The fiscal crisis in California took another treacherous turn this week when Democratic Governor Jerry Brown vetoed a budget plan passed by the Democrat-controlled State Assembly and Senate. With the state's voter-imposed deadline for passing a balanced budget expiring earlier this week, California legislators are now working overtime without pay to try and fix the state's massive budget deficit. Brown's veto, though, was not unwarranted, nor was it radical. Rather, Governor Brown is hoping that by vetoing the plan, he can convince state legislators to finally get serious about balancing the budget and creating a sustainable fiscal future for the state.
First, a little background for those of you outside the state (or inside it, ahem) who haven't been following the rapid decline of the world's eighth-largest economy. For many years now, California has been unable to balance its budget on time, if the state balances it at all. In spite of former Governor Arnold Schwarzenegger's attempt to force legislators to balance the budget by bringing his sword from Conan the Barbarian to the state Capitol, his tenure of office was marked by massive deficits, which led to decreased funding for areas like public education just to keep the state afloat. When the housing bubble burst in 2008, things went downhill quickly, and in 2009 California was forced to issue IOUs instead of tax returns in order to remain fiscally sound. While the state has been able to issue tax returns in 2010 and 2011, it has so far been impossible for legislators and the governor to come up with a balanced budget in a timely manner. In the 2010 election, California voters, fed up with the constantly late budget process, threw a new wrench into the works: by passing Proposition 25, voters ensured that if the budget was not passed by June 15th (last Wednesday), lawmakers would not receive their salaries.
Fast forward to earlier this year, after the new governor, Jerry Brown, was inaugurated. Brown has stated that, as he is at the end of his political career, he is tired of kicking the can down the road and wants to come up with real fiscal solutions. So, he promised that to solve the deficit problem, he would work to pass a budget that didn't rely on flawed economic numbers (a common practice in California). He also promised to close the budget gap, half with spending cuts and half with extensions of current tax rates, which were set to be lowered next year. Brown followed up this promise in March by signing into law approximately $14 billion in spending cuts, over half of the state's $26 billion projected budget deficit. At the time, many hoped that Republicans would allow the extension of these taxes to be voted on in a special election, a prospect that had a great deal of support among Californians.
After that, though, the process reached a stalemate. On March 30, Brown broke off negotiations with Republicans in the state legislature, citing an unwillingness on their part to meet him and Democrats half way on the budget plan. Among other things, Republicans demanded further concessions by Democrats, including pension reform for public employee unions and the institution of a cap on the amount that the California government is legally allowed to spend. Democrats, arguing that they had already met Republicans half way by cutting social programs and education drastically, refused to budge.
Finally, this week Democrats gave up trying to work with Republicans. Instead, they went back to their tried and true method of fudging the state's numbers, taking the tax proposal out of the budget and replacing it with rosy forecasts for the state's income this year. By doing this, they were able to pass the budget with only a simple majority instead of needing the support of Republicans (similar to how Republicans in Wisconsin were able to pass their controversial collective bargaining bill earlier this year).
Governor Brown, though, wasn't on board with the plan. Staying true to his pledge to end the fiscal tricks in the budget, he vetoed the Democratic plan earlier this week, sending legislators back to the drawing board and ensuring that the state would not meet the voter-imposed deadline for balancing the budget.
There's a lot of blame to go around in this situation. Republicans have refused to meet Democrats half way, even after Democrats agreed to pass massive cuts to public education and the state's social safety net in good faith. Republicans have refused even to allow a public vote on the tax extensions; call me crazy, but it seems like voting is what people are supposed to do in a democracy. On the other hand, Democrats have been unwilling to even entertain the possibility of pension reform, which is a serious issue that will continue to bankrupt the state in the future if it's not dealt with. They have also ignored calls for a legal spending limit, despite the fact that Governor Brown has said he supports this idea.
Give Brown a lot of credit here, though. By vetoing this budget plan, he stuck to his promise of not playing politics anymore. Instead of allowing state legislators to fudge the numbers and hope it all works out, Brown is forcing them to get serious and make hard choices. Rather than staging a photo-op with a prop from an action movie, he stood firm. Will anything come of it in California's partisan political environment? Maybe not, but Brown has shown that, at the end of a long and storied political career, he is finally ready to put aside the games and try to solve the state's toughest problems. It might not work, and frankly, he might be reviled for it among many voters, but at least he's trying; that's something we should all hope to see a little more in politics today.
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