Why Jerry Brown's budget gambit may backfire with California voters

Gov. Jerry Brown and fellow Democrats got halfway to closing California's budget deficit by cutting. They hope voters will opt to raise taxes come November to cover the rest. But the political winds may be blowing against them, analysts say.

The state budget that California Gov. Jerry Brown signed late Wednesday will balance only if voters in the Golden State approve $8 billion in new taxes in November – and Mr. Brown and fellow Democrats in the capital are painting a dire picture of what will happen to public schools and social services if voters reject that option.

But it's a gambit that could well backfire, say angry Republicans and some political analysts, given the political dynamic at work in the state.

Democrats note that the budget already makes $7.7 billion in cuts in social services – halfway to closing the $15.7 billion deficit for the new fiscal year, which begins July 1. If California voters reject the ballot initiative on higher taxes, the new budget calls for a series of automatic cuts to kick in, including three fewer weeks of public school for two years.

It's a risky move for Brown. 

“This budget frames Brown’s tax proposal in November as the following offer: vote for the tax, or the kids get it,” says Jack Pitney, professor of government at Claremont McKenna College. “The question is whether voters will find that message appealing.”

Noting that California voters recently rejected a new tobacco tax, Mr. Pitney says, “you have to wonder if they would now accept this much broader tax.”

The November ballot initiative asks voters to increase for five years the state income tax levied on those who earn more than $250,000 annually. It boosts the state’s sales and use tax by one-half cent for four years, and allocates 89 percent of these temporary tax revenues to K-12 schools and 11 percent to community colleges.

Some analysts say the new budget essentially does what Brown promised voters he wouldn’t do – kick the can down the road.

“The budget signed today looks a lot like the budget signed last year, in that everyone knows that it is out of balance when it was signed,” says Michael Shires, professor of public policy at Pepperdine University, in an e-mail. “This year, the budget is, at its signing, at least $8 billion out of balance, and we will likely incur at least half of that imbalance before voters get their say in November. If their answer is no, and there is at least a 50-50 chance it will be, the state will have to act quickly.”

One minus for Brown on Election Day may be President Obama’s strength in California.

“Brown is hoping that the pro-Obama electorate will pass his tax increase, but because the president’s strength here is so certain, [the Obama] campaign won’t spend a lot of money on voter turnout because they need the money in Ohio and Florida,” says Pitney. “So the Democratic turnout may not be as robust as otherwise.”

Political fallout from the signed budget is also proving to be problematic. The governor and Democratic lawmakers chose to be dismissive toward Republican lawmakers, say Mr. Shires and others. The choice could come back to haunt them.

First, “the creativity associated with the 2011-12 budget and any problems associated with this current budget will fall squarely on the shoulders of Democrats heading into the 2014 state elections,” says Shires. “It will be easy for Republicans to say they had nothing to do with it.”   

Second, freezing out the Republicans could make it harder for the tax increases to pass.

“Democrats have sent a message to Republican voters and that significant share of ‘decline-to-state’ voters who have some Republican sympathies: They and their voice do not matter,” says Shires. History shows that when the governor and legislature send that kind of a message to any group, "they respond in force at ballot box," he says, citing the backlash in 1978 to Brown and the legislature over property taxes. "Opponents of the tax will be able to use this to their advantage, and the governor will have to find some way to reach across the aisle if he hopes for his tax proposal to succeed.”

Some Republicans have already taken the offensive against it.

“It's a disgrace that Democrats are playing politics with the budget to sweeten the appeal for ill-fated taxes at the ballot box,” said Assembly Republican leader Connie Conway in a statement Thursday. “If Governor Brown is serious about wanting to earn the trust of California taxpayers, then he will do the right thing by vetoing this reckless budget and forcing the Legislature to go back to the drawing board on the honest, transparent and fiscally responsible budget that Californians deserve.”

Some analysts say Democratic lawmakers were disciplined, even brutal, in chasing down ways to close the deficit, even if unpopular with the public.

The budget includes more than $1 billion in cuts from the insurance program for the poor, Medi-Cal, and other health programs. Some $666 million of those savings come from a plan to move 1.4 million seniors and people with disabilities who receive benefits from both Medicare and Medi-Cal into managed care. In one of the more tendentious moves, legislators decided to eliminate the Healthy Families Program, shifting about 900,000 poor children into Medi-Cal.

Brown was blunt when signing his budget, which calls for $91.5 billion in general fund spending ($142.6 billion in total funding when dedicated funds and bond money are included).

“This budget reflects tough choices that will help get California back on track,” he said in a statement Wednesday.