Jerry Brown takes a big risk - Andy Barr - POLITICO.com
By: Andy Barr
January 23, 2011 02:46 PM EST
After spending nearly 20 years working his way back to the pinnacle of California politics, Jerry Brown is risking it all with an opening gambit that will either lead his distressed state to solvency or leave him in political ruin.
Brown’s bet is that the fear over California’s enormous $25 billion budget hole will give him a six-month window to unite the state’s many powerful warring factions for the greater good – even as each of them takes a major hit.
He’s expecting the state’s dominant state employee unions to sign on to major cuts in salary and services, business to back tax increases and the counties to deal with an enormous shift in expenses onto their books.
On top of that, Brown needs the dysfunctional legislature in Sacramento to cast votes designed to cut services and increase taxes. Even if he can persuade his party to go along with the painful cuts – and that’s a big if – he needs the votes of several vulnerable Republicans in both the state Assembly and Senate to assemble the two-thirds majority needed to approve a budget.
And all of that has to get done by June in order for Brown to put the tax increases in front of voters for approval in July. Otherwise, the deal falls apart.
If he pulls it all off, California’s budget hole will be filled and a crisis will likely be avoided. If not, he could find himself mired in the same kind of drawn out budget battle that permanently damaged his predecessor, former GOP Gov. Arnold Schwarzenegger.
“The path ahead is littered with pot holes and crevices and bottomless pits,” acknowledged Brown adviser Steven Glazer of the recently unveiled budget. “It’s a daunting path to follow. And that’s why previous legislatures haven’t had the courage to attempt it.”
“What we’re trying to do is get all the interests to recognize that unless we find common ground, the economic recovery we care about, the schools we appreciate – there will be no future,” he said.
For now, it seems Brown has a path to success.
“It’s going to be difficult, but it’s certainly possible,” said Allan Zaremberg, the president and CEO of California’s Chamber of Commerce.
Zarenberg said Brown is being given room to work because most of the state’s political interests believe it is smarter to be seen as taking a hit now for the betterment of the state than be caught hoping the deal falls through.
“He’ll have at least six months of a honeymoon,” the chamber president said of Brown.
Brown has been able to line up some support because he structured his budget proposal in such a way that the pain is spread around.
“The governor kind of took the baby and split it in half. He has $12.5 billion in cuts and $12.5 billion in revenue increases,” said state Assemblyman Jim Beall, the Democratic chair of the Committee on Human Services, which oversees the social programs that will take the biggest hit.
Brown has held frequent meetings with legislators of both sides. And he has so far been able to sell Democrats on the massive cuts by laying out the scary scenario of what happens if his budget doesn’t pass, the assemblyman said.
“I don’t think the governor’s budget is one that’s approved of in terms of the cuts,” said Beall. “But if we cut the full amount and had no new revenues, we’d have serious cuts to education – maybe a quarter of education – and maybe cut 30 percent of the revenue to health and human services.”
The magnitude of what Democratic interests stand to lose if Brown can’t get all sides in on a deal is what encouraged the California Teachers Association, one the state’s most powerful unions, to sign on to a $2 billion deferral in funds for K-12 education and a loss of $1 billion from the budget of the University of California system.
And making it all even more complicated, Democrats have to agree to the cuts on faith that voters will extend the tax increases enacted in 2009 and set to expire. Brown promised any new taxes would be put to voters, and the earliest an initiative could be placed on the ballot is July. So Democrats and labor will have to take the initial hit in hopes that voters agree to raises taxes, even as Republicans likely campaign against them.
“There really is not another option for labor and others. It’s either an all cut budget, or a budget that’s split up,” said Chris Lehane, a California Democratic strategist. “You have a Democratic governor who has a positive relationship with labor and labor is able to trust him.”
“The hole is just too deep,” added Jack Pitney, a political scientist at California’s Claremont McKenna College. “Democrats dislike the social service cuts, but the alternatives were to raise taxes even more or to go after K-12 education. His current tax proposal is a tough enough sell as it is: anything bigger would probably fail. And further cuts to K-12 education would trigger a furious reaction both from teacher unions and parents.”
Many of California’s pro-business interest groups are, for the most part, on board. That’s because there is no major Republican interest that takes the brunt of the tax increases, said Zarenberg. “You’ll have opposition, but you won’t have as well-funded of an opposition as you would if the tax was against one industry,” he said.
Still, winning over the handful of Republican lawmakers Brown needs to get to two-thirds will be tricky.
After watching what happened to the last group of GOP leaders who joined Democrats on a budget deal – the Senate minority leader was immediately sacked and three of the six Republicans who voted for the budget were not reelected – there is intense pressure on the state’s Republicans to oppose Brown’s budget.
The state Senate GOP leader has called Brown’s proposed cuts “difficult but necessary,” but has voiced concerns about the tax hike — a common talking point among state Republicans. Others have flat out said no. During a hearing last week, state Sen. Bob Huff, the GOP caucus chairman, called the plan a “non-starter,” adding that his district has “no appetite for raising taxes.”
In the state Assembly, Minority Leader Connie Conway acknowledged in a statement that “difficult choices lie ahead,” but would not commit to supporting tax hikes, saying that “voters made it abundantly clear that they want Sacramento to live within its means.”
“The best part about California today is that the Democrats own it,” said Linda Ackerman, a Republican National Committeewoman from California.
“We do not control the Assembly and we do not control the Senate, so all the fallout is going to come down on the Democrats,” she said. “The Democrats own it, let them own. Let’s see what they’re able to do with it.”
California’s GOP Chairman Ron Nehring has voiced similar sentiments, a message that is frustrating Democrats in Sacramento.
After state Sen. Tom Berryhill told reporters last week following a meeting with his Republican colleagues that “no one person in there is ready to support extra taxes,” the state’s Democratic president pro tem yanked the Modesto Republican’s leadership post on the Senate Agriculture committee.
Brown is hoping that he’ll be able to leverage the deep ties he’s built in Sacramento over a lifetime in state politics to convince all the players he needs to get on board.
“What he’s tried to do is just talk straight with everyone and be honest about what this budget will and won’t do,” said Glazer, the Brown adviser. “It’s not a magical formula. And some legislators seem to feel like you can just wave a wand and solve all these difficult problems.”
“Jerry Brown has been going around having meetings with the Democrats and Republicans on a daily basis…Jerry Brown is doing the things he should be doing,” added Beall, the Democratic assemblyman. “I’ve been impressed by his work ethic, especially in comparison to Governor Schwarzenegger, who didn’t do the personal kind of work.”
But even if Brown gets his budget, the peril is far from over.
Brown’s path to fiscal health for the state is paved at the expense of local governments. Rather than cut many services, he’s transferring the cost to counties and municipalities.
“Right now we’re expecting a cost shift of $1.2 billion from the state to the county,” said Ryan Alsop, the assistant CEO of Los Angeles County.
Counties suffering huge shortfalls on their own will be responsible for $6 billion in additional costs if Brown’s budget is passed, mostly in the form of taking over state social services that Sacramento is dumping on local budgets.
Los Angeles County is facing a $450 million cut alone in funding for CalWorks, the state’s temporary financial assistance program for the unemployed – a move that affects 37,000 families who will have to be taken onto the county’s books, said Alsop.
“It’s a hell of a cost shift. And it’s reliant upon a skeptical public in California voting to extend taxes when their opinion of government in general is in the toilet,” he said.
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