California budget: Voters approve measure to ease a chronic crisis

Hoping to avert California’s annual rise into the national spotlight by being unable to pass its state budget on time, voters on Nov. 2 passed Prop. 25, erasing the Legislature’s crippling two-thirds vote requirement for passing a budget.

California had been one of just three states in the country with that two-thirds provision. The measure passed 54.8 percent to 45.2, and the Los Angeles Times called it “possibly the most important reform adopted at the ballot box in a generation.”

The state budget was a record 100 days late this year and last year issued IOUs to keep the government running. Now, as Jerry Brown returns for his second stint as governor, with an all-blue statehouse, California has the same requirement as 47 other states: a simple majority.

“It is a big story,” says Barbara O’Connor, director of the Institute for Study of Politics and Media at California State University, in Sacramento. She says that because any deviation from majority rule gives disproportionate power to the minority, the new provision will go a long way in ending the deadlock and stagnation that has long plagued California government, irritating residents and damaging the state’s reputation and creditworthiness.

“Prop. 25 will clearly make it easier for the majority party to pass a budget on time,” adds James Mayer, executive director of California Forward, an organization of business leaders created by five major foundations to transform state government through citizen-driven solutions.

Ms. O’Connor says the new law will help California overcome its reputation for having structural flaws rendering it “ungovernable.”

All this said, analysts are quick to add that California politicians will not be freed from avoiding lots of tough decisions.

“Passing Prop. 25 was not a trip to the Wizard of Oz. It will not endow our lawmakers with a heart, a brain, or courage,” says Jack Pitney, political scientist at Claremont McKenna College. In trying to close a $19.1 billion budget gap this year, Democrats held on to raise taxes, while Republicans dug in their heels attempting to dismantle the state’s welfare system.

Nor are voters and residents off the hook from participating in the process.

“California will become ‘governable’ only when residents stop telling lawmakers that they want more spending and lower taxes and begin to sign on to the tough choices we talk about but try to avoid,” says Steve Levy, president of the Center for the Continuing Study of the California Economy (CCSCE). “The key is to show residents that the budget process is open, tell residents the truth, and invite them into the discussion of budget choices.”

The two-thirds requirement was instituted by California voters in three stages. In the Great Depression, they decided that no budget could be passed in a slow-growth year without the approval of two-thirds of both houses. Next, in the 1960s, the requirement was extended to include all budgets in all years. Then in 1978, as part of the Proposition 13 tax revolt that began in California and swept the nation, the requirement was applied to all tax increases as well.

A key provision of Prop. 25 that helped its passage, analysts say, was that it expressly did not lower the two-thirds vote required to raise taxes. Another provision which helped make it popular – to the disdain of tax groups – was a provision that makes lawmakers forfeit pay during budget delays. The Legislature’s approval rating is now at 14 percent, the lowest in state history.

Jon Coupal, spokesman for the Howard Jarvis Taxpayers Association, said, “It provided an opportunity to exact some revenge against the Legislature.”

Some analysts criticize the new law because it does nothing to make sure the budget is truly balanced, or that lawmakers are not overpromising or that the money is being well spent.

“This is why California Forward did not endorse Prop. 25,” says Mr. Mayer. “We believe simple majority vote needed to be part of a package that addressed fiscal irresponsibility and autopilot budgeting, as well as hyper-partisanship.”

CCSCE’s Steve Levy says a more important part of the California election as regards the budget was Gov.-elect Brown’s pledge to have an earlier, more open and honest budget discussion. Brown is going to Sacramento next Tuesday to huddle with legislators.

“The ability to pass a budget by majority vote does not change the fact that an honest and balanced budget will require tough choices on spending and taxes that no one so far has been willing to make,” says Levy. Analysts credit the downturn in the economy, which produced the largest state budget deficit in American history – $63.5 billion – with adding to voter momentum that passed Prop. 25.