Brown stymied by same budget dysfunction that plagued predecessors

SACRAMENTO — Jerry Brown told voters he was different — that only he, a septuagenarian government veteran with no aspirations to higher office, could fix the cycle of swelling budget deficits that has plagued California for more than a decade.

But the release of Brown’s updated budget plan Monday shows that he is being trapped by the same partisanship and dysfunction that hobbled his predecessors when they tried to repair the state’s finances.

“No governor, under the system we have in California, really has the ability to deal with the mess we’ve created,” said Mark Paul, a former deputy state treasurer and the coauthor of a book about the state’s financial quandary. “This is the third governor in a row who has run up against the same problem.”

Brown is stuck between Republicans who refuse tax hikes, Democrats who resist cuts and a tangle of special interests and voter-mandated budget requirements that make it politically easier to push the problem down the road. That’s what Brown has started to do.

Last year, after being unable to persuade Republicans to help raise taxes, Brown signed a budget that made some deep cuts but dodged others by assuming a $4-billion revenue windfall that never arrived. In January, he remained optimistic that the rebounding economy would fill state coffers. Now he has acknowledged that the money hasn’t come in and the deficit has nearly doubled to almost $16 billion.

To close that gap, Brown pins most of his hopes on voters approving $8.5 billion in tax hikes in November. He would make up the difference with spending reductions, a raid on unused dedicated funds and the type of one-time savings he once derided as typical Sacramento trickery.

Brown defended recent decisions to defer some permanent cuts in hope of an economic turnaround.

“When I have to cut and people lose their jobs, a mother loses her child care, I’m reluctant to do that if it doesn’t have to happen,” Brown said at a news conference Monday.

Still, in a familiar refrain, he also lambasted “more than a decade” of bad budget decisions and warned that there will be “a day of reckoning.”

It’s natural to want to avoid permanent pain, said Thad Kousser, a political scientist at UC San Diego. It’s easier, he said, “to convince everyone to take their medicine when they only have to do it for a little while.”

“No one thinks this is a permanent economic downturn,” he continued, “so no one … wants to make permanent choices. That includes the governor, the interest groups and the voters.”

Many experts pin the state’s perennial problems on ballot measures that constrain taxes — as Proposition 13 does — or require that the state devote specific amounts to certain services. Changing such requirements is considered politically impossible because the state’s voters cherish their sometimes contradictory mandates.

That limits government’s ability to adjust to economic downturns, like the ones that socked California after the dot-com and housing busts. Spending mandates don’t necessarily decline when revenue does, and there are few ways to raise money to close the gaps.

Cuts are no picnic either. Reducing parts of the budget that are not protected — the court system, employee pay, healthcare for the poor — is always difficult and takes a toll on politicians’ popularity, said Mike Genest, who was Schwarzenegger’s budget director.

“Every one of those things has very powerful special-interest groups organized against that stuff,” he said. “You’re left with gimmicks and things that don’t work, or things that will work but will only work once.”

Genest added that Brown’s accounting maneuvers and one-time cuts pale in comparison to the Schwarzenegger administration’s record. “We did a lot more of that kind of stuff than he’s doing so far,” he said.

Brown has packaged himself as a different sort of governor. The 74-year-old, who flies on Southwest Airlines and drives a Pontiac, has positioned himself as a truth-teller who will take the tough steps needed to tame the budget.

Among Brown’s first acts after taking office in January 2011 was ordering state workers to hand over tens of thousands of taxpayer-funded cellphones and halting the purchase of new state cars — cutbacks that barely dented the deficit but were symbolically potent.

The governor has long tied his frugality to his pitch that voters can trust him with more of their tax money. He reiterated that Monday when he announced his updated spending plan.

“I’m linking these serious budget reductions, a real austerity budget … with a plea to the voters: Please increase taxes temporarily,” Brown said.

In case the governor fails in his bid to hike sales taxes and income levies on top earners, his budget proposal contains a painful contingency plan: more than $6 billion in additional cuts, mostly from public education.

Brown is relying on more than taxes and cuts to balance the budget. He’s also reaching for quick, one-time revenue hits, such as leftover cash from defunct local redevelopment agencies; a national court settlement on mortgage wrongdoing; and a projected windfall from Facebook’s initial public offering.

Because those cash infusions won’t return in subsequent years, they are considered less reliable than permanent cuts. Gabriel Petek, an analyst at the ratings agency Standard & Poor’s, noted that 75% of the reductions in Brown’s budget proposal last year were permanent. This year that proportion is 50%.

Even if the governor’s proposed tax measure passes, analysts say, it won’t be enough to stave off another round of cuts in 2013. And the taxes would start to expire after four years.

“At some point in time, you have to acknowledge there’s a permanent gap here,” said Christopher Thornberg, a principal at the Los Angeles firm Beacon Economics. “It’s temporary this, it’s temporary that…. We have to stop running our state like a used car.”

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