Can Jerry Brown Restrain Democrats & Save California?

Can Jerry Brown Restrain Democrats & Save California?

By Lou Cannon - November 16, 2012

Be careful what you wish for.

As an erudite former Jesuit seminarian, California Gov. Jerry Brown knows this popular phrase is a secular variant of an adage attributed to Saint Teresa of Avila, a 16th century Carmelite nun: “Answered prayers cause more tears than those that remain unanswered.”

Now that California voters have affirmatively answered Brown’s prayers by raising taxes to avert substantial cuts in education, the governor is warning his fellow Democrats in the state legislature to curb their spending tendencies.

The warning is needed. Voters who approved Proposition 30 -- Brown’s ballot proposal to raise sales and income taxes over seven years -- also gave Democrats a super-majority in both legislative chambers for the first time since 1883. Although Prop. 30 was sold to the public on grounds that its revenues would be used for education, some Democratic lawmakers, heady with victory, have already hinted that they want to use some of the money for other programs that have been starved. Adult dental care for the poor, for instance, has been eliminated and spending on public parks reduced.

But in a state that usually considers tax increases anathema, it was the plight of public education that made Prop. 30 viable. Many elementary and secondary schools are overcrowded and struggling to keep up test scores. The state’s two university systems and community colleges have raised tuition and turned away applicants. Brown warned that if Prop. 30 failed, school years would be shortened and tuition for higher education additionally increased.

Since Prop. 30 revenues go directly into the general fund, they could theoretically be spent on anything -- even though the budget was balanced on the assumption the initiative would pass and the money would be devoted to education. According to the Los Angeles Times, state Treasurer Bill Lockyer, a Democrat, was inundated with phone calls from “activists of all stripes” on Election Day saying that now was the time to spend more money.

“They had to be reminded that the money has already been spent,” Lockyer said.

Brown was reminding everyone of this even before the votes were fully counted. He told reporters it wasn’t easy to hold the public’s trust and that he intended to keep an eye on the budget and avoid “spending binges.”

Then, using one of the biblical analogies he favors, this one from the Old Testament, the governor talked about how seven years of plenty were followed by seven years of famine. “We need the prudence of Joseph going forward these next seven years, and I intend to make sure that’s the story we look to for guidance,” he said.

Restraining spending is not the only problem Brown faces. Because of a tax structure that is heavily dependent on the volatile state income tax, it’s far from certain that Prop. 30 will raise the $6 billion annually it is supposed to produce.

Prop. 30 increases the state sales tax, which varies between localities but is overall one of the highest in the nation, by a quarter-cent for each of the next four years. It raises income taxes on those making more than $250,000 by one to three percentage points, depending upon the amount of income. These taxes will expire after seven years.

In the voter information guide, the non-partisan legislative analyst’s office warned that Prop. 30 revenues will fluctuate. It said that investment income of high earners, and hence the amount of taxes they will pay, “may change significantly from one year to the next, depending on the performance of the stock market, housing prices and the economy.” Swings in the market tend to have an outsize effect on California’s budget.

In addition to its unstable tax structure, California has the lowest credit rating of any state and is second only to Illinois -- the other state with a Democratic super-majority in the legislature -- in unfunded pension liabilities.

In this uncertain economic environment, Brown has emerged as an unlikely champion of stability. The state’s two leading business trade groups, the California Chamber of Commerce and the California Business Roundtable, normally oppose tax increases but stayed neutral on Prop. 30. Now, these organizations and some Republicans privately are counting on Brown to restrain the spending tendencies of the legislature.

It’s a new role for Brown, so flighty in the two terms he served as the state’s chief executive from 1975 to 1983 that he earned the nickname “Governor Moonbeam” and was especially distrusted by conservatives.

Now Brown has emerged as California’s most reliable political leader, a heavy favorite to win re-election in 2014. During this year’s campaign, as public polls showed slipping support for Prop. 30, Brown steadfastly predicted its passage. He relied on internal polls that showed a correlation between support for the initiative and support for President Obama. The president carried California by 23 points. Prop. 30, sailing along on his coattails, won by eight points.

Since the election, Brown has refrained from saying, “I told you so” to Democrats of fainter heart. He knows that victory can be fleeting and that vigilance and economic good luck are needed to keep Prop. 30 on track. Or as he would say, the prudence of Joseph. 

Lou Cannon, who is traveling in Scotland, has written about the campaign for RealClearPolitics.

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