California’s longest-ever state budget impasse ended in early October 2010, when then-Gov. Arnold Schwarzenegger and legislative leaders announced a deal that included the creation of a rainy-day reserve.
“It will be up to the voters to decide if this is the right thing to do,” then-state Sen. Roy Ashburn, R-Bakersfield, told his colleagues a few days later, shortly before they approved the measure overwhelmingly.
Today, Schwarzenegger is gone, as is Ashburn, the two Republican leaders at the time and more than one-half of the lawmakers who voted to put the reserve measure on the ballot. Now the measure itself seems destined to die, most likely to be replaced by a different approach sought by Democratic Gov. Jerry Brown.
Voters’ 2010 approval of majority-vote budgets and replacement of the Republican Schwarzenegger with Democrat Brown have greatly expanded Democrats’ power to change law. Also, Democrats gained two-thirds supermajorities in 2012 for the first time since the late 1800s. Voter-approved term limits, meanwhile, continue a biannual shuffling of lawmakers who were party to a deal with those who were not.
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For Republicans, the proposed change in the budget reserve proposal is the latest in what they contend is a string of recent Capitol agreements undone by Democrats. Republicans accuse Democrats of eroding a Capitol word-is-your-bond tradition on issues ranging from welfare to water.
“The public wants us to work together to get things done. But when a deal is not a deal, it strikes at the very fundamental premise that you can trust those you’re negotiating with,” said Senate Republican Leader Bob Huff of Diamond Bar.
Democrats scoff at the Republican complaints. They say parts of some agreements have proved to be unworkable. Past pacts, they added, sometimes reflected extraneous GOP demands, such as a constitutional amendment to change the state’s primary system that was part of the February 2009 budget pact.
“There was way too much opportunity to use leverage in ways that I believe was not productive,” said Senate President Darrell Steinberg, D-Sacramento. “Yes, we live up to our deals. But when it comes to the budget and budget policy, things change.”
Republicans point to several components of recent budget agreements that Democrats changed, or tried to change, in subsequent years. Among them:
• Health care – In 2009, many Republicans voted for a bill by then-Speaker Karen Bass that taxed health plans, with the revenue going to preserve the Healthy Families health care program for low-income children. In 2012, Democrats went along with Brown’s plan to fold the program into Medi-Cal, saying it would be better and save money. Republicans said children’s health care would suffer.
• Business taxes – The February 2009 budget package included several business tax benefits, such as giving businesses based out of state more options to calculate their state tax liability. Republicans said the change would stimulate investment in the state. Critics called it a giveaway to big business.
In 2011, Assembly Speaker John A. Pérez, D-Los Angeles, carried unsuccessful legislation to end the “single sales factor” break and put the money toward college scholarships. A year later, 61 percent of voters backed Prop. 39, a ballot measure sponsored by billionaire environmentalist Tom Steyer, which stopped the $1 billion benefit and directed some of the money toward energy-efficiency projects.
• In-home health services – The July 2009 budget package included fingerprinting requirements and other changes to the In-Home Supportive Services program demanded by Schwarzenegger and Republicans to prevent alleged fraud. In 2011, Brown signed legislation eliminating those requirements. Democrats said claims of IHSS fraud were overstated and that the 2009 changes were too costly.
Claims of broken deals are not just between Republicans and Democrats. In 2003, Democrats were divided over some caucus members’ attempts to scuttle a farm equipment tax benefit that was part of the 2001 budget pact. The effort fizzled.
Steve Boilard, executive director of the Center for Governmental Studies at California State University, Sacramento, said government would grind to a halt if there was no deal-making to guide how lawmakers vote.
“I’m not that outraged that, with some of these deals, one or the other party backs away from it after a couple of years. The world changes so rapidly,” said Boilard, who spent 15 years at the Legislative Analyst’s Office. “But if you’re just going to very cynically promise something that you never intend on delivering, then yes, your word is less credible and that really gums up the works.”
Former lawmakers say California’s 1990 legislative term-limits law has complicated things. “Term limits make it really hard to sustain a quote-unquote deal when the members change,” said former state Sen. Denise Moreno Ducheny, D-San Diego, who led the Senate budget committee during the depths of the recession. “In what world does a Legislature bind a future Legislature?”
“ ‘That wasn’t my deal,’ ” added former Senate Minority Leader Bob Dutton, R-Rancho Cucamonga, quoting a former colleague. “A lot of these legislators make a deal, but then they’re no longer in office,” he said.
Over the coming weeks, two bipartisan agreements on the November ballot could be altered.
In November 2009, about two-thirds of Democrats and Republicans voted to place an $11 billion water bond before voters in 2010. The measure’s ballot date has been postponed twice, and is now scheduled for November 2014 amid talk that it will be moved yet again or significantly slimmed down, with unknown consequences for the bond’s $3 billion for new reservoirs.
Republicans had demanded the reservoir money in return for supporting projects backed by Democrats. Of the lawmakers who voted for the bond, less than a third are still in the Legislature.
Brown, unlike Schwarzenegger, has been noncommittal on the issue, only voicing general support for “expanded storage and serious groundwater management.”
Former Senate GOP Leader Dave Cogdill, the author of the water bond, said he is frustrated with the turn of events.
“Once you make a deal, I expect to uphold my end of the bargain and I expect you to do the same,” said Cogdill, who was ousted by GOP colleagues in February 2009 after he and a handful of Republicans voted with Democrats for temporary tax increases. Alluding to that, Cogdill noted “what we put on the line and lost in order to get them their side of the deal.”
Ducheny, who also worked on the water bond, said she understands Cogdill’s complaints yet added that it might to be time to revisit the issue. “It was a carefully crafted deal that satisfied the members at the time, but it’s been five years,” she said.
Republicans also are unhappy with the prospect that Brown and Democrats will revamp the reserve fund, a cornerstone of the October 2010 agreement.
Under ACA 4, the state would divert 3 percent of revenue into a rainy-day reserve, along with money above a 20-year revenue trend. The money would be off-limits except after earthquakes and other emergencies and when revenue comes in less than expenses for the previous year. It was supposed to go on the June 2012 ballot.
Less than a year later, Democrats approved a law that moved all propositions to November elections. It also moved ACA 4 to the November 2014 ballot.
“You had a deal that relied on the same five parties being around the next year,” Peter Schaafsma, a longtime fiscal consultant to Assembly Republicans, said of the 2010 budget talks.
Steinberg, Assembly Speaker Pérez and other Democrats now say ACA 4 is too complex to work. Under Brown’s proposal last month, capital-gains revenue above 6.5 percent of the general fund would go into the reserve. Brown also wants to create a special pot with the reserve for schools. And Brown said his proposal would allow lawmakers to use the reserve to pay down debt.
Republicans, though, say the real goal is to adopt a weaker reserve that groups with a stake in the state budget, such as health, welfare and labor interests, could circumvent.
“All that work, gone,” former Senate Republican Leader Dennis Hollingsworth, who negotiated the pact, posted on Facebook last month. “Also remembering the criticism that our 2010 deal wasn’t tough enough. Wanted the whole loaf. Now there’s not even any scraps.”
Steinberg, who also negotiated the 2010 pact, said Democrats will produce a better reserve.
“Governor Schwarzengger was on his way out. He wasn’t all that invested in the details. And we had to get the budget done,” Steinberg said of the talks then. “It was imperfect, we recognized it as such at the time, and we have the right to seek to change it with a two-thirds vote.”