Capitol Journal: Proposition 25 proves its worth

The first point to be made about the state budget the Legislature passed Tuesday night is that Proposition 25 worked. California’s Capitol has become less dysfunctional.

Consider: This will be only the sixth time in the last 25 years that a budget has been enacted by the start of the fiscal year, assuming Gov. Jerry Brown signs it before Friday. And he will; he already has signed pieces of it.

Before Prop. 25, approved by voters last November, California was one of only three states that required a two-thirds vote of the Legislature for budget passage. Now a budget can be passed by a simple majority.

That means Democrats can ignore Republicans and not spend all summer trying to buy their votes with various versions of pork while the cash-strapped state stiffs small business vendors, drives its credit rating further into the basement and embarrasses itself.

A nasty little feature of Prop. 25 also provided a sharp prod to the Legislature: It cut off lawmakers’ pay for every day they failed to pass a balanced budget by their June 15 constitutional deadline. When state Controller John Chiang actually severed the money flow — ultimately costing legislators about $5,000 each — Democratic leaders became unusually motivated to quickly pass a budget the governor would sign.

Point No. 2: Republicans missed a golden opportunity to use what’s left of their clout to achieve the pension, spending and regulatory reforms they’ve trumpeted for years. They’ve always talked a good game but still can’t deliver — basically because they lack the courage of their convictions.

Brown and Democrats were desperate to extend temporary sales and car tax increases that will expire Friday and were willing to trade for pension, spending and regulatory reforms. Because a two-thirds vote still is required to raise taxes, at least two GOP votes were needed in each house.

But, as Brown commented Monday, “there is an almost religious reluctance� by Republican lawmakers to vote for tax hikes.

That was the biggest holdup to reforms.

Another apparently was that the handful of Senate Republicans with whom Brown was negotiating suffered from an inflated idea of what they could achieve. They acted as if they’d never heard of the German politician Otto Von Bismarck, who famously observed: “Politics is the art of the possible.�

One veteran business lobbyist, who asked not to be identified because he must deal with these people , says that when plugged-in outsiders suggested various potential compromises to the relatively inexperienced GOP negotiators, they were dismissed with the response: “We can do better.� But they couldn’t.

In the end, Republicans contended that Brown, bowing to labor unions, refused to place pension and spending reforms on a special election ballot alongside taxes. It’s true, unions didn’t want those issues on the ballot — didn’t even want a tax election, for that matter — but Brown seemed willing.

“Put them all on the ballot,� Brown told reporters June 16.

I asked the governor Tuesday whether he had been willing to place pension and spending reforms before the electorate, and he replied: “Hell, yes. I said that in March.�

But never did Republicans commit to voting for taxes in exchange for the reforms, both Brown and Senate leader Darrell Steinberg (D-Sacramento) insist.

And that greatly disappoints business groups.

Joe Czyzyk, chairman of the Los Angeles Area Chamber of Commerce, notes that his group endorsed Brown’s proposed tax-and-cut solution to filling the state’s deficit hole.

Republicans are “wrapped up in cut, cut, cut,� says Czyzyk, chairman and chief executive of Mercury Air Group. “Cutting only works as a stopgap measure. It’s not going to solve our problems. Our problems have to do with getting jobs. And you’re not going to get jobs until the private sector says, ‘The place to reinvest in is California.’ That’s not going to happen until we get regulatory reform.

“As in business, you can always cut expenses, but if you don’t increase sales you’re not going to make it. Cutting doesn’t grow you. We’ve done the cutting. We can’t continue to cut in places that completely harm the state. We need to create jobs.�

Allan Zaremberg, president of the California Chamber of Commerce, says: “We need to get this budget mess behind us to get some certainty for businesses thinking about investing in California. And we have a budget that continues the uncertainty. We tried so hard to find that sweet spot for a comprehensive solution.�

“Comprehensive solution� is code for compromise on taxes.

“I’m disappointed in the cuts to higher education, public safety and trial courts,� Zaremberg says. “That creates uncertainty� for business.

Point No. 3: It was probably the best budget that Brown and Democrats could concoct.

Yes, there were fudged figures. To make the budget “balance,� Brown projected $4 billion in previously unanticipated revenue. But in case that money doesn’t materialize, he and Democrats agreed on “trigger cuts� to higher education, K-12 schools, libraries, prisons and services for the needy and disabled.

And there were some gimmicks, but not the most egregious kind, such as were previously passed by Democrats and vetoed by Brown — specifically, the lease-out-and-rent back of state buildings and a legally suspect increase in local sales taxes.

The Legislature passed a $131-billion budget that included $86 billion for the deficit-ridden general fund. There were $15 billion in program cuts — aimed mainly at the poor, college students, public safety and parks.

It may have been the best budget possible. But it wasn’t befitting a great state and its needs in an increasingly competitive world.

Point No. 4: We need a Son of Prop. 25 — a ballot measure that reduces the vote requirement for raising taxes to a simple majority. Allow the majority party to function and hold it accountable.

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