Is California Gov. Jerry Brown's 'ransom' budget an empty threat?

There is little doubt, political analysts say, that California Gov. Jerry Brown (D) intended to frighten state voters with the budget he proposed Thursday. What is less clear is whether his new ultimatum is essentially an empty threat. 

Facing a $9.2 billion deficit, Governor Brown warned Thursday that the state would have to cut $4.8 billion from education if voters did not pass his ballot initiative to raise taxes on rich Californians.  

“He is forcing voters to decide which pain they prefer: severe program cuts, including in both the education and corrections systems, or wrenching tax increases,” says Villanova University political scientist Lara Brown.

But California has earned Standard & Poor’s worst credit rating for a US state precisely for its repeated refusal to address the structural imbalances in its budget, and it is by no means certain the Legislature would swallow Brown’s bitter pill even now. 

Brown’s proposed $92.6 billion spending plan unveiled Thursday is intertwined with his ballot initiative. The initiative would raise $7 billion by raising the tax rate on Californians making at least $250,000, and by increasing the state sales-tax rate from 7.25 percent to 7.75 percent. The hikes would expire after five years. 

If the initiative fails, however, Brown's budget plan has a trigger to automatically cut $4.8 billion from education.

Political scientist Dan Schnur told Bloomberg News that this trigger was "the most expensive ransom note in California political history." But Brown denies that he is trying to strong arm voters.

“When they asked Willie Sutton why he robbed banks, he said, ‘because that’s where the money is,’ ” said Brown in a press conference Thursday. Noting that 40 percent of the state budget, by law, is earmarked for education he continued, “Well, education is where California’s money is.”

But getting the Legislature to back such a plan is another matter. 

Republicans blocked a bid by Brown last year to raise taxes, and they are gearing up to block his budget  now. They say growing state tax revenues show that holding taxes low has stimulated the economy.

“It is disappointing to see Governor Brown propose yet another reckless budget scheme,” said Assembly Republican leader Connie Conway in a statement. “We believe Sacramento’s focus should be growing the economy and getting spending under control, not trying to raise taxes.”

But there are signs that Democrats might be digging in as well – and the Brown budget would fail without Democratic support. At issue are proposed cuts to health and welfare services even if his tax initiative is passed.

"Legislative leaders are already declaring the onerous cuts will not be passed easily,” says Barbara O’Connor, director emeritus of the Institute for Study of Politics and Media at California State University, Sacramento, in an e-mail. 

But she adds that the budget is “an honest appraisal of what the budget will look like without revenue increases in November,” and that voters seem to side with Brown – prioritizing education over health services.  

“Polling indicates that voters are willing to increase revenues to avoid cuts to education,” she says.

One key unknown is where the economy goes in the first half of 2012. If things go better – and more revenue comes in – pressure for both cuts and taxes decreases.

“Jerry Brown and the rest of the state thought that the economy would be doing better by now than it has,” says Robert Stern, former president of the Center for Governmental Studies. “He is desperately hoping that the recovery will be evident by summer and that people will have more confidence in state government and him so that they will pass his measure. If not, education will take a huge hit and so will Brown.”

Brown is in a tough spot no matter which way he turns, adds says Jack Pitney a political scientist at Claremont McKenna College.

“In the longer run, he can't get the voters to raise taxes until he convinces them that he's made deep cuts,” Professor Pitney says. “But will the Legislature accept the cuts?”  

“The Senate [Democratic] leader says he wants to hold off and see if revenues will go up,” he adds. “Maybe that will happen, but might an uptick in revenues in the spring diminish the public appetite for a tax increase in the fall?”