You’ve got to hand it to Arnold: He may be down in the polls, may have
alienated the Legislature, the working class and even the moderates who put him
in power; and he may even be fighting for his political life, but he’s not
afraid to swing for the fence.

His slate of ballot measures this November is a wonky, unsexy conservative
juggernaut designed to keep Democrats away from the polls and shows an
unflinching commitment to ex-Gov. Pete Wilson’s unfinished business. Key to the
massive changes these measures would bring is the reforms buried in Proposition
76.

“The California Live Within Our Means Act,” as supporters call it, is a
constitutional amendment which would create a new state spending cap, change the
school spending formulas that were put in place by voters in the form of
Proposition 98 and give the governor broad new powers to control the state
budget.

Proponents say it’s the only way to get a real grip on out-of-control spending
that has routinely put the state in the red since the peak in tax revenues
during the dot-com era of 1999.

Opponents, however, say this is a power-grab by a governor frustrated with the
difficulty of the legislative process, and a conservative effort to further
limit support for public schools and popular safety-net programs.

“They thought that this governor is so popular and so able to sell, he’s going
to be able to do what Pete Wilson couldn’t do,” said Bruce Cain, director of UC
Berkeley’s Washington Center. “Now, we look back and we see that the governor’s
power and prestige have diminished, so it looks like an overreach.”

In polls released Oct. 27 by the nonpartisan Public Policy Institute of
California, Proposition 76 was trailing badly among likely special election
voters. Despite overwhelming support for the idea of reforming the budget
process (89 percent agreed), 62 percent said they would vote against this
measure, while only 32 percent would vote for it. Most of the opposition seems
to center on the school funding issue.

Proposition 98, passed in 1988, set a minimum level for K-12 public school
funding tied to the number of students and the performance of the state economy.
Proposition 76 would change its most important provision: to automatically
increase funding in good years.

“It changes the rules of Proposition 98. It says that if the money goes down in
any given year, you re-set the base. But if it goes up in any given year, you
keep the old base,” said Assemblywoman Jackie Goldberg, D–Los Angeles. “The
[state] legislative analyst’s office says that, in the first year or two, it
should cost the schools $4 billion. Right off the top.”

That, says Yes on 76 campaign spokesman Tom Campbell, is a gross distortion of
the way the measure really works. Campbell is one of the designers of 76 and has
taken a leave from his job as director of the California Department of Finance
to stump for the proposition.

“Year in, year out, schools will get an increase equal to population plus growth
of income in the state, no matter what,” said Campbell, happily wading through
the complex funding formulas that determine school funding numbers. “But if the
Legislature chooses to put more money in than that, they can; it won’t count
automatically as the base for the next year. We had to address it because
Proposition 98 is the only formula that draws in this matter, with calculations
unrelated to the amount of revenue the state has.”

The $4 billion figure is the result of a 2004 deal between Schwarzenegger and
school officials and the California Teachers Association in which Proposition 98
was suspended for one year. The repayment of that money has since been in
dispute: The CTA and other parties say the governor agreed to restore it in full
in 2005, which, according to the formulas required by Proposition 98, would now
equal close to $4 billion. The governor’s office has said that he never promised
the money right away. Part of his current proposal is to give that money back at
$250 million per year, but it wouldn’t increase base funding levels.

The 79-year-old California Taxpayer’s Association, which is backed by
corporations interested in limiting taxes, is supporting the measure, saying it
would increase school funding steadily and predictably. The state Parent Teacher
Association and education unions reject the proposal outright, saying it
shortchanges voter-mandated school funding priorities.

School funding, however, is not the most radical constitutional change proposed
by Proposition 76. Goldberg says the new powers created by the measure would
make him — or any governor, from whatever party — into a “king.”

New budgetary rules, for instance, would give the governor the power to declare
a fiscal emergency if state revenues fall 1.5 percent or the state’s reserve
account will be depleted by 50 percent. In that instance, the Legislature would
have 45 days to either reduce spending or impose new taxes and agree to the
results by a two-thirds majority, or the budget automatically goes to the
governor for cuts of his own choosing. In the case of a late budget — a
perennial occurrence — the Legislature would have 30 days.

“This puts a huge amount of power in the governor’s hands — I don’t care if it’s
Arnold Schwarzenegger, Gray Davis, or whomever,” said state Senate President
Pro-Tem Don Perata, D-Oakland, in a live debate aired Sept. 24 on the Bay Area’s
KTVU-TV. “I don’t think we want to tilt it in that direction because one person
can make decisions that you send people to Sacramento to make as legislators.”

A legislative analysis published by the League of Women Voters of California
points out that it would be politically advantageous for Republican legislators
to scuttle any budget deal if they simply wanted to hand it to the governor for
cuts. It would only take 14 legislators to block passage of any budget.

“Can you imagine a Republican assemblyperson or senator voting for a budget
again, as long as there was a Republican governor? No! And if the reverse were
true, the Democrats wouldn’t either,” said Goldberg.

“That’s overstated,” counters Campbell, who believes this has been steadily
misrepresented by opponents to the bill. “Remember, none of this applies unless
you have that fiscal crisis. If the Legislature has failed in 45 days, then the
governor must act within 10. For that, I don’t make any apology. I think we need
a CEO or else the problem just shuffles along to the end of the year, the budget
runs out and we’re in a much worse position.”

“This is adding more power to him, but it doesn’t really get to the major
structural problems,” said Bruce Cain. “The major structural problems have to do
with the fact that we don’t raise taxes, and yet we have expectations of
spending that are pretty high. I think people look at it and say, ‘Oh, I don’t
quite intuitively understand how this solves all our problems.’ It looks like an
inside struggle.”