Brother, can you spare $15 billion? When California's once and current Governor explained how he proposed to close the state's $26 billion dollar budget deficit by July 1, 2011, it was one part spending cuts, one part temporary extension of taxes.
While the spending cuts passed, the tax extensions were hotly debated. Now comes word that budget negotiations between Jerry Brown and legislative Republicans have broken down. It seems certain that Brown will not get his desired June special election on the tax extensions. An agreement to put the tax extensions to a vote of the people would have required a two-thirds vote of both houses of the legislature, which means four Republicans (two from each house) would have had to endorse the plan. That was apparently a hurdle too high to clear.
Republican lawmakers have stated that they would not agree to ask the voters whether or not to extend the temporary tax increases unless the Governor and Democratic lawmakers agreed to ask the voters to weigh in not only on the proposed tax extensions, but also on those two other issues; a cap on government expenditures and cuts to pension programs. Democrats claimed that Republican lawmakers' list of demands was endlessly increasing.
What's next for California? Brown has pledged not to balance the budget with gimmicks and rosy revenue predictions, and a balanced budget is legally required by June 15th. That leaves at least two options.
First, Brown could take the tax question directly to the voters by circulating at least one ballot initiative. By the time a ballot measure is circulated and put on the ballot, the temporary taxes at issue will have expired. That means that instead of being asked whether to extend taxes, voters will weigh in on whether to increase taxes.
Second, the Governor could impose even more spending cuts. Such expenditure decreases would have been unfathomable years ago, and will unquestionably hurt the poor, infirm, young and old. Brown has taken to YouTube in attempt to assure voters that he will pursue other options.
Another possibility is that despite his pledge not to raise taxes without a vote of the people, Brown could bypass the voters and ask the legislature to approve his tax plan. In addition to breaking his prior pledge, this would bring Brown back to his problem of getting four Republicans to endorse his plan.
California's most recent budget bust raises lurking questions about the states' governability. Asking whether California is governable seems to be a favorite pastime of journalists and political junkies. It's a question worth exploring. The breakdown of budget negotiations speaks to some structural and political issues in the Golden State.
First, as to the structural issues, many readers are probably wondering why it is so hard to pass a budget when the voters just agreed to lower the threshold needed to pass a budget from two-thirds to a simple majority. The answer is voters have left in place the two-thirds requirement needed for tax increases and extensions, and in fact increased the number of legislators needed to implement fee increases from a simple majority to two thirds. But how does one balance a budget? With spending cuts and revenue increases. Within our current framework, that means only 50.1% of lawmakers are need to agree on spending cuts, but 66% are needed to raise revenue (taxes and fees).
The consequences of a system that requires only a simple majority to cut spending but a supermajority to raise revenues are playing out in Sacramento, before our eyes. Californians must decide for themselves whether the supermajority requirements embody sound policy. Supermajority requirements reflect, among other things, a distrust of the legislature.
Second, speaking of distrusting our elected officials, this recent budget debacle also raises some purely political questions related to the rights of voters. Voters are loathe to give up any power. Understanding that, Brown pledged allow the voters weigh in on tax measures. However, we must determine whether that is smart policy. We do not have a system of direct democracy, instead we live in a representative democracy. Should voters (meaning the slim segment that shows up at the polls), elected by no one and accountable to no one but themselves, weigh in on certain policy decisions? I'm not suggesting an answer, I'm suggesting a debate on the question.
While we debate the kind of government we want, Brown and lawmakers on both sides of the aisle must determine what kind of budget we'll have next year.