Budget battle reveals compromise is not a dirty word

Don't look now, but post-partisanship is making a comeback. Nobody is celebrating, but Gov. Arnold Schwarzenegger and state law-

makers have just demon-

strated again that it's possible to bridge the deep partisan divide that has frozen Califor-

nia's Legislature in a condition of near perpetual gridlock.

Last week, for the second time in five months, Schwarzenegger cobbled together a difficult budget plan and joined lawmakers from both parties to support the compromises necessary to pull the state back from the brink of insolvency.

In February, he got fellow Republicans to raise taxes temporarily. And now he has persuaded Democrats to make deep and permanent cuts in spending. Both budgets passed with bipartisan votes.

They had to, thanks to California's much-maligned requirement that a two-thirds majority of legislators approve any spending bill. And both plans passed despite withering attacks from some of the most powerful interest groups in the state.

Most of the focus lately has been on what Schwarzenegger and the Legislature have not done, namely solve the state's fiscal problems once and for all. And that's a valid criticism. California's government will struggle to make ends meet for years to come. But in the middle of the worst recession since the Great Depression and in the wake of the collapse of the state's once-booming housing industry, solving the entire problem now might be close to impossible.

What Schwarzenegger has done instead is to stabilize the state's finances and enact a handful of reforms that will reduce spending in the future. He also has set the stage for the final year of his two terms in office, when he will try to finish the job he was elected to do -- bringing the budget back into balance -- while enacting even more sweeping reforms that could change the very structure of California government.

If he can do either or both of those things, Schwarzenegger could well leave office as a success. That would be amazing, considering that a few months ago he was given up as politically dead, a lame-duck, irrelevant.

Of course, Schwarzenegger himself has to bear much of the blame for the string of deficits over which he has presided. He inherited a mess, but as a candidate in 2003, he never should have pledged to roll back the car tax, and he could have won the state's historic recall election without doing so. But once he made that pledge the centerpiece of his campaign and decided, correctly, that he needed to follow through after taking office, Schwarzenegger should have insisted on spending restraint from the Democrats who controlled the Legislature. He did not.

Instead, he let the Democrats write a mostly meaningless "balanced budget amendment" and presented it to the voters in early 2004 along with a $15 billion bond to restructure the state's debt and borrow some more. He promised that the two measures combined would wean the state off its flow of red ink. But with no long-term plan for slowing the growth in spending, that goal was a mirage, and Schwarzenegger bounced from year to year, using borrowing, fund shifts, one-time money and gimmicks to make the budget appear balanced even as the state kept spending more than it was taking in.

He could get away with that as long as revenues were growing, as they did through the middle of the decade. Each year's new money effectively covered the shortfall from the year before. But once the housing bubble burst, the state's economy tanked and tax receipts plummeted, no amount of gimmickry could paper over the deficits. By the start of 2009, the shortfall had reached an estimated $40 billion.