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Sacramento Update: Budget Delays, Race For Governor

Audio

Aired 8/16/10

The down economy, and state budget delays are dominating the political conversations in Sacramento these days. We speak to non-partisan political consultant Leo McElroy about why the budget is more complicated this year, and how the state's financial woes will play into the governor's race.

MAUREEN CAVANAUGH (Host): I'm Maureen Cavanaugh, and you're listening to These Days on KPBS. It isn't as if there's no good news about the California state budget stalemate. Last week, lawmakers in Washington voted to send more federal aid to the states, including California. If that bill had stalled, our budget problems would have increased astronomically. And state workers got some temporary glad tidings from a California appellate court a few days ago, putting furloughs on hold for them for at least another week. Since that's what passes for good news, you can imagine that movement toward a budget agreement in Sacramento is not proceeding well. Republicans, Democrats and the governor are still struggling to agree on a plan to close a $19 billion budget gap, and the budget is now about 7 weeks overdue. Joining me to discuss the stalemate in Sacramento is my guest, nonpartisan Sacramento political consultant and a contributor to Morning Edition here on KPBS, Leo McElroy. Good morning, Leo.

LEO MCELROY (Sacramento Political Consultant): Good morning, Maureen.

CAVANAUGH: What are, if you could summarize, the main areas of disagreement between the Republicans and the Democrats this year?

MCELROY: Revenue and cuts, very, very basically, and it’s probably where you would expect it to come down. The problem is that Republicans are insisting on much more draconian cuts in areas such as welfare and the work programs and aid to school, whereas the Democrats are insisting that they’ve cut those as far as they can go and they need to do some revenue measures to be able to maintain at least some reasonable level of those services. Republicans see revenue measures as out of line and are pretty much putting up a road block that says, no, we will not go for any added tax measure so what we have as possible solutions being kicked around are bits of really bizarre bookkeeping language that would juggle this number and that number and try to come up with something that people can vote for.

CAVANAUGH: And just as the Democrats seem to be gaining a little bit of steam on their proposal for tax increases that they said would only – would not affect the middle class, the State Independent Legislative Analyst analyzed the plan and came out with a different idea.

MCELROY: Yeah, the Leg Analyst kind of shot a pretty large hole in the projections because the projections were based on some assumptions that didn’t hold up. It’s a fairly complex thing but essentially what we have is some taxes which will be expiring at the end of the year and would be going out of existence next year. The Democratic plan is based on tax savings that don’t recognize that those savings are already going to occur. So essentially what would happen in the proposal that they’ve put forward as the Leg Analyst sees it, and I have to tell you the Leg Analyst has a pretty good record of calling the shots the way they see them…

CAVANAUGH: Umm-hmm.

MCELROY: …is that it actually is going to cost the middle class some substantial money. The numbers that we’ve seen would indicate probably for someone in a fairly low range of income probably another couple hundred bucks a year in added taxes. And so this gives the Republicans something to shoot at and at the same time raises some questions about the Democrats’ version of the numbers.

CAVANAUGH: Now, separating ourselves from, for a moment, from Republican and Democrat struggles, what kind of impact does the fact that we don’t have a budget have on state services, contractors who do business with the state, are they feeling any of this yet or is that still to come?

MCELROY: No, I have to tell you that this is a scary time. I used to do some services for the state as a consultant and this is the time that you start looking at the fact that they’re not going to pay. I mean, the state is notoriously slow paying their bills anyway but this is the point where you start saying, man, that money may not come in at all or it may not come in for a long, long time. And so you start seeing really difficult situations. I can recall a few years ago working with the Department of Forestry, we were facing the fact that suppliers who supplied fuel for firespotting and firefighting aircraft were not going to continue supplying the fuel because they weren’t going to get paid.

CAVANAUGH: That’s a bad time of year for that to happen.

MCELROY: Oh, I’ll tell you, and, you know, and what’s the time of year that budget crisis happens? Just as we’re going into fire season always.

CAVANAUGH: Umm-hmm. I’m speaking with non-partisan Sacramento political consultant Leo McElroy, and we’re talking about California’s state budget stalemate. Now I said in the introduction that the governor wanted to impose three mandatory unpaid days off for 150,000 state employees. A state appellate court has rejected that furlough order, at least for the next week. Why was the furlough plan rejected, Leo?

MCELROY: Well, the contingent is that the bargaining units who would be most affected by this—and these, by the way, are the bargaining units that have not agreed to make concessions on pensions and retirement plans that the governor has asked for—these bargaining units, according to the court, cannot be forced into this furlough plan because it is a violation of their contract. And so we have a situation where the governor is faced with either winning an appeal, which he’s going to try to do, or taking the more draconian approach and starting to actually lay off people.

CAVANAUGH: Umm-hmm.

MCELROY: Not furloughs, not three days off a week, just you don’t work here anymore. And that’s got to scare the living daylights out of state employees because it’s a very real possibility.

CAVANAUGH: Now besides the disagreements about policy that we were just talking about, that revenue versus taxes – revenue versus cuts, excuse me, the whole idea of the negotiations around this budget, you describe them as pretty ugly this year. Tell us a little bit more about that.

MCELROY: Well, it’s interesting because it started off tremendously ugly and it’s a reflection of a national political trend that we’re seeing. Politics is getting uglier in this country, I think, and then we’re seeing deeper divisions between the parties. And the legislature reflects this pretty strongly. Most of the Democrats are pretty far to the left side of the ledger of their party, most Republicans are pretty far to the right or at least are hewing to the rhetoric of those particular wings, so this has made it ugly. In the legislature, we’re seeing political repercussions for anybody who strays away from the party line. We’ve seen Republican leaders who eventually wind up sighing and voting for a budget being kicked out of their leadership positions. Darrell Steinberg, the Democrat President pro Tem of the Senate, has been under attack from Democrats because he is too willing to negotiate and he’s actually getting attacked for negotiating, which a lot of us thought was what his job was. But at any rate, the political fire aimed at both parties is really withering and it probably explains the reason why we’re seeing so little rhetoric coming out of the legislature right now. The leadership are being very quiet. You’re not hearing a lot of screams and shouts and fingerpointing. They’re all kind of hunkering down in the trenches and hoping they can get something accomplished before they all lose their jobs.

CAVANAUGH: Where is the governor in all this? Does he have any negotiating power?

MCELROY: If this is World War II or let’s say World War I, where one side is dug in on the trenches in one place, one side’s dug in on the trenches in the other, the governor is out there in the barbed wire in no man’s land. He’s out in between and the bullets are whistling over his head in both directions. The problem is, the governor has no bargaining chips at all. He has very little going on other than his maneuvers, say, with the possible layoffs or furloughs. There just isn’t much that he can do. Politically, he’s a lame duck. He’s going to be out of there. He is not in big favor with his own Republican party. He’s not in big favor with the Democrats. He’s trying very hard to do the job that the voters have hired him to do but you’ve got to say that he has almost no chips in this poker game right now.

CAVANAUGH: Have we ever seen a situation like this in the past where a California governor is basically – has alienated himself from both parties?

MCELROY: Oh, yeah. Yeah, we did actually. Back when I was a reporter covering the capitol, I remember Jerry Brown…

CAVANAUGH: Ohh…

MCELROY: …being actually banned from the legislative chambers. And…

CAVANAUGH: Nobody’s banned Governor Schwarzenegger yet, huh?

MCELROY: No, no. He’s still welcome as long as he brings his cigars, I guess.

CAVANAUGH: How do you think historians are going to look back on this time in California political history, Leo?

MCELROY: I think they’re going to call this a time of massive dysfunction. I think it’s the time that we have proved that California’s government has gotten to the point where it almost is the little engine that couldn’t, that it just is almost is incapable of running. And that’s scary. We have just reached political deadlock and governmental stasis to the point where nothing’s functioning as it’s supposed to any longer. And it probably is going to mean that somewhere down the road, if we were lucky, there would be massive reforms that would change things.

CAVANAUGH: Now I said in the opening, too, that we did get this influx of federal aid. We have $1.3 billion for MediCal and teachers’ salaries, benefiting the state. Is that – If we hadn’t gotten that, would we have been facing complete disaster?

MCELROY: Yes, we would have. However, let’s not celebrate too hard because the legislature has been assuming all along that that…

CAVANAUGH: Right.

MCELROY: …money was going to come in…

CAVANAUGH: Umm-hmm.

MCELROY: …along with other assumptions about how much tax revenue, for example, the state is going to take in. And the legislative assumptions about how much money’s going to come in from taxes to the state have not stood up against reality. So even a lot of the negotiating that’s going on is based on numbers that are of questionable value.

CAVANAUGH: Leo, it sounds like one of the casualties of this budget battle, and perhaps the recession itself in California, is Proposition 18, the state water bond measure. It has been withdrawn from the November ballot. Tell us a little bit about that.

MCELROY: This was something that startled a lot of people. There was opposition to putting 18 on and to passing it, largely from environmental groups, but that was not considered to be the big danger to it. Environmental groups in the past have not always been successful in defeating bond measures they didn’t like, Peripheral Canal was the only one I can think of where they actually did. But what we’ve suddenly faced here was the legislature looking at the economic picture and saying this is a public that is not happy with the way the economy is functioning, it’s not happy with the way that their own jobs are being held onto, and they’re unlikely to vote for something that in normal years might’ve been almost a slam dunk. And nobody wanted to risk the possibility of putting the water bond on and having them defeat it.

CAVANAUGH: Defeated, right. And this was – people were saying that this was Governor Schwarzenegger’s legacy measure.

MCELROY: The governor’s legacy is tottering badly. When you take a look at what’s coming up in the November ballot because two other pieces of his legacy are going to be on the ballot and one is the measure that – or, measures that would change the redistricting reforms that the governor had pushed through, pushing for a nonpartisan commission to draw legislative districts in California. Now there are a couple of measure on there that would change that and would drastically endanger it because the politicians, frankly, don’t want nonpartisan drawing of the lines, they want to be able to draw their own comfortable lines. And the other one is measures that would attack the governor’s greenhouse gas regulations and would trim those back to the point where they would virtually not exist at all. And you take away the redistricting and the greenhouse gas and the water bonds and there is precious little left of the Schwarzenegger legacy.

CAVANAUGH: Well, speaking of the election and this new gubernatorial race between Meg Whitman and Jerry Brown, what are we hearing from these two candidates about their plans, what they would do for the California budget crisis?

MCELROY: What are we hearing sensible? Or what are we hearing?

CAVANAUGH: What are we…

MCELROY: We’re hearing rhetoric, largely from Meg Whitman. Most of the people that I’ve talked to, most of them Democrats in this regard, are saying when is Jerry going to say something? When is something going to come out of Jerry Brown? We’re not hearing a great deal out of him. What we have heard out of Meg Whitman are some proposals that, quite frankly, don’t work at all. Her massive layoffs of state workers, if you actually look at what the state workers are and what positions the governor can deal with, she can’t even do what she says she wants to do. So there are real problems with both the political candidates and I think the truth is neither of them wants to get involved in this mess. Neither of them wants to make a suggestion that can easily be shot down, so they’re saying a great deal of nothing.

CAVANAUGH: My final question to you, Leo. When do you think we’ll have a budget in place here in California?

MCELROY: I have been betting all along that August was not going to be the magic month. And I have been saying that I think if you went to Nevada and asked the odds makers, you’d get a lot better odds on September than you would get on anything happening in August. And as time goes by, October is starting to draw a little support in the betting.

CAVANAUGH: Leo, thank you so much.

MCELROY: You bet, Maureen.

CAVANAUGH: I’ve been speaking with non-partisan Sacramento political consultant and contributor to Morning Edition here on KPBS, Leo McElroy. If you’d like to comment, please go online, KPBS.org/thesedays. Coming up, we’ll talk about the new fresh face of school lunch here in San Diego. That’s as These Days continues on KPBS.

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