Sorry, governor, but 57 and 58 don't add up

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By STEVEN GREENHUT Senior editorial writer and columnist, The Orange County Register sgreenhut@ocregister.com

Thanks to Gov. Arnold Schwarzenegger's persuasive powers, recent polls show a dramatic turnaround in the percentage of California voters backing the governor's pet initiatives, Propositions 57 and 58. Prop. 57, which would float a $15 billion bond to pay for the deficits created under the Davis administration, and Prop. 58, which requires the state to enact a balanced budget, are now likely to pass.

Yet there's no way I can bring myself to vote for either one of them. Admittedly, it's a close call. Some of the political people I trust the most are supporting both measures. After all, the new governor inherited a budget mess from the past administration, and there's no way he can realistically cut billions of dollars from one year's budget to balance the books, they say. We need to hold our noses, cover an already-existing debt, and then keep from spending our way into this mess again.

The problem, as I see it, is that there's no indication the state won't simply go down the spending route again. Under tight time constraints to get the measures on the ballot, and eager to rack up bipartisan successes, Gov. Schwarzenegger agreed to a deal with Democratic legislators that is at the heart of the problem.

The initial Republican idea was sound: Accept a bond in exchange for a firm spending cap to keep a spendthrift Democratic-controlled Legislature from running up debt again. Without a firm cap, conservatives argued, the state government will act like a credit-card junkie who continues to run up bills this year even after getting the home-equity loan to pay off the mountain of debt run up in the past year.

Something has to stop the spending spree. California has a large structural deficit, in which the state consistently spends about $8 billion more than it takes in tax revenues. The Democrats have an "easy" solution: just keep raising taxes and feeding the beast. That's why they opposed a GOP proposal that would have capped state growth to percentage increases in inflation and population. It was a real spending cap.

Prop. 58 is their alternative. As the Orange County Taxpayers Association explains, "The Constitution requires the governor to submit a balanced budget, but the Legislature is not required to adopt it. Proposition 58 would strengthen the law slightly by requiring that the state enact a balanced budget. It would not preclude masking deficits with tricks that have gotten us into the present mess: dishonestly overestimating revenue, short-term borrowing, and stealing money from other programs to prop up the General Fund."

So, Prop. 58 would offer a slight improvement over the current situation, but it would not cap spending. Presumably, under the Schwarzenegger administration, spending would be controlled because a responsible governor wields a veto pen.

But what happens if, say, Treasurer Phil Angelides - who has traversed the state calling for dramatic tax increases - becomes gov- ernor? Or lefty Bill Lockyer? Then we're stuck with an enormous bond and the whole spending spree goes on and on.

There's no one I trust more on fiscal matters than Orange County Treasurer John Moorlach. He's the guy who predicted the 1994 O.C. bankruptcy. And he is one of the few people I know of statewide predicting the fiscal crash that's coming as a result of the outrageously generous "3 percent at 50" public-safety union retirement benefits that allow law enforcement officials to retire at age 50 with 90 percent of their pay depending on years of service. Officials ignore him now - at their own peril, I might add - as Richmond and San Diego face dire economic circumstances related to retirement benefits.

So when Moorlach told me he supports 57 and 58, I listened closely. It took the state five years or so to build up the deficit mess, so it will have to take a few years to get us out of it, he argues. The initiatives buy time, and let the state dig out of a hole.

That's a persuasive argument, but I remain unconvinced that officials have the intestinal fortitude to stop the spending spree and keep themselves from spending us into a similar mess. I doubt that 58 will stop spending in a significant way.

Had the governor held firm and negotiated a real spending cap, I would support the bond. No question. But without a spending cap, no dice. The other main argument to support the two initiatives is a political one. Supporters claim, convincingly, that the governor will lose much political clout if his two initiatives fail. If he fails, then Democrats will reassert their power and will be in a stronger position to hold up other elements of the Schwarzenegger agenda, such as workers compensation reform.

That's true, but the governor's political problems don't concern me. I'm still a bit annoyed that he has refused to expend any political capital opposing Proposition 56, which would eliminate the two-thirds legislative vote requirement for budgets and tax increases, and would thereby give the Legislature a virtual blank check to increase taxes at will. Doesn't the governor realize that if Prop. 56 passes, all his good efforts to fix the budget mess could be undone almost overnight?

The governor promises "Armageddon" cuts if the bond fails. Maybe I'm being unfair, but my response is, bring 'em on. That's what's really needed to get this state back to fiscal health, anyway. I'm willing to roll the dice and see what happens if 57 and 58 fail.

RINOS Part II

Last week, I described efforts by moderate-to-liberal O.C. Republicans to win the primary race for the Assembly. I didn't mention the state Senate. The three safe Republican seats in Orange County are now held by conservatives: Dick Ackerman, R-Irvine, Bill Morrow, R-Oceanside, and Ross Johnson, R-Irvine.

Because of term limits, Johnson is leaving his seat, and one of the two candidates running to replace him has a spotty record on fiscal and union-related issues.

The race pits Assemblyman John Campbell, R-Irvine, against termed-out Assemblyman Ken Maddox for the heavily coastal Senate district. Campbell has been a reliably conservative vote on every issue, economic and social. Not only that, but he has been a leader - a mover and shaker with significant influence in the Capitol, especially on budget issues.

Maddox is a solid social conservative and an extremely personable fellow, which explains some of his support among conservatives.

But at some point Maddox made a conscious decision to support a Big Labor agenda, which means that in a Legislature where Democrats have close to a supermajority, he could provide a key vote for expanding public-sector pensions and union interests.

Maddox's campaign is heavily funded by unions and tribal interests. On the economic side, Maddox has been one of the worst Republican votes.

He reminds me of the pro-life Democrats I knew back east. Maddox supporters present him as a blue-collar conservative in contrast to Campbell as a white-collar conservative. The real distinction, though, is Maddox isn't particularly conservative on fiscal issues, whereas Campbell is solid all the way around.

Maddox's votes are no aberrations. Maddox wrote a letter to the Board of Supervisors supporting the Project Labor Agreement that granted a near-monopoly of county construction contracts to union workers.

In the Assembly, Maddox has supported bills that require union wages be paid on all economic development projects; impose the costly and rigid eight-hour workday on employers; increase workers' comp requirements for temporary labor agencies; give Native Americans veto power over many private developments on non-reservation land near reservations; make it easier for employees to sue their employers; provide law enforcement and firefighters up to two years of tax-free full pay for disability; and require additional employee categories to join a union or pay union fees.

One Campbell brochure includes 28 Maddox votes that advance liberal union, trial lawyer and Indian interests, which is a partial list over a two-year period. It's sad to say, but Maddox clearly belongs on the list of Republicans In Name Only with last week's cast of characters. Campbell tacks right on the social issues, the economic issues and - despite what Maddox claims - on immigration also. Which leaves little reason for conservatives to support Maddox.