California’s Budget–A Time for Straight Talk on How We Got Here and Where We Should Go

By John Laird
Chair
Assembly Budget Committee

The most successful national candidates this year have tapped into a desire for public officials to be direct and truthful with the voters, along with leading the nation away from the partisan divides that have seemed to sap our ability to achieve progress. Five years ago I entered the legislature with this same hope, and while I’ve been successful on many fronts, this sentiment in regard to the state budget continues to be absent.

Arnold Schwarzenegger ran for governor in the 2003 Recall election as a candidate who would end gridlock and get things done. In that campaign, he pledged to lower the car tax, balance the budget and not cut education. At the time I said keeping all three pledges would be impossible—and a year later Schwarzenegger broke his pledge and cut education.

The governor did, however, keep his promise to cut the car tax. Together with a ballot measure that locked in the spending supported by the car tax—yet without the car tax revenue—those moves will cost the state $6.1 billion next year. I, and most of my Democratic legislative colleagues, didn’t support the idea of both eliminating the revenue and locking in the expenditure. The governor and most Republican colleagues did.

When Governor Schwarzenegger was facing a major shortfall in his first budget, he proposed major cuts and going to the voters in 2004 with a new $15 billion bond to pay off debt. At the time I supported raising a tax to pay for that bond. The governor and Republican legislators opposed that idea. For next year’s budget the cost of that resulting bond payment—unbacked by a new revenue source—will be $3 billion.

The governor also sponsored Proposition 46, approved by voters in 2002, which sets aside over $400 million annually for after-school childcare, without a way to pay for it. Added together on an annual basis, the lost car tax revenue, the unbacked bond payment and the mandated after-school childcare will cost $9.5 billion in the next budget year—well more than the $8 billion deficit we’re working to close. Ironically, through 2008, the revenue the state has lost due to the cutting of the car tax will be $15 billion—the same amount as the debt bonds voters approved in 2004.

To summarize, if the governor hadn’t cut the car tax and had provided a new funding source for the debt bonds and afterschool care, we wouldn’t have a budget deficit—and the Proposition 98 guarantee to schools would be working just fine. And, we would have probably been able to pay off the debt bonds by now.

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