The packaging of Prop 1A…

So much of the campaign around Prop 1A is to package it with the other initiatives, and then sell the entire package as a whole, even though the parts are very different, with different consequences.

The Governor has made two arguments. One is to sell the package as the ultimate solution to our budget crisis: “We have a chance to fix this once and for all.” But no one believes that. Not the LAO. Not his own budget crunchers. Not the budget passed earlier this year, nor the pending ballot measures package, solve the fundamental issue of the mismatch between the level of services the state provides, and the revenues the state brings in. Severe cuts were made, but the revenues are temporary. And even in the short-term, given the extent of the economic crisis, California has a significant deficit on May 20th regardless of the vote on May 19th.

Unable to continue that argument with a straight face, there’s a new line. The new tact has been arguing that the state will fall off a cliff if the package is voted down. But let’s tease out the package: Proposition 1A will have zero impact on the deficit on May 20th. The impacts of its passage, whether of additional revenues for 1-2 years in 2011-13, or the long-term constitutional contraints on spending and investment, don’t kick in for a few years.

The measures that do have an impact on the deficit on May 20th are Propositions 1C, and to a lesser extent, Props 1D & 1E. Proposition 1C would allow the state budgeters to book $5 billion in budget solutions. While some may question the wisdom or even the actual ability of California to “securitize” the lottery, it’s Proposition 1C’s failure that will make the deficit $5 billion bigger.

Similarly, if Props 1D &1E are voted down, and the general fund is thus not able to take money from voter-approved funds for services for children and the mentally ill, then the general fund deficit is bigger, but at a smaller scale–less than $1 billion for both measures.

It would be more forthright if the proponents, in their alarmist rhetoric, focused on Proposition 1C, arguing that if that measure goes down, the budget outlook of cuts or taxes would be significantly worse. But they don’t think they can sell it. So they are trying to package it with the other measures, and use the elements of Prop 1A to somehow sell Proposition 1C.

Besides, the Governor in particular sees his legacy in Prop 1A. As he said, “I mean, I’ve been fighting for five years now for budget reform, to put a rainy-day fund aside and to put a certain cap on spending. I wasn’t successful. I tried through the Legislature when I first came into office; I tried in 2005 to go directly to the people, but apparently it wasn’t inclusive enough so that failed — the idea was good but it failed. And so here was our chance again…. “

There’s an irony here. He failed in 2005 to pass a spending cap in Proposition 76, which was unpopular from the start. Voters didn’t like placing limits on the services they depend on–education, health care, public safety, etc; nor did they like giving the Governor unilateral authority to make certain cuts. (I believe they still don’t.) The opponents used Proposition 76 to help discredit the Governor and the entire package, including other measures that ended up losing by much closer margins.

Now the Governor is trying to use another spending cap proposal to prop up his entire package. But it’s a fundamentally unpopular notion to begin with, so I don’t know if it will be successful. It seems it is a strange strategy, given recent history.

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