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Politics : Politics for Pros- moderated -- Ignore unavailable to you. Want to Upgrade?

To: Tom Clarke who wrote (12975)	10/19/2003 7:35:00 AM
From: Lane3	Read Replies (1) \| Respond to of 793672

So what do you think of the Post's editorial decision?

To: Tom Clarke who wrote (12975)	10/19/2003 7:53:51 AM
From: LindyBill	Read Replies (1) \| Respond to of 793672

The Sacramento Democrats are clueless if they think Arnold is going to back out of his promises. I only hope he takes a tougher stance than Weintraub proposes. _____________________________________ Why Arnold is unlikely to raise taxes and spending By Daniel Weintraub -- Bee Columnist - (Published October 19, 2003) I'm surprised by how many people around the Capitol think that Arnold Schwarzenegger is going to toss his campaign promises overboard in his first weeks in office and propose raising taxes to balance the state budget. His anti-tax rhetoric, the thinking goes, was just to get elected. He will blame it all on Gray Davis and say this is what we have to do to clean up the mess. I don't think so, for two reasons. One is that it would be political suicide. Much of the energy surrounding the recall came from the voters' conclusion that you can't trust the politicians in Sacramento to do the right thing. And even if many voters say they're fine with the idea of raising taxes, that's not what Schwarzenegger said he was going to do. If he goes there now, he will immediately brand himself as just another two-faced pol. His credibility would be shot. The second reason is that I think Schwarzenegger actually believes that taxes are too high already. Taking a politician at his word no doubt strikes some people as naïve in this age of cynicism. But the new governor is a man who learned his economics from Milton Friedman, the free-market, low-tax guru who preaches individual initiative and small government. While Schwarzenegger has moderated his views over the years, his instincts remain Friedman-esque. So I still expect Schwarzenegger, as he promised, to reverse the recent tripling of the car tax on his first day in office. Next, I'm betting, he will call the Legislature into special session and ask lawmakers to cut spending and take other actions to get a jump on reducing the structural gap between spending and revenues that will resurface in the fiscal year that begins July 1, 2004. The best estimates place that gap at about $8 billion. If Schwarzenegger wants the state to reimburse cities and counties for the loss of the car tax revenue after that tax is cut, the state shortfall would grow to about $12 billion. While early reports suggest tax revenues are coming in ahead of projections, expenditures will probably also be higher than expected, and these two trends might balance each other out. So the gap is likely to be around $12 billion. If he's not going to raise taxes, then, what can Schwarzenegger do to balance the budget? He can start by cutting spending. While the Democrats in the Legislature will resist, Schwarzenegger can begin with about $2 billion in spending cuts proposed earlier this year by Gov. Gray Davis that were never enacted. He can probably credibly propose another $2 billion from his plans to cut waste and restructure government. Schwarzenegger is also going to look to the federal government to reimburse California for some of the cost of providing services -- schools, health care, incarceration -- to illegal immigrants. And he wants to negotiate new deals with the Indian gaming tribes, allowing them more slot machines in return for a contribution to the state's general fund. These two sources could yield several billion dollars combined. Finally, Schwarzenegger has said he wants to restructure the state's debt and seek voter approval for borrowing that Davis and the Legislature approved earlier this year, possibly in violation of the state constitution. Refinancing that debt over a longer period could provide short-term savings of as much as $2 billion annually. It's also possible Schwarzenegger will ask the voters to borrow a little bit more to cover the cost of some of the questionable smoke and mirrors that now riddle the budget, or perhaps to pay for the expected leap in state pension costs coming next year. He has said that he favors laying everything out for all to see, and asking the people to join him in approving a solution. The extra borrowing, if it's done wisely, would ease the transition back to a balanced budget. At the same time, Schwarzenegger could ask voters to approve a new spending cap or reserve requirement and clarify the constitutional limits on deficit spending, to ensure that California never finds itself in this kind of predicament again. Officially, the deadline for placing measures on the March 2 ballot already has passed. But those deadlines can be changed by legislation in an emergecny. Using the same timelines employed for the just-completed special election, Schwarzenegger would have until about Christmas to persuade lawmakers to put his proposals to the voters. Otherwise, he would have to wait until the November, 2004 election, too late to help him with his first budget. So I expect him to ask lawmakers to move quickly. If he can clear that initial obstacle, the rest of the job of balancing the budget would be considerably easier. sacbee.com