Why Arizona, California budget woes have similar causes

As I'm sure virtually everyone in Arizona has heard by now, a report out this week states flatly that Arizona is in the second worst financial shape after California.

In fact, I wonder if that's even true, for one thing California actually did overcome partisan differences and get a budget together while our Governor and legislature, led by the same party, were still bickering and not getting anything done. In fact they never did agree on a budget this year, with the Governor 'creating' a pseudo-budget by vetoing some of the legislative cuts and forcing a third special session which may or may not begin next week to address some of the unresolved budget issues.

However, for some clues to why things are so bad, it might be useful to compare the two states and see what is common between them that may have led to this situation.

Party control is not one of those factors. California, once the home of Nixon and Reagan Republicanism, has become a reliably Democratic state, and despite having a Republican Governor has had a Democratic legislature for a long time. Arizona on the other hand has had Republicans running the legislature since 1964 (when Barry Goldwater's coattails in his home state swept the GOP to power in a body they have controlled for decades since then.)

There are however three factors that all appear to have sprung from populist impulses.

The first is that Californians, who were anti-tax during the 1970's and 1980's passed the same kind of law as Arizona passed in 1992. It requires a 2/3 vote of both houses of the legislature plus a Governor's signature to raise taxes. This effectively prevents raising taxes even in an emergency like the present since it is virtually certain that you can muster 1/3 of one house or the other to always vote against a tax increase. Let's be honest here-- if the same provision applied to spending cuts, the state would be just as constricted since you could always find 1/3 of at least one house who would vote against any spending cut. What this does is effectively disables the legislature's ability to deal with problems as they emerge and in a disaster like we have now this restriction is crippling. And it is also true that preventing the legislature from raising taxes is in effect saying that you don't trust the voters to vote out any legislator who voted for an unpopular tax.

In Arizona the supermajority provision was complicated during the 1990's when the state cut taxes very deeply so that we now are faced with a situation where we already are one of the lowest tax states in the nation and still can't raise them back again.

The second is the citizen ballot initiative provision that has essentially pre-written large chunks of the state budget in both states. While I fully supported and voted for dedicated spending on programs like children's health care that I did not believe the legislature could be trusted to fund adequately (and I will oppose any effort to repeal this dedicated spending, at the ballot box or elsewhere because I know that Kirk Adams and Bob Burns would use the money to pay for tax cuts, not to reduce spending cuts) it is true that when there is a big budget deficit, the fact that certain budget items by law can't be touched forces the cuts to be deeper everywhere else. Sort of like building a wall around a town to keep out a flood. It may succeed but it will push more water downstream and flood the next town worse.

As one California observer noted, Californians are schizophrenic-- they don't want to pay taxes but they want the Government to provide a lot of stuff. So they have voted that combination, and the same is true of Arizonans. That's not a partisan observation, it's an observation of the way things are.

The third similarity is legislative term limits. Most people don't like professional legislators, but in Sacramento and Phoenix that problem has been solved by another populist measure that creates a whole new set of problems-- term limits. The biggest problem with this is that there are always at least 1/4 of the members with no experience, another 1/4 of the members who are on their way out and therefore have no reason to try and reflect what anyone in their district thinks (1/4 + 1/4 = 1/2) and the other half of the legislature in between these two extremes (i.e. with little experience and not really needing to satisfy their district beyond the next election or two.) Further, there is a lack of institutional memory. Programs that may have been begun at an earlier time (such as investments in biotechnology) may be discontinued, defunded or severely cut when a new group of legislators comes in with a different idea about where things should be headed and has no idea of what the original justification or purpose for the programs was.

Term limits may be nice in theory but in practice it means we force people to retire once they actually learn what is going on and how to get things done within the system.

These three populist ideals-- supermajority to raise taxes, budget-by-ballot-initiative and term limits, while appealing in some degree to people on both the left and the right, have essentially crippled the governments in both Arizona and California to the extent that neither may be able to deal with the tidal wave of red ink now rolling towards them at high speed.

Republicans own the Republican budget.

The latest word from the capitol is that the GOP legislature is, as it looked like they might do last week, going to pass exactly the same budget that Governor Brewer vetoed on July 1, and this time she will sign it.

She will blame this surrender, ironically enough on Democrats.

Yes, you read that right. After being frozen out of budget negotiations for months (and the proposed Democratic budget was never considered at all by the GOP leadership, by the way) the only times when Democrats were consulted was when it became clear that the GOP leadership was all tied up in knots with themselves with a deadline looming and they needed one more vote-- and then it was never the Democratic leadership, but individual Democrats (Hale and later Miranda) who they tried to get to defect and vote for a terrible budget for a price, and as I noted they were consulted literally hours before deadlines and not at any other time or with any other Democrat. Luckily neither of those two took the bait.

Zelph at AZ Netroots has a pretty good summary of all the times that Democrats were consulted at all here. As you can see the number of times when even individual Democrats were courted is a short list, and never once did the Governor bring together a 'five party' solution (herself, and the majority and minority leaders from both houses of the legislature,) something Democrats had been repeatedly asking for. You'd think she was superstitious about the number five or something.

Blaming Democrats that a bad budget passes with only Republican support because none of them actually was willing to sell out and vote for the bad budget? That would be bad enough in and of itself.

However we can go further, and point out that this isn't just a bad budget full of budget cuts. It's a bad budget full of tax cuts (especially the permanent repeal of the state property tax.) Asking any thinking person to vote for a sales tax referral when all it will do is backfill a tax cut that mainly benefits the rich and corporations who can pay good lobbyists is a sham in and of itself.

Let's be clear. This is a Republican budget, written exclusively by Republican leaders, passed with only Republican votes in a legislature where Republicans have absolute control, and if it is signed it will be a Republican Governor. This turkey will be their budget, they will own it and there will be no way one could argue otherwise. Democrats can't do anything about this budget because they've been locked out of the room for a long time. Blaming Democrats would be like blaming the person you outbid at an auction if the item you bought turns out to be junk.

But they will try it anyway.

I bet even if they REALLY had another forty years they still couldn't get the state budget done.

If you look real close at the latest AZ Central article about missing the budget deadline you'd find that they haven't really missed the July 31, or August 1, well actually it could be August 7, no wait-- August 10, er. 11th, 2009 deadline.

That's because the dateline on the article is DECEMBER 31, 1969 (!)

So maybe the legislature invented a time machine and went back forty years so they could work all the problems out.

Although looking at how well this group works with each other, I'm not sure that even working on the budget for forty years would be good enough.

Voters like Congress better than the Arizona legislature

According to a June survey, the Arizona legislature is less popular than Congress. And when you look at it more closely it's even worse.

by Amy B Wang
The Arizona Republic

Two-thirds of Arizonans who participated in a research panel are dissatisfied with how the state Legislature is dealing with Arizona's budget and tax issues, according to a June report by the Morrison Institute.

Two-thirds is about 66%. In contrast, the current disapproval rating for Congress (which has never been very good, because Congress has been a favorite punching bag for people to blame things on for decades) is 60.8% in the current RCP polling average.

But it gets worse than that. Most of the polls in the RCP average are not just surveys of 'adults' but most are instead surveys of 'likely voters' (though some may split the difference and use 'registered voters.') This filters out people who may not really care very much and may not even care enough to bother to actually register or show up at the polls and vote.

However, the Arizona Republic article goes on to say:

Fewer than half of the respondents said they kept tabs on current public-policy processes, including news about the Arizona state budget.

When researchers narrowed it down to this group, the rate of those dissatisfied with state lawmakers jumped to 80 percent.

So among people who are actually paying attention, four out of five disapproved with the job the legislature was doing-- in June. The language may not have specifically said, 'likely voters' but it's an almost automatic assumption that the people who are paying attention to the legislature would probably be considered 'likely voters' with very few exceptions. So out of a group of voters likely to vote next year, the approval rating for the legislature was 20% (assuming that we generously count all those who don't 'disapprove' as 'approve' and so give the lege the assumed support of all those who say they have 'no opinion,' 'refuse to answer' or 'aren't sure'-- really, we're doing everything we can here to help them out.) Twenty percent approval is dangerously into 'throw the bums out' territory.

Ah, but that doesn't even tell the whole story. Note that this survey was taken during JUNE. June was the last month of the scheduled regular session. Likely the survey was taken after the June 4 budget vote which would have decimated schools and state agencies while giving away a quarter billion dollar tax cut, and during which relations between the Governor and the Republican leadership in the legislature got so bad that she went to court and sued them to try and get them to send her the budget so she could veto it. However, since then we've gotten no budget, had a full month of special session and still no budget (though some of the proposals we've seen are even worse than the June 4 budget.) I doubt if ANYONE thinks that the legislature is more popular (or even still is as popular) today compared to where it was in June.

Pity the poor legislators. I wonder what the state legislative GOP leaders would say if someone pointed out to them that more likely voters approve of the job that Nancy Pelosi's Congress is doing, than approve of the job they are doing.

Then again, earlier this year Congress was able to pass, and the President did sign, a budget.

GOP alternative budget is a joke.

After being criticized for just blindly opposing the President's budget without offering any alternatives, the House GOP today came out with an outline for an alternative budget.

Well, sort of. At a capitol hill press conference minority leader John Boehner presented the Republican budget alternative. Their 'budget blueprint' is eighteen pages mostly of platitudes and talking points with unspecified proposals to cut wasteful spending and cut the size of the government (no hard numbers or programs where spending would be cut.) Cutting government spending is a little like ending hunger or creating a permanent peace between the Israelis and the Palestinians-- it's easy to talk about but much harder when you have to figure out how to do it-- so hard that nobody seems to be able to figure out a way (certainly not house Republicans, who ran the place for six years with a President who signed everything they sent up and responded by passing budgets that featured explosive growth in government spending.)

They say they are working on the details. OK, we will see exactly what they propose to cut and by how much.

They are proposing some tax incentives to insurance companies and other entities to expand access to healthcare. Ho-hum. The same kind of do-nothing approach that didn't do anything about healthcare during the past decade and a half.

The only hard number they offered was this one: Another massive tax cut, cutting the marginal tax rate to 10% for anyone earning up to $100,000 and 25% above that. Remember of course that the Bush tax cut only cut the top rate from 39.5% to 35%-- so this proposal appears to be at least twice as large as the Bush tax cut. Now, remember that the Bush tax cut cost $1.3 trillion. So just off the cuff, I'm guessing (even assuming no inflation) that this one would cost well above $2 trillion, in fact probably closer to $3 trillion. And this is from the crew who just last week said we couldn't afford the Obama budget which they claim will cost $1.9 trillion. How do they plan to reconcile the fact that their tax cut alone looks like it will add more to the national debt than they claim Obama's plan will add? Oh yeah, it's those unspecific and unnamed spending cuts.

Yeah, I'm convinced. I'm convinced that the Republicans still don't have a plan.

President's budget challenge-- sorry, Mr. President, we've already seen your 'fuzzy math'

Today, President Bush challenged Democrats on spending.

Well, there are certain areas where I would be all for a spending cut. Starting with the third of a trillion dollars we have dumped into Iraq since the war began. That is the first place where government spending should be slashed. Maybe we can get it to zero before the President leaves office-- wouldn't that be an accomplishment?

He claims he has a plan to balance the budget by 2012. Hmmm... Didn't he start with a balanced budget? No, actually he didn't. He actually started with a suplus well into the hundreds of billions of dollars. He also says he wants to preserve the Bush tax cuts (which would take a positive vote by Congress to extend; if Congress does nothing then they will expire on schedule and revert to the Clinton tax rates, which helped produce that surplus).

The President said he doesn't want 'politics as usual' and warned Congress against passing bills that are 'political statements.' Then he said that he wants a line-item veto. Um, excuse me Mr. President, you might recall that some years ago Congress did pass a line item veto. It was determined to be unconstitutional by the Supreme Court after two Republican lawmakers sued when Bill Clinton actually used it to veto a couple of their pet projects. So, you are asking for something that has already been declared unconstitutional, apparently for appearances. What was that about bills that are 'political statements?'

"We need to reform Social Security and Medicare and Medicaid so future generations of Americans can benefit from these vital programs without bankrupting our country," he said.

I have an idea for reforming Medicare. How about scrapping the turkey of a drug bill that your party passed and you signed three years ago, Mr. President? You know, the one that gives away trillions of tax dollars to pharmaceutical companies and really hasn't made prescription drugs any cheaper for American seniors?

As for Social Security, that could be fixed by eliminating the $90,000 cap on Social Security wages subject to taxation. How about it, Mr. President? Obviously the American people didn't like your privatization plan last year, so how about something different?