Hard times fuel debate on the initiative process

August 18, 2003

San Francisco Chronicle

James Sterngold, Chronicle Staff Writer
Sunday, August 17, 2003

Even before Proposition 13 thundered into the recall campaign this week, some political experts and even some voters had been starting to wonder whether this landmark anti-tax measure -- and the initiative process it spawned -- might have created some of the instability in state government that many find so jarring.

In the 25 years since Californians passed the measure and angrily took control of policymaking from the Legislature -- adopting a series of ballot initiatives that have cut taxes, mandated spending and reshaped the state budget -- voters have come to regard this right the way most Californians look at sunshine, as their due and a source of vibrant health.

But now the state is facing a political and fiscal meltdown. And Warren Buffett, the billionaire investor who has become one of Arnold Schwarzenegger's most visible campaign adviser, has questioned the way Prop. 13 keeps property taxes so low, especially for longtime owners of million- dollar homes, like himself.

Schwarzenegger quickly distanced himself from any criticism of Prop. 13 -- which is like drinking hemlock in California politics -- but the episode underscored the growing number of questions about this adventure in direct democracy and whether it has made the governing process more unpredictable and difficult to control.

To be sure, there are numerous reasons for the state's current plight, from the deep economic malaise to a governor who has left people cold.

The Field Poll said Thursday that 70 percent of voters now disapprove of Gov. Gray Davis' performance, a figure equaled only once before -- by Richard Nixon, just before he resigned from the presidency. But the same poll also found that 54 percent of voters believe that recalling Davis -- perhaps the most aggressive assertion of direct democracy -- will not make it any easier to solve the state's festering budget problems.

Many experts agree, and they point to a little-noticed proposition on the coming ballot as a perfect example of how voter initiatives can make matters worse.

Proposition 53 would require that up to 3 percent of the state's general budget be spent on improving infrastructure, including everything from highways and office buildings to reservoirs and forest fire stations.

Supporters say it provides a sensible way to rebuild the state's long- neglected infrastructure. But it also would tie the Legislature's hands, some experts argue, giving it little say over the spending of billions of dollars while opening lawmakers up to fierce criticism when they make cuts from other parts of the budget to pay for the infrastructure improvements.

"Having the recall on the ballot with Proposition 53 is such a classic," said Jean Ross, executive director of the California Budget Project, a nonprofit research group in Sacramento. "The voters will make it that much harder for the governor to balance the budget at the same time they are expressing their anger at the old governor for not balancing the budget."

David Abel, a consultant who has served on commissions examining government financing problems, said that given the degree to which initiatives have reshaped state spending, the process has made sound budgeting far more difficult and made it harder for politicians of either party to win public support.

EDUCATION SPENDING

According to the state legislative analyst's office, voters have passed 15 major initiatives since Prop. 13 in 1978 that altered the state's ability to tax and spend. The most notable of those was Proposition 98, which guaranteed that educational spending would take up a huge portion of the budget.

"This has become a profound attack on representative government," Abel said.

'I think we have destabilized representative government in this process."

Defenders of the initiative process are quite open in saying that the whole point is to restrict the maneuverability of politicians, in large part because of the belief that the lawmakers cannot be trusted. That is why many supporters of the initiative revolution and the recall define their propositions in strongly negative terms.

"This is sort of California self-correcting when the politicians get a little crazy," said Ken Khachigian, a conservative political strategist who worked in the Reagan administration and was an adviser to Republican Rep. Darrell Issa's campaign to get the Davis recall on the ballot.

"The recall is anti-big-government, anti-union-control, anti-social-program- explosive-spending, anti-money-in-control. This is basically limiting the size of government, limiting the influence of government."

Ever since Prop. 13 put a cap on property taxes and made it far more difficult for the state to raise new taxes, a long series of initiatives has put lawmakers and governors in a bind.

By mandating spending, the initiatives have tied up well over one-third of the state's general fund and leave politicians with the unpopular job of figuring out what has to be cut to make way for the required programs.

Last year, for example, Arnold Schwarzenegger championed Proposition 49, which mandates spending on after-school programs for children. Proposition 10, in 1998, increased cigarette taxes and requires that the money be used for childhood development programs. Proposition 42 mandates that certain gasoline tax revenues be used only for transportation programs and not placed in the state's general fund.

On top of that, huge portions of the budget are tied up in other areas -- about $6 billion for the state university systems, about $3 billion for repaying bond interest and principal, and $2 billion or so on pensions, according to Mac Taylor, a deputy in the legislative analyst's office in Sacramento.

A second, equally unpopular result has been that, faced with restrictions or losses in revenue, the state government has sucked tens of billions of dollars away from local governments.

PROPERTY TAXES

Local property taxes are largely taken by Sacramento; cities keep a larger share of their local sales tax revenue. As a consequence, cities are pressed for budget reasons to restrict the construction of new housing -- contributing to shortages -- and instead compete aggressively for shopping centers and auto malls, which generate more sales taxes.

That is a key reason why Home Depots and other so-called big box retailers, as well as the huge auto malls, are so eagerly courted by local governments -- even though most local government officials say those retailers create few high-paying jobs and can contribute to road congestion.

Sacramento gives back some, but not all, of those funds to local governments. Gov. Pete Wilson helped resolve a fiscal crisis in 1992 by taking away billions of dollars in local tax dollars to help pay for state educational spending, promising that most of the money would eventually be returned. Analysts say the state still keeps about $600 million more than it gives back.

The result of all the initiatives has thus been to concentrate immense spending power in the state's hands, taking away power and funds from local governments, which provide many of the most heavily used services, from parks to libraries and senior centers.

The situation has grown so dire that the League of California Cities, which represents most local governments across the state, has for the first time created a political action committee that will raise millions of dollars to press its own initiative in November next year.

Their cause is a constitutional amendment that would prohibit the state government from raiding any more local government tax revenues -- potentially helping cities but tying the hands of the Legislature even further.

John Russo, Oakland's city attorney and the president of the League of Cities, said the proposed amendment reflects broader concerns about the initiative process.

"The catechism in California says that somehow the wisdom of the people is always greater than that of their elected representatives," he said. "We're saying there are consequences that we have to think about."