Jerry Brown gives California lawmakers budget warning: brace yourself

Gov.-elect Jerry Brown took the unusual step Wednesday morning of convening a town-hall-type summit of lawmakers three weeks before he actually takes office. The subject was the California budget crisis, and the the takeaway was, "You ain't seen nothin' yet."

California budget battles have become part farce, part tragedy in recent years as lawmakers repeatedly miss deadlines and pass budgets that paper over the structural flaws that lead to chronic deficits.

That ends now, was Mr. Brown's message in a gathering that seemed aimed at steeling lawmakers for a virtual budget apocalypse.

Others have made the claim before, but Brown has one thing going for him: a level of political savvy that his recent predecessors have lacked. He has already been governor of California from 1975 to 1983, which means "we will see much more sophisticated gamesmanship than” Gov. Arnold Schwarzenegger, says Joel Kotkin, a California political expert at Chapman University. "People may not like him, but they respect him, and they didn’t respect Arnold.”

On Wednesday, Brown came armed with charts and experts on the dais, mounting a sobering slide show to demonstrate the severity and singularity of the state’s $25 billion budget shortfall. He claimed that this is unlike any recession in California history and sought to convince lawmakers that all the solutions – both stopgap and structural – that they have thrown against this mounting problem in past years will no longer fill the gap.

Brown’s team of analysts indicated that cuts to prisons and the once-vaunted state school system would need to be deep. And that there is no single solution.

This comes at a time when the state is reeling. Spending on education, which accounts for 40 percent of the general fund outflow, has already taken a 10 percent cut in a state that now ranks behind nearly every other state in educational statistics such as student-to-teacher ratios. Unemployment hovers at 12.4 percent – higher than the national average. And numerous comments from lawmakers suggested that the high cost of doing business in California is still pushing companies out of state.

The new governor’s biggest problem is that he is missing the silver bullet of prior decades.

“During the mid-1990s, strong economic growth helped solve budget problems at the state and federal levels,” says John Pitney, a political scientist at Claremont McKenna College, via e-mail. “It's unlikely that the economic cavalry will save the day during the next couple of years. Brutal arithmetic will force painful spending cuts or painful tax increases.”

What is the Golden State going to do? Wednesday’s event, says Brown, was not so much about answers as getting everyone tasked with solving the problem on the same page and fleshing out the pertinent questions. And austerity is one of Brown's strong points, says Mr. Kotkin.

Brown will have a legislature dominated by his own party, but that might not help. “How does he get his own party members to gore their favorite oxes?” he asks.

One way is to exploit the sense of crisis to push change. “I’m pretty sure he has read Machiavelli,” Kotkin says.

Brown puts it a different way: "Breakdowns can lead to breakthroughs.”

Perhaps the most important lesson to glean from the dire condition of the world's eighth largest economy is the importance of the middle ground, says Kotkin. He notes that the largest outflow of California residents to other states, “is the middle class.”

This moderating population is essential economic and social ballast,” he says adding, “both at the state and national level.”

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