailed by voter initiatives that have over the years set funding levels for various programmes.
One pledge that resonated with the public was Mr Schwarzenegger's promise to audit state finances to uncover wasteful spending. That enabled the candidate to play to the voters' perception that Mr Davis's administration had frittered away a gross amount of public money.
But budget experts say a rigorous audit might trim spending by at most $100m - a drop in the bucket compared to the near 10 per cent budget deficit the state faces next year.
"People are going to be disappointed because all the same problems are still going to be there. We need more money coming in," says Ms Rueben.
Pundits and budget experts predict Mr Schwarzenegger will be forced to backtrack on his pledge to hold the line on taxes. Some observers suggest he will do so after expressing his "shock" at finding out that California's fiscal woes are much worse than he expected.
Voters may have chosen a big-screen hero as their governor, but they will probably soon discover that Mr Schwarzenegger, like Mr Davis before him, is merely mortal when it comes to grappling with California's messy finances.
This might mean going to the "Evidence-based Education" (EBE) approach, which is advocated by the Department of Education nowadays. The main point of EBE is (if I may) that while money has increased for education per capita, results have only been improving subjectively, in contrast to evidentially by way of test scores, scientific experiments, and control groups. According to EBE, education is far behind other social fields in using the scientific method...
This implies that an audit wouldn't even save .1% of the budget? Not 10% (10b), not 1% (1b) but .1% (.1b)?
Intuitively, I would think at least 10% of the budget is wasted, and of that you could find political cover to get rid of maybe half of it. My proposal would start by dumping the 10% and then I'd bargain down to 5%.
McClintock proposed a 10% across the board cut. I would propose a 5% across the board cut plus the 10% of audit savings to cut by the same amount as McClintock. I then bargain down to accept 10% total savings, which I understand is roughly where the structural deficit is.
I would save education by noting how bloated the bureaucracy is and proposing to cut that instead of in-classroom spending. If I was really smart, I might even be able to give the latter a small boost.
I would be quite surprised if Arnold is not working on a very similar plan to this, and I'm very curious to see what he comes up with.
D
PS I think Tom McClintock would be welcome in an Arnold administration as an advisor, but considering his recent remarks, I think Tom has to make the first move. I strongly suggest that he do so.
I have no idea how Arnold plans to address these problems. Demanding more from the casinos will take quite awhile, and in the meantime, Davis left a timebomb. Services have to be cut, but most of them are mandates, and he has no power to undo them.
All of the solutions require a cooperative legislature, but they weren't recalled last night.
I've said all along that I don't know why anyone who truly understood the problems would want to be Governor now. It's a career-killer. Fortunately, Arnold has no political career to kill, and he can go over the heads of the legislature better than Tom or anyone else ever could. It's his only hope.
10% savings? I don't believe they will find that kind of savings from an audit. While $100m sounds too small, I would be surpised if they can find more than 1% or 2% due to the stated "fraud and corruption". IMO, more focus should be put on which programs can be eliminated than hoping the audit can miraculously solve the deficit problems, and Education expenditures have to be part of that process.
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