California's agony can't be ignored


Everyone knows public finances in California, America's once-fabled Golden State of opportunity, are in shambles.

But should the rest of us care?

The state's ever-rising deficit has hit $24.3 billion as the legislature's liberal Democrats and conservative Republicans remain in constant deadlock. Voters in May overwhelmingly rejected five "budget reform" ballot measures.

Even before the showdown at the polls, the crisis had forced Gov. Arnold Schwarzenegger to demand budget cuts topping $15 billion by slashing school aid, cutting the state's medical care assistance program and laying off 5,000 state workers.

Now Schwarzenegger says $5.6 billion in added cuts are necessary. He'd shut down 80 percent of California's state parks. Then cut close to $1 billion from state college and university budgets. along with student aid. Another $909 million would be saved by commuting the sentences of nonviolent offenders a year early (probably a good idea) but eliminating prisoner substance abuse counseling and vocational training (sure ticket to more prison pressures).

Most shocking of all, Schwarzenegger believes it will be necessary to eliminate the state's basic welfare program with its 1.3 million beneficiaries - 1 million of them children. The budget "gain" of $1.6 billion would trigger $4.7 billion loss in federal funds. California, Frank Mecca of the County Welfare Directors Assn. told the Sacramento Bee, would become "the only state in a country in the First World not to have subsistence benefits for children."

So how did California get in this terrifying spot? A lot, clearly, by its own missteps, starting with fierce voter-approved revenue-cutting measure of 1978, Proposition 13. That initiative not only cut property taxes statewide by an average of 57 percent but forced both the state and local governments into a super-majority straightjacket to raise taxes - a minimum two-thirds vote in the legislature or local councils.

Profoundly undemocratic (a minority of a third can tyrannize the majority), the two-thirds rule mixes like a witch's brew with California's penchant for special interest ballot initiatives that distort budget making. Plus, the minority Republicans of late have been shrinking into an ideologically rigid, anti-government party, just large enough to paralyze legislative decision-making in Sacramento.

What a contrast to California's truly golden years of the 1950s and '60s, when such governors as Earl Warren and Pat Brown taxed liberally to make historic investments in schools, a world-renowned university system, major waterworks and more.

Still - notwithstanding California's recent follies - should the nation refuse help, keeps hands off? California accounts for 12 percent of our national population. Its universities, corporations, laboratories are critical to our collective future.

Stephen Levy, a leading California economist, claims his state is "taking a bad rap." Not just California, but 48 states currently face deficits. Roughly 20 percent of California's current deficit, he acknowledges, is its own fault, partly caused by tax cuts made in the boom year of 2000 and never restored.

But the real problem, notes Levy, is "a massive national recession" that's not California's fault. A faltering state government, ending welfare to work, cutting school years, ravaging university and student aid budgets, means "we're eating our seed corn," throwing a long dark shadow across the future. And with sharply reduced state spending, deepening and lengthening recession.

Levy's message to President Obama and Congress: Enact a second round stimulus bill - perhaps $150 billion - as a safety net for states (maybe $20 billion for California). The funds could focus first and foremost, he asserts, on investment in America's children and youth.

There's a counterargument - the federal government is already dangerously into red ink spending, imperiling its future creditworthiness. Levy's rejoinder: If Washington can bail out AIG and banks, how about a safety net for America's own children?

And on the California front, a push for dramatic reforms - possibly even the first state constitutional convention since 1879 - is gathering steam. A leading business group, the Bay Area Council, backs the idea of a "con-con" authorizing initiative on the 2010 ballot. The Council is suggesting assembling 400 Californians, chosen mostly at random, to take an entirely fresh look at California's government, budget and election processes, and recommend changes for a vote in 2012.

Meanwhile a former Assembly Speaker, Robert Hertzberg, now co-chair of the reform group California Forward, is urging a radical decentralization of taxing authority and services - from Sacramento, to the state's regions and cities.

The idea's especially intriguing because, as Levy notes with examples from Los Angeles and elsewhere, local voters around California have recently shown they will approve major funding for schools and other vital local services. They aren't anti-government, they're just anti-Sacramento and its ugly partisanship, misleading initiatives and compromise-resistant government worker unions.

So if a there's a light at the end of California's long, dark tunnel, it may be compellingly simple: a focus on pragmatic, people's, grassroots democracy.


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