Guest Editorial

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    Why no state budget?

    By State Assemblymember/Fran Pavley, (D-41st)

    On July 1, the statutory deadline, it is very unlikely that California will have a budget. California’s credit will be in even more serious jeopardy than it is already. Vital services that people count on may be cut off.

    I came from local government. I was a four-term mayor and councilmember in Agoura Hills on a nonpartisan city council. Republicans and Democrats worked together in the common interest of securing the city’s finances for the next year. The question that guided us was, “What is in the best interest of the city?” We had little sense of which party label anyone wore.

    I arrived in Sacramento in January of 2001 with the same hopes and expectations. Republicans and Democrats would work together, using their different points of view as checks and balances to craft good policy on a wide variety of issues for our very diverse and dynamic state.

    What followed was a series of disasters. I was barely sworn in when a huge tanker truck crashed through the Capitol building and burst into flames. It was probably a warning of what was to come. For the rest of the year, it was the energy crisis. We weathered that storm and kept the lights on.

    In 2001 and into 2002, the national economy was headed south. California was particularly hard hit because Silicon Valley and its dot-com boom collapsed. A hefty 48 percent of the state’s general fund revenue comes from personal income taxes. Anyone who invested in the stock market saw their income plummet, and California, being so dependent on the income tax, began running an increasing deficit.

    In good economic times, we had been able to make vital investments in our schools. Ten years ago, California’s schools were 49th in the country. Since then we have increased our expenditures for class size reduction and teacher training, as well as enacted testing and accountability measures. And we have crawled our way up from 49th to 29th. We are finally moving in the right direction. This is no time to lose that momentum. A well-educated workforce is vital to our state’s economic future.

    When California faced similar financial problems in the 1990s, Republican Gov. Pete Wilson and the legislature solved the problem with a compromise package of half spending cuts and borrowing, and half new revenues.

    It takes a two-thirds vote of the legislature to pass a budget. In fact, California is one of only three states that require a two-thirds vote. Even the federal government requires just a simple majority vote. What this means is that even if all 48 Democrats voted to pass the current Assembly version 2003-04 budget-and I have been ready for weeks to vote for a balanced proposal of cuts, borrowing and new revenues-six Assembly Republicans must cross party lines and vote with the Democrats.

    However, the press is reporting that Senate Republican leader Jim Brulte has threatened that he will end the political career of any Republican who supports a tax increase to help close the deficit. Nothing good has come out of this “line in the sand” except partisan gridlock, which has been made even worse by the attempts to recall the Governor right in the middle of the budget crisis.

    One of the biggest issues blocking a budget compromise is a proposed half-cent sales tax to pay off the proposed $10.7 billion deficit bond. Both Republicans and Democrats support this one-time only bond, which is critical to closing this year’s gap. The issue is how we will repay it. Wall Street analysts insist that we establish a dedicated revenue source to pay the debt service on the bond. By contrast, if we were to use our existing sales tax to pay off this bond, we would have to cut an additional $2.3 billion every year for the next five years.

    The state budget has become a political problem. It is no longer only a fiscal problem. I am dismayed at the level of partisan bickering and grandstanding while California sinks further into crisis. I am confident that a solution can be reached if we can break through the party labels and superheated rhetoric and work together to move this great state forward.