As Gov. Arnold Schwarzenegger launched a campaign to pass six budget-related ballot measures recently, he cited a historical factoid that may be more revealing than he intended.
Schwarzenegger mentioned that every one of his recent Republican predecessors – Ronald Reagan, George Deukmejian and Pete Wilson – had been compelled to raise state taxes when faced with severe budget deficits. And now Republican Schwarzenegger has done it himself.
The two Democratic governors of the same era, Jerry Brown and Gray Davis, not only avoided tax increases (although Davis briefly hiked vehicle license fees in his recall-shortened tenure), they championed significant tax cuts.
One might conclude from that four-decade history that Democratic governors were more careful stewards of the public purse than Republicans. But a more accurate reading of history is that every one of those Republican governors inherited a fiscal mess of some dimension – Ronald Reagan from Pat Brown, George Deukmejian from Jerry Brown, Pete Wilson from Deukmejian, and Schwarzenegger from Davis.
Ultimately, governors could clean up those messes only by raising taxes – some by a little, some by a lot.
"One of the ironies of Pat Brown's eight-year (1959-67) stint as governor is that he left his successor (Reagan) an even larger fiscal mess than the one he inherited," writes David Doerr in his authoritative book, "California's Tax Machine." He noted that Reagan said later he was shocked to learn, upon becoming governor, that the state was spending a million dollars a day more than it was taking in.
The deficit that Deukmejian inherited from Jerry Brown, Pat's son, in 1983 was the direct result of the state's assuming immense burdens for schools and other local programs after the passage of Proposition 13 in 1978, while cutting state taxes so that Brown could demonstrate that he'd gotten the voters' anti-tax message.
Deukmejian's problem was small by later standards, but nevertheless he closed it with a package of borrowing, deferrals, spending cuts and taxes – even though the governor insisted, in vain, that the new revenues were not new taxes.
Deukmejian left Wilson what turned out to be, proportionately, the worst state budget problem of the era, roughly one-third of the general fund budget, thanks to a very severe recession. And Wilson twisted arms in the Legislature to raise sales and income taxes by many billions of dollars.
Now, Schwarzenegger has been bloodied with another multibillion-dollar tax hike. The structural deficit he inherited from Davis, and failed to close, ballooned as the economy plunged into an even worse recession.
We don't know who the next governor will be. But chances are high that he or she will come into office in 2011 with a large and still unresolved fiscal headache. In fact, the Legislature's budget analyst, Mac Taylor, is forecasting potential deficits as high as $26 billion by 2013-14.
It's something of a tradition.
Call The Bee's Dan Walters, (916) 321-1195. Back columns, www.sacbee.com/walters.
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