Take It to the Limit... and Beyond?
The television ad features a portly man at a restaurant table, being brought plate after plate of heaping portions, as the announcer mockingly says, "Tell him it's time the people took control of gluttonous government spending."
The commercial aired in the fall of 1979 as part of the ultimately successful campaign for Proposition 4, a constitutional amendment to limit government spending.
If there's one thing that Californians really want when it comes to ending the state’s seemingly endless cycle of fiscal chaos, it's a strict cap on government spending.
Except when they don't.
Such caps, which limit both current and long-term spending, are a perennial topic of discussion and the focus of my story this morning on The California Report (listen below).
This week, as Governor Jerry Brown resumes negotiations with legislators over a new state budget, Republicans are again demanding a hard-and-fast spending cap in exchange for their eventual support of Brown's proposal to extend billions of dollars of taxes.
And polling would seem to back them up. Last week's survey from the nonpartisan Public Policy Institute of California found huge support for some kind of spending constrain: 75% of likely voters surveyed support strictly limiting year-to-year increases in state government spending.
Interestingly, that's almost exactly the final tally in support of 1979's Prop 4, the brainchild of the late Paul Gann one year after her helped write history with the Proposition 13 tax revolt.
"Once Proposition 13 passed, Paul realized that wasn't going to do the job," says Ted Costa, heir to the political organization Gann built and the first proposal he worked on with the late activist.
Gann's sequel limited government spending growth to growth in population and inflation, and it covered both state and local entities (a point not often remembered). But once the measure started really kicking in, a bipartisan group pushed to loosen the state budget restraint. And in 1990, the voters agreed.
"We put it in place, and we thought the voters knew what they were doing," says Costa dismissively. "But apparently, they didn't."
Of course, others see the 1990 amendments to the spending cap differently. "Gann was a formula that prevented adequate public investment in public education and infrastructure," says Mark Paul, co-author of a 2010 book on the dysfunction in California governance.
In the 21 years since the Gann limit was modified, it's only come into play once -- in the dot com boom times of 2000-01 -- but was not breached, thanks in large part tax reductions. In the budget Governor Brown has proposed for the new fiscal year, state government spending is projected to be $17 billion below the cap. While the 1990 modifications to the Gann limit are the real story to that number, it's hard not to notice the billions of dollars of spending that are excluded -- dollars that are paid to local government. The single biggest amount goes to K-12 schools, a system set up in the wake of Prop 13. And there, it seems, is at least a small bit of irony: Paul Gann's success with Prop 13 led to a state government spending process that actually helped make his spending limit not so limiting.
For advocates of smaller government, the history of attempts to reinstate tougher spending limitations (and Gann's 1979 effort wasn't the first) hasn't been pretty. Recent history has seen two important rejections by the voters: Arnold Schwarzenegger's 2005 initiative and the 2009 legislative proposal to divert more revenues into a reserve fund.
(And yes, the 2009 measure is on course to get a second shot. It's now scheduled for next February's ballot and has changed only by removing the tax increase attached in 2009. And yes, that's the same tax increase Brown is now trying to get back on the ballot, too.)
Republicans in the Legislature want to revisit the idea of a cap as part of this year's budget negotiations, one that's temporary. Sen. Anthony Cannella (R-Ceres), one of the handful of GOP legislators negotiating with the governor, said the idea is to create a firm cap on state spending for the duration of the temporary taxes proposed by Brown, set to expire in the summer of 2015. Any unanticipated revenues above that cap would be directed towards paying off budgetary debt.
"I think when the governor is going and asking hard working Californians to go and pay higher taxes," says Cannella, "we ought to have a harder cap in place."
Governor Brown has voiced support for some kind of budget spending limitation, but admitted last week that the crafting of such a proposal is "dicey." That may be an understatement.
Jean Ross, of the advocacy nonprofit California Budget Project, argues that a cap based on current spending levels locks in program cuts made in recent tough times, cuts that weren't necessarily supposed to be long lasting.
"A limit that doesn't allow the state to come back and revisit those decisions," she says, "wouldn't be good."
The idea of a new constraint on spending raises questions about how it would interact with the state's mandate for school spending, Proposition 98. Legislative Republicans insist that K-12 funding would be placed outside a temporary spending limit, thus ensuring no cuts to public schools.
But given that the Proposition 98 formulas generally raise school spending each year, there's some question as to whether the education slice of the budget pie would grow larger through the years, resulting in a squeeze on everything from social services to public safety.
Others, though, suggest that none of these measures really address the public's concern. "What is it that the voters are interested in limiting?" asks Fred Silva, a former legislative staffer who’s now a budget analyst for the bipartisan group California Forward. Silva says that based on community events held by his group, the public's desires are much more simple. "They want responsible spending," he said.
How to define that, of course, is tricky. Even as voters in the recent poll overwhelmingly supported "strictly" limiting annual government spending, large majorities also opposed further cuts on three of the four largest segments of the state budget. Which seems to explain why Ted Costa, perhaps the state's most diehard advocate of small government, has given up on spending caps.
"You can't force something on someone," he says, "that they don't really know if they want."
Note: The original version of this posting said that the spending limit had been breached once since the 1990 modifications. In fact, that breach was avoided, in part, by generous tax cuts. The posting has been revised to reflect that. --JM