Hey California -- how's that recall election workin' for ya?

Brilliant at Breakfast

Wednesday, February 18, 2009

Remember the 2003 recall election that made Arnold Schwarzenegger the Governor of Gollyvornia? That was the election triggered by the huge spike in energy costs which weakened the state's economy. Of course it turned out that California's energy costs were caused largely by Enron, the now-defunct fradulent company led by Bush-buddy Kenny Boy Lay, but who remembers that now? But then, Californians have a history of supporting things that turn out to be mind-bogglingly stupid in the long term. Another chunk of the mess in which the state finds itself today can be traced to Proposition 13, which sought to address soaring property taxes by capping them at 1% of a property's assessed value and transferring a good deal of power over to the state. There are those now saying that Prop. 13's time has come and gone, but it's the third rail of California politics.

I live in a high property tax state too. God knows it's not that we have more services than other states. What we do have is a far-from-vibrant political climate, in which entrenched hacks run the entire political system from the state-level parties (both of whom are equally corrupt) down to the local level, where the mayor of my town violates the state Constitution by not even living in town after being nailed for DWI with a cocktail waitress in the car with him, the Council does nothing to oust him, he's been in the seat for nearly three decades, and the council members parcels out contracts to their friends and cronies in secret meetings with no input from the townspeople as to whether we want yet another small park that no one uses. The local powers that be are Republican, but I'm not convinced local Democrats would be any better. But when your state is in worse shape than New Jersey, that's saying something.

With Prop. 13 and the 2003 recall election, Californians resorted to the promise of quick fixes and the smooth talk of Republican politicians promising that lower taxes were the answer to all their problems, andhere's where they find themselves now:

The state of California — its deficits ballooning, its lawmakers intransigent and its governor apparently bereft of allies or influence — appears headed off the fiscal rails.

Since the fall, when lawmakers began trying to attack the gaps in the $143 billion budget that their earlier plan had not addressed, the state has fallen into deeper financial straits, with more bad news coming daily from Sacramento. The state, nearly out of cash, has laid off scores of workers and put hundreds more on unpaid furloughs. It has stopped paying counties and issuing income tax refunds and halted thousands of infrastructure projects.

Twenty-thousand layoff notices will go out on Tuesday morning, Matt David, the communications director for Gov. Arnold Schwarzenegger, said Monday night. “In the absence of a budget we need to realize this savings and the process takes six months,” Mr. David said.

After negotiating nonstop from Saturday afternoon until late Sunday night on a series of budget bills that would have closed a projected $41 billion deficit, state lawmakers failed to get enough votes to close the deal and adjourned. They returned to the Capitol on Monday morning and labored into the evening but still failed to reach a deal. They planned to reconvene at 10 a.m. Tuesday to go at it again.

California has also lost access to much of the credit markets, nearly unheard of among state municipal bond issuers. Recently, Standard & Poor’s downgraded the state’s bond rating to the lowest in the nation.

California’s woes will almost certainly leave a jagged fiscal scar on the nation’s most populous state, an outgrowth of the financial triptych of above-average unemployment, high foreclosure rates and plummeting tax revenues, and the state’s unusual budgeting practices.

“No other state is in the kind of crisis that California is in,” said Iris J. Lav, the deputy director of the Center on Budget and Policy Priorities, a liberal research group in Washington.

The roots of California’s inability to address its budget woes are statutory and political. The state, unlike most others, requires a two-thirds majority vote in the Legislature to pass budgets and tax increases. And its process for creating voter initiatives hamstrings the budget process by directing money for some programs while depriving others of cash.

In a Legislature dominated by Democrats, some of whom lean far to the left, leaders have been unable to gather enough support from Republican lawmakers, who tend on average to be more conservative than the majority of California’s Republican voters and have unequivocally opposed all tax increases.

As Paul Krugman points out today, we ignore California at our peril, because this stalemate in the California legislature echoes the kind of stalemate we currently see in Washington. We have seen the future, and if we allow Republicans in Washington to do the bidding of their master Rush Limbaugh and attempt to make President Obama a failure in their lust for power, that future is California.

Copyright 2009 Brilliant at Breakfast