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Fletcher, Kehoe On California Budget

Fletcher, Kehoe On California Budget
Assemblyman Nathan Fletcher and State Senator Christine Kehoe look back at the budget process which led to a legislative stalemate and the possibility of an all-cuts budget after three months of negotiations between Governor Jerry Brown and the California Assembly over how to close a $15.4 billion dollar budget deficit broke down.

MAUREEN CAVANAUGH: After three months of negotiations between Governor Jerry Brown and the California Assembly over how to close a $15.4 billion dollar budget deficit, the talks have been suspended. Governor Brown will not get his proposed special election in June asking voters to extend tax increases.

GUESTS: Assemblyman Nathan Fletcher (R) San Diego

State Senator Christine Kehoe (D) San Diego


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This is a rush transcript created by a contractor for KPBS to improve accessibility for the deaf and hard-of-hearing. Please refer to the media file as the formal record of this interview. Opinions expressed by guests during interviews reflect the guest’s individual views and do not necessarily represent those of KPBS staff, members or its sponsors.

CAVANAUGH: I'm Maureen Cavanaugh, and you're listening to These Days on KPBS. After three-months of negotiations between governor Jerry Brown, and the California assembly over how to close a 15.4 billion dollar budget deficit, the talks have been suspended. Governor Brown will not get his proposed special election in June asking voters to extend tax increases, and that means deeper cuts are likely in the next year's budget. In order to try to understand how this happened, this hour we welcome three guests. Two are elected officials, state assemblyman Nathan Fletcher, and state senator, Christine Kehoe. And the third is Leo McElroy, nonpartisan Sacramento political consultant. I spoke earlier with Republican Fletcher and Democrat key hoe separately about the budget. We'll then get analysis from Leo McElroy and take your calls. Joining me now is assemblyman Nathan Fletcher, he's a Republican representing the 75th assembly district here in San Diego. Assemblyman Fletcher, good morning.

FLETCHER: Good morning, Maureen. Thank you for having me on.

CAVANAUGH: There seems to be a lot of finger pointing going on over the current citizen of the California budget. How would you describe where we are right now and how we got there?

FLETCHER: Well, I would describe where we are to use a medical analogy, if you have a broken leg, we can give you pain pills to treat the symptoms, but until we reset your leg, we aren't really gonna begin the healing. And what we're doing a lot of right now is talking about how do we treat the symptoms of the budget deficit. But I think we need to talk about how do we reset California? How do we get ourselves on a solid footing so we're competitive in today's global economy? How do we make bold structural changes to the way our state operates, and most personal how do we get our economy going again? And I think all parties need to stop finger pointing and sit down and talk with those types of bold structural reforms to really get California competitive again. And then we can deal with the symptoms of the budget deficit.

CAVANAUGH: So what do you think was the main obstacle that prevented Republicans from voting for a special election in June to ask voters to extend the current package of temporary tax increases? Why did that get derailed.


FLETCHER: I don't know why that got derailed in our last negotiations. I really don't. There were negotiations that were ongoing, talking about the importance of pension reform, about budget reform, about regulatory relief all in a package of something that would solve the problem and allow for a special election, and the governor fairly unexpectedly were you from other negotiations. And I think all parties need to get back to work and sit down and try to figure this out.

CAVANAUGH: Well, the governor said the price of getting Republicans to vote for this special election was a 53 item special interest list that the GOP basically submitted to the governor and said, okay, if you give us these, we'll give you your special election. Isn't that sort of over reaching by the Republicans?

FLETCHER: Well, I don't know. I don't know about a list of 53 thing. I mean, I saw the thing that came out. I know in talking to people that were in the negotiations, what they were calling for was pension reform, some regulatory relief to get people working again, and budget reform to structurally solve the problem to reset California. Now, there's 53, there's 103, there's 203 different ways that you can take ideas and say what are the key ones we need to do, and in the context of negotiations, you brainstorm every idea that on the table, and I don't think anyone goes into negotiations expecting to get every idea they throw out. But the important thing is people not stop working, that they not finger point, that they not blame. Let's get back to work and let's try and get this thing done.

CAVANAUGH so what are the key things that you think that need to be reformed in order to get California on another plateau, so to speak, another level so that we don't have these budget deficits?

FLETCHER: Well, I think there's a couple of them. One of them is definitely budget reform. The way the State of California packages is completely broken. We exist in a boom and bust economic cycle, and in the boom time, the state spends every penny it has. So in the downturn which we're going through right now, there's no reserve. And so some type of spending stabilization mechanism to limit the growth in the boom years and force the legislature to store that money in reserve so that we can fund our priorities like schools. And we can tell schools you're gonna get a steady year over year increase, whether the economy is up or down, and it's not gonna be subject to the whims of the stock market. So I think budget reform. And the second thing I think we need to do is a true tax reform. We have a tax code designed for an economy 50 years ago. It doesn't take into account the very competitive, very global very innovative nature of today's world. We are all aware of a lot of the difficulties that our pension system faces, and I think there's some things that we can do to rein that in. And then at a certain point, we gotta make it easier for small businesses, because that is the heart and whole of the California economy, is our innovative entrepreneurial small businesses. Let's make it a little easier for them to start and grown their businesses here in California. And those are the things I think we need to do to get our economy turned around and make the long-term changes to really reset California and put us on a solid footing. And we ought to be able to find agreement on those things.

CAVANAUGH: Now, right now the State of California faces a $15.4 billion budget deficit. And in an effort to ease the cuts that would have to be made, governor Jerry Brown proposed extending the current package of temporary tax increases and having a special election for that. Tow my question to you is, since we face such an immediate problem, why did you vote no on a special election?

FLETCHER: Because we weren't solving the structural problem. See, you don't seal did a structural problem and temporary taxes. And this is what Sacramento's been doing for the last 6 or 7 years. The State of California today has 12000 more employees than it had this time last year. So I don't understand where we're cutting schools when we're adding 12000 employees in a year over year way. The other thing is, it's not an extension of the taxes you pay today. Of the income tax went away last year. It's bringing back higher tax rates that I think will further impede our economic recovery, but I certainly don't think that you have the moral authority to take more money from small businesses when you're not willing to take the tough medicine and make the difficult decisions to get our tax back on track. So a package that's temporary cuts and temporary taxes, doesn't solve a structural problem. If we want to solve a structural problem, you have a lot of people who are willing to go a long way to find a solution [check].

CAVANAUGH: Nathan Fletcher. And I'm wondering, is there any chance that you would agree to increase revenue?

FLETCHER: Well, we've gotta see what an entire package looks like. I mean, if we're truly going to reset California, I think we're open to doing a lot of things. But if we're gonna do the types of things that have been proposed, which isn't really solving the problem, it's just merely passing on the obligation to small businesses because the state won't reform itself, then that's not gonna fly.

CAVANAUGH: Now, so many state Republicans have basically signed a pledge that they will not raise taxes, and I wonder can there be any real negotiations on the deficit when there are so many Republican legislatures who have already done that?

FLETCHER: Well, the governor had more Republicans negotiating with him on a compromise agreement than he needed votes to pas it. So I don't think the problem and a reluctance to have people that are willing to do it. I think the problem is a reluctance at this point on the part of the governor to really step up and say, hey, we're ready to be a part of a solution. There were five senators in the senate, they only need two, who publicly stated, hey, we're willing to work with you on this. And they weren't able to reach an agreement. And I think they need to get back to work and try and get something done.

CAVANAUGH: Now, it looks as though the governor might not have any option left because this special election has been stymied. But to come forthwith an all cuts budget. But the Republicans' leadership says it will not vote for an all cuts budget so much isn't that sort of a catch 22.

FLETCHER: Well, I'll vote for an all cuts budget. I did it last year when governor Arnold Schwarzenegger proposed one. And if that's the direction the governor wants to go, then I don't think you have any other choice. But [check] difficult environments to grow jobs, and we have a state government that keeps year after year expanding and [check] increase in taxation. Given that other states manage to make due with a lower tax rate and a more robust economic environment. So if it comes to an all cuts budget and that's what we have to do, then that'll be the situation we face. But a lot of times you're presented with false choices, you know? You're told your only option is we're gonna close schools for two months or raise taxes, as opposed to saying how about we stop adding thousands of employees every single year? How about we take a hard look at the correction system and ask why do we spend $52,000 a year to incarcerate someone in California when other states do it for half as much? Why is the administrative office of the Courts spending billions of dollars a computer system that doesn't work? It is years past due, [check] I do believe there are reforms in the State of California that can be made that can insure we can do our priorities like educating our kids and funding public safety. It just requires some difficult choices.

CAVANAUGH: Now, assemblyman Fletcher, you talked about resetting the budget process and part of that, and I believe that you would like to do is a budget reform bill that you proposed last month. It would change the California budget from baseline budgeting to performance based budgeting. Can you explain how that -- what the difference is there?

FLETCHER: Sure, this is one of the pieces of reform that we should be able to find agreement on. It's been difficult in the past. But I think we have an opportunity. In Sacramento, if you're a state agency, your budget conversation is basically based on what did you get the previous year, and what kind of an increase would you like. So we debate the increase. An agency wants seven, we say three, we end up at four. And then they say, well, we were cut three percent because only in government is a reduction in the rate of growth a cut. And what we never do is debate what is it you do, how do we measure it, and what value are we getting from the taxpayers? So performance based budgeting does away with the previous model and says every agency needs to outline what is it you do, what is your purpose, what is your goal, and how do we measure it in 123 and then we can fund you on a unit cost of labor based on what you deliver. And if you had an agency that said -- had a 25 percent reduction in its work load, say in a recession, you issues fewer licenses for restaurants because there's fewer opening, well, if you had that reduction, then your budget would simultaneously decline as well. So we could actually track efficiencies, we could track metrics, know what are you doing, how does it work, and really do some proper over sight. So it would be fundamentally changing the way California budgets its budget situation. And I think it would make a real difference.

CAVANAUGH: It just occurs to me, though, wouldn't you adding a level of bureaucracy in making that evaluation as to whether or not each agency has actually performed well enough to get an increase?

FLETCHER: No, because they have levels of bureaucracy on top of level was bureaucracy that prepare the baseline budgeting year over year. You're just telling those same folks instead of doing what you did last year, you're going to do it a new way. And it's actually a simpler way. Because we're gonna simplify your separations down to what is your core function, what do you do, and how many times do you do it in and then we'll simply be able to look at those numbers and hold you accountable for delivering on what you said you were gonna do. Then we could have real conversations. If we funded states that way, then take the department of motor vehicles who does a number of thing, issue driver's licenses, issues tags for your license plates. Why do you need to register your tags every year? You should do it every two-year, well, that wouldn't save us any money because that's not the way we budget. But if we were on a performance based budget, all of a sudden we could say, if this is the dollar amount it is to issue tags and if we did it every two years instead of every year, this is the dollar amount we would save.

CAVANAUGH: I'm sorry, do you want to go on?

FLETCHER: No, I just think it's just a fundamentally different approach in measuring outcome.


FLETCHER: And saying what is your goal, what is your purpose, how is it you serve the public. And then actually hold agencies accountable for doing that.

CAVANAUGH: Now, that's an ambitious budget reform proposal. One of the things Republicans in Sacramento have been criticized for is they haven't really brought forth alternative plans on the budget. Why do you think -- do you agree with that first? And also, where are these alternative plans, if they exist?

FLETCHER: Well, I -- I mean, it's interesting on one happened, be you get criticized for having a list of too many ideas, and then on the other hand you get criticized for not having any ideas. And so I don't think it can be both. I think a number of ideas have been injected from people in both houses in terms of making it easier for small businesses to working ideas on pension reform, even ideas on pension reform, even idea on education reform, idea on budget reform, and there's no shortage of ideas. What there is a shortage of at times is political will to go in and say, everyone's gonna step out of their comfort zone, everyone's gonna make some difficult decisions, but everyone's gonna be focused really on how do we reset California, and get us on the path to prosperity again. I don't think there's been a shortage of ideas, I think there's been a shortage of will to sit down and make those political decisions.

CAVANAUGH: I understand. You spoke about political will, and I'm just thinking, if the governor does manage to peel off a Republican or two to make a budget deal, do you get the feeling from this leadership that there will be reprisals against those legislators as there have been some time in the past?

FLETCHER: Well, I don't know. I think it depends on the substance of the agreement. If there's something that is truly bold, that is truly helping get small businesses back to work, that is truly reforming California, then I think you can see a lot of agreement. If you get more of what we've seen over the past 4 to 5 years out of Sacramento, the people deserve better. The people that pay one of the highest tax rates in the nation, that have one of the highest regulatory environments, that have one of the largest state governments I think deserve a level of reform that understands what you're spending money, it is the People's money, and they worked really hard for it. And it ought to be spent with that understanding.

CAVANAUGH: Anything going on in Sacramento right now regarding the budget.

FLETCHER: Well, everyone's waiting to see what the governor were you from negotiations, regarding the special election, and there's not a great sense of certainty in terms of where he would like to go next or what his proposal would be.

CAVANAUGH: Assemblyman Fletcher, thanks for your time.

FLETCHER: Great, thank you, Maureen, have a great day.

CAVANAUGH: Thanks. That was California assemblyman Nathan Fletcher from San Diego. You're listening to These Days on KPBS. Before I speak with senator Christine Kehoe, let me bring in Leo McElroy, nonpartisan Sacramento political consultant, and contributor to morning edition here on KPBS. Good morning, Leo.

MCELROY: Good morning, Maureen.

CAVANAUGH: I want to invite our listeners also to join this conversation at 1-888-895-5727. Leo, what's your reaction to Nathan Fletcher's explanation of why Governor Brown couldn't get the few Republican votes needed to place the tax extensions on the June ballot?

MCELROY: Well, basically he's offering a long-term solution to a situation that's a short term problem. And the long-term solution can't be achieved that fast. Right now our problem is a shortfall in the current money that we're looking at. A shortfall in the next year. Structural reform as he calls for it, and he's right, we certainly need structural reform, but it doesn't happen that fast. We're going to have to remake California's government at some time because it's become dysfunctional. That's not gonna solve this year's budget problem. That's not gonna solve next year's budget problem. That's a couple of years down the road. That's really kicking the can down the road.

CAVANAUGH: Go ahead.

MCELROY: And that's a problem.

CAVANAUGH: I was just gonna say, how do you see the role in the Republican party in general in this budget debate?

MCELROY: Well, very frankly, what's happened, because the voters particular away from the Republicans ability to holdup a budget to make their demands strong by making a budget a majority vote issue as it is in most other states. Republicans feel the other bargaining chip they have left financially is to holdup tax cuts. Since they can't stop a budget from going through, they now can sit there and say, well, okay, but you can't raise any taxes. We're going to stop you financially because for that, you still need our votes. And so you have party officials who are saying it's the only bargaining chip we got. What can we get for it? What can we get? And one of the big things they're calling for is regulatory reform, quote unquote, which largely means relax things like California's ocean laws, relax things like the green house gas laws that were passed. Take those burdens off government, quote unquote, and it will make things easier, and then we might give you a vote or two. Well, those are long-term solutions, and they're not solutions that a lot of people see as financial in nature. It's a battle over the role of government.

CAVANAUGH: Now, assemblyman Fletcher said that the governor called off these negotiations about the special election. Indeed, technically, that's true. The governor says he called them off because of this 53 page -- pages of demands or wish list that the Republicans presented to him. Where do you find the element of truth in why the special election talks were called off?

MCELROY: Well, it precisely happened the way you've detailed and in fact the way he detailed but what he didn't get was the middle stem in there. He talked about the Republican senators who were negotiating with the governor, and they were, and that seemed to be moving along to some extent, although those senators were being threatened daily with reprisals for being willing to even talk with the good afternoon. The problem is they finally just backed out of the deal because they were under too much pressure from their own side, and the negotiating process went from those five senators back to the party leadership, and the party leadership other ones who came in with this laundry list of demands. [check] is faced with new people to negotiate with and a much, much larger laundry list of things that they want on their Christmas shopping list if they're going to deliver the two votes to let government move ahead.

CAVANAUGH: Now, when you talk about reprisals, political reprisals for people for Republicans who may decide to cooperate or negotiate with the democratic governor, Jerry Brown, who would be calling the shots on those reprisals? Who's behind that?

MCELROY: Well, that's the problem that we backed ourselves into in California, is we've made legislatures who are no longer responsible to the people. The legislatures are responsible to party mechanism and party bosses over ideological block bosses, tea party people, antitax people. Grover Norquist is nor powerful in California than any member of the California assembly or senate, because when Grover Norquist scream don't even allow the people to vote on a tax increase, you've got senators who are willing to say, okay, that's fine, Grover. Nobody elected him, and he isn't even here, but he's calling shots. Party officials are calling shots because we are so dependent on primaries in districts that are one sided districts. Republicans win in this district all the time. They don't care about the general election because they're never gonna lose in it. They only care about making sure they win the primary. Democrats, same thing. We have created a very slanted legislature with Democrats responsible to the left wing of their party or to interest blocks of their party. Republicans likewise. And so there is no middle ground. And there is the ability for pressure to be put on them from party bosses and from interest groups that wield much more power than the elected public.

CAVANAUGH: Okay. So Leo, what we're gonna do now is take a break, and when we return, we will hear from the Democrat in this hour long discussion about other California budget, Democrat Christine Kehoe, and we'll also hear again from you, and if our listeners would like to get involved in the conversation, we're happy to take their calls at 1-888-895-5727. You're listening to These Days on KPBS.

CAVANAUGH: We continue with our examination of budget deficit stalemate in sacramento. Earlier i spoke with republican assemblyman Nathan fletcher. Now democrat Christine Kehoe is my guest. Senator Kehoe represents California senate district 39 here in San Diego. And Good morning, senator Kehoe. Thank you for doing this today.

KEHOE: Good morning, Maureen. How are you doing today?

CAVANAUGH: I'm doing just fine. Thank you for doing this today.

KEHOE: Delighted:

CAVANAUGH: Now, how do you view the budget process the legislature just went through.

KEHOE: Well, I think it is a step toward solving half of our budget deficit, and if we had been able to get full support, two additional votes in the assembly and that state senate, we could have gone the whole way and solved our -- about 24 billion dollar budget gap, we could have done it by now and placed both the 11 billion dollars worth of cuts that were enacted and put before the voters and extension of --- before the voters in June, but we already got half way there because we could not find those two additional votes to place those before the voters, so we have only done about 11 billion dollars in cuts, very harsh cuts that follow several years of previous cuts, but without those extra votes, that all we can do right now.

CAVANAUGH: Now, what is your take on why the two sides couldn't come to an agreement? Why there weren't just a handful of Republicans that would support the idea of putting a measure on the ballot for the voters to approve as to whether or not to extend this tax package?

KEHOE: Well, you know, that is the question that everyone's asking. And I think that's more than one answer there. There are Republicans who want to see government spending reduced severely. And we see that message all over the country and in Washington in recent days and all. And there are almost all the Republican members ever the California legislature have signed a pledge never to raise taxes. So they feel they can't go back on that pledge no matter how dire the cuts, even in their own districts will be. And finally there are -- while though apparently the negotiations got very close, the Republicans that are considering voting for the chance for the voters to vote on revenue, we're not really asking them to raise taxes, only to allow the voters to speak, they wanted more concessions from the governor on pension reductions and environmental protections to be reduced. And other steps. They had quite a long list of demands that they wanted to -- they wanted agreement on benefit they would vote.

CAVANAUGH: Now, in your opinion was it a mistake for Governor Brown to say he wanted a special election? Could he have gotten an extension of the tax increases as part of the normal budget process?

KEHOE: Well, you know, I don't think the governor is wrong in making the pledge. And he's bound and determined to keep it, which I think is admirable, and I think Governor Brown has been a breath of fresh air around the capitol. He's here every day, he talks to Democrats and Republican, he goes to members' offices and meets in groups, so it's not the long distance relationship that governor Schwarzenegger was more comfortable with. So I think Governor Brown has really changed the attitude and the atmosphere here in the capitol. [check] no, I think as the governor says, this is too important not to allow the people of California to speak on what our future is going to look like. Do we want to preserve our universities and our great school education? Do we want to have a great transportation system and hospitals that can serve 40 million Californians? Or do we want to somehow diminish that future and not preserve our core public programs?

CAVANAUGH: Now, assembly speaker John Paris, he's proposing -- he's a Democrat, he's proposing democrats pass a budget in June which includes the extended tax increase, contingent upon voter approval in November. What do you think of an idea like that?

KEHOE: I think assembly member Paris and speaker Paris is trying to get to a solution that work enforce everybody. But I'm thinking that if we cannot get the two Republican votes in the senate and two more Republican votes in the assembly to allow the voters to vote on taxes, I don't know why it's easier or a better solution to think that we can get two Republicans to vote on taxes in each house without voter approval or involvement. I think that will just turn into another weeks and weeks of discussion that will in the end probably not bear any fruit.

CAVANAUGH: I'm speaking with senator Christine Kehoe, she's my guest on These Days this morning. And I'm wondering, let's talk a little bit about where the Democrats stand in these negotiations that just were stalemated a while back. In reading columnist George Skelton in the LA Times, he [check] would not agree to a spending cap. Do you think that's part of the reason?

KEHOE: No. I think that different types of spending caps were discussed. And I think most Democrats were willing to agree to a cap that would have been acceptable to the Republicans. You know, Maureen, I have to say it's always hard to judge exactly what was said in a negotiation. The governor is talking to Republican members and to democratic members, and to our, you know, the leaders of both the Republican and democratic caucuses, and so, you know, there are almost everything has been discussed. In fact, you know, over and over again. I think we could have agreed on a spending cap. But a spending cap, environmental protections being weakened, and pensions being reduced for workers, only in the hope that we could get something on the ballot for the voters to approve, that was starting to get to be too big an ask for some Democrats. I think we still could have gotten there, but it was getting tougher and tougher.

CAVANAUGH: I understand what you're saying. Well, one thing the Republicans claim are that Democrats in the legislature are tied to labor unions and therefore they can't make needed pension reform legislation. So my question is, what do you see as the connection between state Democrats and unions? And is it one that precludes any kind of a deal on pensions?

KEHOE: You know, it's common wisdom up here that one side is tied to the labor unions and the other side is tied to big business. And I don't -- I think both of those stereotypes are not a hundred percent true all the time. I always listen to working people in my district because now in the recession when people don't have jobs, it's an important part of the work that I do, trying to produce more jobs in San Diego. But the -- to say that pension reform is off the table is simply not true. In fact, last year, before governor Schwarzenegger left, in his final months in office, he did negotiate some very important pension reductions that the six bargaining units in Sacramento or so agreed to. Including a pension cap, older retirement ages, more contributions from the employee, and those were important steps. Democrats approved those. He -- we also repealed a prison guard, peace officer's, California peace officer's association bill that had been enacted many years ago. Democrats voted for that repeal. Of it was a fiscally sound thing to do. But most Republicans did not. They refused to vote on that bill. So you know, the idea that pension reform is not something that Democrats can agree to and only the Republican caucus pushes for pension reform, the facts don't bear that out. If you look at people's voting records you'll see that we realize that some parts of the pension system spiking, you know, multihundreds of thousands of dollars going to one individual, when most pensioners get 25 or $30,000 a year, those very high one, we have to do something to cap those and make sure that they don't -- we don't keep adding people into those high levels.

CAVANAUGH: Senator Kehoe, what's your opinion about raising revenue to try to close the deficit? Lately, the California teachers' association has proposed a one percent increase on the taxes of the wealthiest Americans to close the budget deficit. Do you think that's a good idea?

KEHOE: That's another issue that comes up over and over again in the time that I've served in the legislature. We have very high income earners in California. Of we have millionaires and billionaires. And it's a wonderful place to live and very wealthy people like California and San Diego just as much as you and I do. But to -- it's a small pool of people when you get to the very high income earners, and to my way of thinking, it's not the most sensible way to go. It is a small increase, the vehicle license fee is spread over millions and millions of drivers. Just for example. And if you're driving a $15,000 car or $20,000 car, you're gonna pay far less than somebody who's driving a 50 or an $80,000 car. And that is -- I think that's a progressive tax, and it's more consistent. And it doesn't go up and down. We are always trying to raise -- it's proposed frequently to raise the taxes on high income earners, but it doesn't put that much more money into our general fund. If I could add one more thing on the general tax, Maureen.


KEHOE: A good portion of our personal revenue depends on personal income tax. And it's especially gener -- it gets more revenue into the state when wealthy people cash in stock options and capital gains on their investments. So when we have a robust economy, we get a lot of revenue from people cashing in those kinds of special incomes, stock options and capital gains. When the economy goes down, those kinds of -- that kind of income crashes as well. So it exacerbates, it exaggerates our income -- our revenue volatility. When the economy's great, we're all rolling in dough, and when the economy crashes, so does the state revenues. And when the economy is down, that's when people need public services. That's when they can no longer afford their health insurance, when they may be losing their house or their car, and they turn to the government for aid with many, many different kinds of issue, including food clothing and shelter. And so we need to find stable consistent sources of income. Putting one percent on the wealthiest people in the state doesn't work. It doesn't bring in enough revenue, and it's too volatile to sustain us in hard times.

CAVANAUGH: My final question, senator Kehoe, how close are we to actually an all cuts budget. And what do you think that that would mean for California?

KEHOE: Well, we've -- the governor is still negotiating with members of the Republican caucus in both the assembly and the senate, those are ongoing and active discussions. He is working with business people and educators around the state to let them know that if we have to do an all cuts budget, programs will be cut. Our schools are going to suffer more, some I hate to say it, but some of the teachers that received lay off notices in San Diego probably will not be hired back. Class sizes will continue to increase, special programs may be cut. I don't want to bring those messages. I would vote on revenues today or tomorrow or next month. We need to get our Republican members to step up and do the same thing. Right now, there's a chance we could have a special election in November that would let the voters approve revenues. But falling short of that, or a signature gathering campaign to put ballot measures before the voters, I don't see how we're gonna raise revenues, revenues that we need, revenues that we need for core public programs like schools and hospitals and transportation. This -- we are way past cutting the fat. And we are going to see California's future shrink if we start to reduce our education spending anymore, our hospital spending and our transportation spending. This is the kind of, especially schools and transportation, this is the kind of work that it's too big for people to do on their own. We need to have public programs to get these big jobs done, our freeways.


KEHOE: And our schools. Without them, California's future will not be as bright, our economy will not be as strong, and our recovery, which we're starting to see right now, will be slowed down.

CAVANAUGH: Senator Kehoe, thanks for speaking with us.

KEHOE: Thank you, Maureen.

CAVANAUGH: We have to take a short break. We'll be back with analysis from political consultant Leo McElroy as These Days continues here on KPBS.

CAVANAUGH: You're listening to These Days on KPBS. And let me welcome back Leo McElroy, nonpartisan Sacramento political consultant. Leo, good morning again.

MCELROY: Good morning. Good interview with Christine Kehoe.

CAVANAUGH: Well, we just heard from democrat senator Christine Kehoe, and before that, assembly Nathan fletcher, and Leo, in your opinion, did the governor make a mistake in proposing a special election?

MCELROY: No, I don't think he did. I think it was his belief that this was the only way he was going to achieve a solution because the reality is, you still do not have a legal way in California to increase revenue without a two thirds vote of the legislature, and the political power in the Republican party is so dead set against that that any member who goes against that and votes for a revenue enhancement measure is risking his political future in that party.

CAVANAUGH: Since the Democrats are in control of both houses of the state assembly, and the good afternoon's office, do they have a tendency to over play their hand or perhaps think they have more power in state government than they actually have?

MCELROY: No, I think they still realize that the balance of power is set forth in the constitution and approved by the voters is pretty clearly set for a bipartisanship solution at some level. We said, for instance, finally, after lots of years of having billions held up with a need for a two thirds majority, that a budget could be passed by just a majority vote. However the voters at the same time said you cannot raise revenues without a two thirds vote. So you're right back to the point where if you want to get more money in the till to deal with the dire situation such as we have now, you can't do it with only one party. And the realization is very clear among Democrats in the legislature that they in fact don't own the world. That they don't have the ability to solve this problem all by themselves. They're gonna have to do it with somebody else. Or they're going to have to make really draconian cuts. I think Christine Kehoe was being optimistic on how close we are to an all cuts budget. I think we are very, very very close to an all cuts budget even if we were somehow able to put revenue enhancement on the ballot, it would go on the ballot in, say, November, and those would not be extensions of present taxes anymore. They would be new taxes. And voters would be much less likely to vote for them. So I think the truth is coming that doomsday is here, it's knocking on the door. And we're gonna have to see a realistic budget that says this is how much money we have in the till, this is how much money we can spend, and this is how bad it's gonna hurt.

CAVANAUGH: We have a caller on the line, Leo Philip is calling from Point Loma. Good morning, Phillip. And welcome to These Days.

NEW SPEAKER: Hello. I just wanted to say that three weeks ago this last Tuesday, Blum berg news revealed that the coke brothers had contributed heavily to the California state Republicans in order to get their business taxes cut. Now, the coke brothers are out of Texas.


NEW SPEAKER: And so we have outside sources here, but the main question is, how do you deal with people who have been bought and paid for?

CAVANAUGH: Thank you, Philip. Leo?

MCELROY: Well, you name me a politician right now who hasn't had some degree of within bought and paid for, and I will go into a state of shock. The truth, is, we make political campaigning so bloody expensive that almost everybody is in a position where they have to take huge financial donations to try to get elected. There are lots of legislatures out there out of that hundred and 20 people who realize very clearly that there are some special interests that help them get into the position where they are, and they're probably gonna have to go back to those special interests and ask for more help. So special interests are the big specter in the law. And Democrats have special interests that help them, Republicans have special interests that help them. And does it bend their viewpoint? Of course it does. We're back into the best government money can buy. You better look where the money comes from.

CAVANAUGH: Now you just told us you thought we were very close to an all cuts billion. But Governor Brown is out and about, he's sounding very energize said, even somewhat aggressive these days in the sound bites that I've been hearing. Is he gonna bring this fight to the voters?

MCELROY: Well, I think he's trying to. I think he really would like to. The governor expressed a position of principle which is that revenue should not be raised or increased without a vote of the people. It's a very -- well, in the old day, it would have been described as a Republican concept. The governor is really sticking to it. Now the problem is now that time has run out on a June election, it's not gonna be an extension of taxes anymore, it's gonna be a new taxes because those taxes he wants to extend will expire are July 1st, and the poles are not very optimistic about which way the voters are going to go on this. An all cuts budget may change that, however, as people look at it and say, okay, this is what we're going to lose if we don't add some money to the till. Of these are the services that are going to go away. These are the number of jobs that are going to be lost. This is what we're going to do to the state economy if we have to take all of these cut back, and it's not gonna be pretty.

CAVANAUGH: Now, I'm going to give you the title. If you were governor, Leo, what would you do?

MCELROY: Probably resign. And run for the wood. Jerry Brown, you know, says he's old, he doesn't have to do that. He can stick around and try and find a solution. And I hope for all of our sakes he does. But I don't think it is going to be a comfortable solution. I think the truth is that the political parties are so dug in in their own ground that the likely hood of getting anything that both parties will agree to increase revenues and avoid an all cuts budget probably isn't going to happen. It's easy for one side to hold out and say we want structural reform, which is long-term reform, and hold that as hostage for short term fixes. The fact is, we're not gonna achieve structural reform over night. We're not gonna do it in time to affect this year's budget.

CAVANAUGH: Leo, in about the minute we have left, looking for a positive way to end this, I know that you believe that redistricting will actually affect this budget process in a good way. Can you encapsulate that for us in about a minute?

MCELROY: Absolutely. I think one of the big problems in California along with term limit, which has given us a bunch of short term legislators who have no loyalty to the process, is the district maps that were drawn with the collusion of both parties to make Democrats districts always safe for Democrats, Republican districts always safe for Republicans. And so legislatures who serve are not serving at the will of the voters in thirds requirement district, they are serving at the will of the party partisans in their psychiatric. Republicans become very, very Republican, Democrats become very, very Democrat, neither one cares about the voters from the other party because the party rules their particular district. A reform that makes districts competitive is going to force them to start thinking about what these people on the other side of the fence are thinking and believe in.

CAVANAUGH: And you did that in one minute. Thank you so much Leo.

MCELROY: Okay. Take care.

CAVANAUGH: Leo McElroy is nonpartisan Sacramento political consultant, and he speaks with us on morning edition here on KPBS regularly. If you would like to comment, please go on-line, Days. Stay with us for hour two of These Days, it's coming up in just a few minutes right here on KPBS.