Eight years ago, the California Teachers Association, arguably one of the Capitol's three most influential interest groups, leveraged an extra $1.8 billion a year in school money from Gov. Gray Davis.
The state was rolling in money in 2000, thanks to a one-time infusion of income taxes on stock options and capital gains as the dot-com bubble began to burst and techies cashed in their stock options. But Davis was reluctant to use it for permanent tax cuts and/or spending.
The CTA, however, had ginned up a ballot measure that would require the state to match the national average in per-pupil spending, which would cost the state roughly $6 billion more a year. Davis agreed, in effect, to buy off the union with the $1.8 billion boost.
That action, coupled with other spending and tax cuts, pretty much blew the income tax windfall. A year later, when revenues returned to normal, the state faced a large deficit that eventually not only cost Davis his governorship in 2003 but has plagued his successor, Arnold Schwarzenegger, ever since.
Briefly put, the state is committed to spending more each year than the revenue system can produce, even when the economy is booming, and when recession hits, the deficit grows to monumental proportions.
K-12 schools, which consume more than 40 percent of the state's general fund, are obviously a big chunk of its fiscal dilemma, as the history of education finance since 2000 underscores.
When Schwarzenegger took office in 2003, after Davis was recalled by voters and with the state facing virtual bankruptcy, one of his first moves was seeking a school aid reduction. CTA's leaders, during a personal meeting with the new governor, agreed to a $2 billion cut – although the precise dimensions of the verbal agreement are still being debated.
The union and other education advocates contend that Schwar- zenegger agreed to restore the money as soon as the state's finances improved. His aides have disputed that claim, but it became a very sore point, especially when Schwarzenegger later tried to persuade voters to give him more power to reduce spending, including school spending that's guaranteed by a provision of the state constitution that the CTA got enacted in 1988.
The CTA beat up on Schwarzenegger. Ever since, he's made nice, more or less, with the powerful union on school finance – until this year.
The deficit has once again grown to titanic size. Schwarzenegger initially warned the CTA and other elements of the "Education Coalition" that they could see midyear cuts ranging from $2 billion to $4 billion.
The governor's deficit-reducing proposal is about a 50-50 split between spending cuts and new taxes, including a $1.8 billion permanent cut in base funding of K-12 schools – in essence, the same $1.8 billion that Davis gave them in 2000. And, of course, the CTA has mounted an ad campaign against it.
What goes around comes around.
Call The Bee's Dan Walters, (916) 321-1195. Back columns, www.sacbee.com/walters.
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