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March 18, 2004

Math Problem

http://www.jewishjournal.com/opinion/article/math_problem_20040319

It's spring in Sacramento, and that means the Capitol steps are jammed again with protesters against government cuts -- the first protesters to show up in mid-March were thousands of community college students demanding that California taxpayers continue paying the nation's steepest college subsidies per student.

In light of his March 2 election victories, some say the governor can withstand the emotions that will crescendo this summer, as they have in recent years, with large numbers of wheelchair-bound recipients of state monies zipping through halls to stare down uncomfortable legislators in tense hearings.

He may be able to withstand the emotional pressure, but a bigger question may be whether Gov. Arnold Schwarzenegger can withstand the math.

Last year, facing a historic deficit that dwarfed the budgets of some smallish countries, the Legislature cut very little -- roughly $4 billion from an operating budget of nearly $80 billion. Now, the governor has proposed $7 billion to $9 billion in cuts for fiscal year 2004-05.

But the Legislature won't give him all the cuts he wants, and he needs to close a gap of $14 billion. So his 150-person performance review team is scouring the state to identify waste, abuse, fraud and duplication for further cuts.

Mindful of the governor's popularity, Democratic Assembly Speaker Fabian Nunez of Los Angeles, a savvy negotiator, is smoothing the waters between the anti-cut Democrats and the anti-tax Republicans. He's joined Senate President Pro Tem John Burton (D-San Francisco), the unapologetic big government liberal, in saying the Democrats won't repeat 2003 by digging in their heels for taxes and failing to seek cuts -- the stubborn legislative stance that sacrificed their governor.

In a highly unusual shift, the Democrats are holding hearings into how efficiently state programs operate. Nunez said the hearings are designed to cut waste and abuse.

Maybe that's what the Dems are doing -- or maybe not. A major hearing March 15 was on child care, an area with little potential waste.

The hearing seemed designed to make the governor squirm, as people testified about how badly low-income families need child care. Were legislators really trying to show the governor planned to save billions by making sure nobody gets extra milk and cookies?

But there's still room for optimism. Daniel Pellisier, chief of staff for Assemblyman Keith Richman (R-Granada Hills), said, "It's heartening to see that the Dems will look toward eliminating waste and inefficiency in the budget before asking taxpayers to pay more money."

The fresh-thinking Richman, a socially moderate Jewish pol, is one of very few leaders in Sacramento with moderate ideas, so the governor seeks him out regularly.

"Hopefully," Pellisier said, "in the weeks ahead, the Democrats will look at things that will generate significant savings in areas such as health care administrative costs, the Department of Corrections and the education bureaucracy."

Still, it's instructive to look back at December, before Democratic leaders witnessed Schwarzenegger's last success, when twin Propositions 57 and 58 to refinance the state's huge debts and put a spending cap on the Legislature won by landslides.

Back in December, Democratic leaders rejected Schwarzenegger's request to place a true spending cap on the March ballot. The spending cap voters approved, which makes it difficult but not impossible for the Legislature to overspend, was fashioned by the Democrats.

In arguing for a softer spending cap, Burton said, "It is our job to implement our own vision, and that of voters.... We owe voters not just what they think is right at the moment but also our independent assessment of what is best."

Deploying that philosophy, Burton was the fiercest fighter in Sacramento against budget cuts in 2003. He emerged victorious -- if you could call it that.

Californians should expect that by about May or so, after the Democrats' hearings have failed to find a whole lot of cuts that don't create fury among the well-padded public employee unions, the two parties' divergent philosophies will reassert themselves.

As one Republican insider noted, "The Democrats started their waste-cutting hearings with child care? C'mon. What about waste at Caltrans, which we're told doesn't have enough money now to pursue many transportation projects? Why do we still pay 7,000 state engineers? Are they sitting, like, with their little pencils poised in the air?"

Sacramento is so resistant to trimming down, that state department heads are notorious for refusing to say where savings exist in their own departments. Richman sued former Gov. Gray Davis' Department of Finance to get access to reports Davis ordered from department heads showing where they would make 20 percent budget cuts if they had to.

Davis vowed to cut the size of government but later lost his nerve. He refused to show the 20 percent-cut documents to the Legislature for fear of angering public unions.

Recently, Richman lost his suit. The Legislature never did learn what California's department heads said about where they'd cut.

Schwarzenegger has access to those reports. Among his other difficult tasks, he may become the first governor in years to seek big layoffs or wage cuts from a work force of about 230,000.

The governor has one modest escape hatch. Borrowing can close part of the gap. The $15 billion bond issue approved by voters March 2 to refinance the Davis debt included $5 billion or so in unassigned borrowing. The governor wants to use it over the next three years to close modest budget gaps that persist as he hacks away at deeply embedded overspending.

He might, for instance, direct the money toward the huge Medi-Cal program, now that the courts have said California can't further reduce the fees it pays doctors without conducting lengthy studies.

Meanwhile, Schwarzenegger and his finance czar, Donna Arduin, are actually seeking out waste and abuse in government. If the Dems launched their efficiency hearings with less than honorable intentions, they will look like phonies and obstructionists by summer, just as several Democrats face down tough legislative races.

If that happens, the students may be the ones on the Capitol steps now, but it is the Democrats who could get an education.

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