Political Storms Swirl in Cash-Strapped California

BY Spencer Michels  December 6, 2011 at 11:50 AM EDT

Even though there don’t seem to be any major statewide election contests on the horizon, political winds are swirling in California, kicking up dust. Democratic Sen. Dianne Feinstein is up for re-election next year, but so far nobody well-known is running against her. So all eyes are on the governor to see if he can rescue a state in serious trouble.

In a new Field Poll, Democratic Governor Jerry Brown is doing ok — but not great: 47 percent of Californians approve of his performance, while 36 percent disapprove. That’s the second-lowest in history. As the leader in a state that nearly everyone agrees is broken, 47 per cent isn’t too bad. As Field Poll director Mark DeCamillo said, “that’s as good as he could possibly hope for in a bad situation.”

The bad situation and the political storms are mostly about money, and they portend major developments on the horizon for the state and at the ballot box.

The state does not have enough money to cover expenses. It will be $3.7 billion short this season. It is facing automatic spending cuts that lawmakers and the governor agreed to earlier this year in order to get a budget passed. Those cuts come on top of big slashes to the state budget, and are taking their toll on state programs, from welfare and education to state parks. There’s debate on whether the legislature could modify the triggers, but there’s not much inclination to do that.

So Governor Brown’s modest approval ratings could take a major dive, should the “triggers” go into effect and cut services even more.

In several respects, California’s budget dilemmas parallel the national picture. Democrats and Republicans are at loggerheads over taxes and spending, with the GOP refusing to approve any tax increases or public votes on tax increases. The Republicans are distinct minority in the legislature, but they can kill tax measures, which require a two-thirds vote to pass. The state Democrats don’t like the cuts to programs, especially for the poor, but have gone along with the governor in reluctantly supporting them, faced with no other choice — at least for now. But there may be choices coming up.

The fallout from this mess takes many forms. For starters, the legislature is far less popular than the governor: only 22 percent of Californians approve of how lawmakers are doing their jobs, while 62 percent disapprove. (That’s actually better than how they perceive Congress: only 10 per cent of Californians approve of the job they’re doing, while 84 percent disapprove.)

Brown realizes he has got to do something to try to remedy the financial situation, since going to the legislature obviously doesn’t work, and the cuts could be devastating. So very soon he will launch a campaign to put on the ballot a measure to boost revenues by $7 billion over a five-year period, by raising taxes on California individuals making more than $250,000 a year and temporarily raising sales taxes half a cent. Taxing high-income people should be popular, but the sales tax increase could face opposition. California voters have not often looked kindly on tax increases, but this time — some analysts say — the situation is dire. The vote would come next November.

But complicating the chances for Brown’s plan are several other tax and reorganization measures headed for a vote on the same November ballot, if their proponents can gather enough signatures:

*A group of well-known, mostly wealthy Californians called Think Long, organized by nomadic billionaire Nicholas Berggruen, has proposed lowering the state’s income taxes for individuals and corporations, and imposing a sales tax on services; this would boost revenues by $10 billion, Berggruen and his cohorts say. But will Californians vote to lower taxes for the wealthy?

*The California Federation of Teachers (one of two teachers’ unions) wants to raise taxes for millionaires, with most of the money going to schools.

*Another plan to rescue the beleaguered schools comes from civil rights advocate Molly Munger (with ties to Warren Buffett), which would raise income taxes, except for the poor.

*And Californians for Clean Energy and Jobs is planning to raise $1.1 billion by raising corporate taxes on out of state businesses, to fund clean energy projects.

There are other plans as well — and voters could well be confused by next November’s ballot. Should the economy improve by then, no one knows what the effect on tax measures would be. And that, in turn, could trigger its own backlash to the governor’s proposal.

So while next November’s ballot may not be crowded with races for office (except for president), the fate of California’s dysfunctional government could ride on those impending — and potentially confusing — tax measures that are making their way toward the voting booth, and on the popularity of Jerry Brown, who will have to campaign hard for his proposals — even though he personally won’t be on the ballot.

California’s state capitol building in Sacramento, Calif. Photo by Flickr user Wendy McCormac.