Dan Walters: This budget crisis isn't like earlier ones

By Dan Walters , dwalters@sacbee.com

last updated: July 05, 2008 10:48:27 PM

California Forward is a new, bipartisan, foundation-supported organization whose goal, it says, is to fix the evident dysfunction of state government – a malaise most evident in the circular wrangling over the deficit-ridden state budget.

California Forward, in fact, has published a lengthy, largely accurate critique of the budget process that includes this central passage:

"The current budget process is largely a relic of the mid-20th century, with the focus on how much to increase spending (or how much to cut), rather than the value that public services bring to Californians over time. These annual budget decisions often either push California's fiscal systems toward long-term solvency or away from it. The ongoing and chronic imbalance between revenues and expenditures is one indicator of system failure. Changing how budget process decisions are made could enable public leaders to deal with the more intractable and complex problems involving the revenue system and the state-local relationship."

California Forward appears to be saying that what may have worked in the mid-20th century, or even later, is inapplicable today, given vastly altered social, economic and political circumstances. And that's why it was rather odd that California Forward sponsored a seminar in Sacramento last month on the budget, devoted to journalists describing how four previous governors dealt with fiscal crises.

The overarching theme of the nostalgic narratives, which had been previewed in the Los Angeles Times, appeared to be that all four governors weathered their fiscal crises by being pragmatic and willing to raise taxes. Implicitly, then, were Gov. Arnold Schwarzenegger just as flexible, the current crisis could be resolved.

It was a waste of time. None of the situations faced by the four previous governors, either fiscally or politically, remotely resembled what Schwarzenegger is confronting – rather unsuccessfully – even though he is flexible to a fault.

The Capitol's atmosphere is infinitely more confrontational and ideologically ossified than anything the four previous governors faced, for one thing. And that includes the most recent of the four, Pete Wilson, whose crisis in the early 1990s was twice as bad, in relative financial terms, as the current one.

Legislative term limits, gerrymandered districts and cultural polarization in California itself have made serious progress on any major issue, including the budget, nearly impossible, given the structural restraints we call "checks and balances."

The budget, meanwhile, has become a markedly more complex document, largely because Proposition 13, passed by voters in 1978 to slash local property taxes, thrust much more responsibility for financing schools and local services onto the state. And Proposition 98, a school finance measure enacted in 1988, made the process even more complex and rigid. Its effects were just beginning to be felt when Wilson was governor.

Finally, the fiscal problems that troubled those other governors primarily resulted from economic recessions, including the worst recession in a half century during the Wilson era, and therefore were temporary. But today's crisis primarily stems from voters and politicians spending more money than the revenue system can produce, even in a good economy.

It is what those in the Capitol call – and what California Forward identifies as – a "structural deficit." This is, in brief, a unique situation and what any governor did in the past means absolutely nothing today. Until and unless California resolves its underlying crisis of governance, the budget crisis, along with the crises of water, education, transportation, housing and everything else, will continue to bedevil us.

That's the message that California Forward should be driving home.

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