In the relaunch of the The New Republic, David Dayen describes the four-year strategy California Democrats deployed to balance the budget and put the state back on the path to prosperity:
Progressive Democratic activists identified the straitjacket of rules that had the state tied up in knots, and devised a systematic plan to change them. Through massive organizing, they transformed the electorate and sidelined Republican obstructionists. Now, with surplus money on hand, they’re getting ready to fight a new battle over the next few years: whether to focus on budget balancing and debt reduction, or to continue to boldly invest in California’s future. National Democrats, mired in a series of endless fiscal showdowns in Washington, ought to pay attention: California suggests a way to overcome continual hostage-taking and government-by-crisis.
California’s recent budget problems resulted from the deepest economic downturn since the Great Depression. But the state’s difficulty in addressing them was as much a political crisis as a budget crisis. Since the passage of the notorious anti-tax Prop 13 in 1978, which capped property tax rates and made it nearly impossible to raise revenue through the legislature, California has been locked into a revenue structure that, outside of boom times, proves too small to finance the public services that residents desire. Several tax cuts during the late 1990s dot-com boom, and a huge $5.5 billion annual cut to the vehicle license fee passed by Arnold Schwarzenegger in 2003, only exacerbated this imbalance.
The state also had to contend with multiple veto points that allowed the minority party to control the fiscal debate. Until 2010, the legislature needed a two-thirds vote to both pass a budget and raise taxes, leading to several incidents of brinksmanship with Republicans, who gerrymandered the state just enough (in a corrupt bargain with the majority Democrats) to hold on to a bit over one-third of the legislative seats. Robbed of the tools of budget-balancing, majority Democrats had to make painful concessions in order to get Republicans to pass a budget.
Piece by piece, reformers started to dismantle these obstacles, using the state’s ballot initiative process. In 2008, voters approved an independent redistricting commission to break the incumbency protection racket and make the legislature look more like the electorate. In 2010, a Republican year, increased turnout and voter mobilization helped elect Democrats to all statewide offices, including the Governor’s mansion. Voters also passed Prop 25, a critical measure for reformers, allowing for a simple majority vote to pass the budget. Majority vote budget initiatives had been on the ballot before, but after years of chaos and minority hostage-taking, it was a far easier sell for reformers. Adding a “no budget, no pay” rider that would withhold payment to legislators if they failed to pass a budget helped provide accountability and broaden support.
As a result, the subsequent two budget agreements were significantly less volatile. However, because of the structural revenue gap and the super-majority requirement to increase taxes, both budgets still entailed crippling cuts. Governor Brown campaigned on a balanced solution that included raising taxes, but he could never pick off the Republicans needed to pass that through the legislature. So in 2012, Brown resolved to go directly to the ballot.
The activist coalition, which includes Reclaiming California’s Future and other organizations, also held Gov. Brown’s feet to the fire. He proposed raising income taxes on everyone making $250,000 and above, but RCF came up with an alternative plan that generated even more revenue than Brown’s but only raised income taxes on those making over $1 million. The compromise plan was put before voters as Prop 30 last November. It passed, 55 to 45 percent.
Structural problems remain — unemployment is still unacceptably high at 9.8 percent. But, as Dayen notes, the progress so far has allowed California to move the debate from how the state will pay its bills to how the state will invest in its future, which is a much better debate to have.
