Consumer Federation of California

Addressing the legislature yesterday, Governor Schwarzenegger offered gimmicks instead of solutions to the budget crisis. He also misinterpreted the May 19 election, saying voters sent a ‘no new taxes’ message. In fact voters support a mix of targeted tax increases and limits on budget cuts .

Voters soundly rejected a scheme that cut corporate taxes by billions, shifted the burden onto workers and middle class consumers, and promised permanent government austerity even after the economy recovers.

The Governor offered up a few pet proposals that ignore the real causes of the budget gap. These include relaxing rules to make it easier for school districts to fire the workers who ‘mow the lawns or fix the roofs’. This is code language for a long-sought Republican policy goal: replacing school employees who earn a living wage with outside contractors who pay their workers near the minimum wage and who provide no health benefits.

This policy change would increase the ranks of the working poor, place more demand on taxpayer-funded public hospitals, and result in substandard maintenance work that will cost our schools more to repair over the long run.

The Governor also tried to use the budget crisis to achieve his political goal of eliminating boards and commissions that include independent legislative appointees. If the governor consolidated or eliminated every board or commission on his wish list, replacing boards with staffers that answer only to the Governor, the savings would amount to about $8 million, an infinitesimal 0.003% of an estimated $24 billion revenue shortfall. Such a symbolic cut is not worthy of emphasis in a major address to the legislature.

The political gain for the governor is substantial, if he disposed of independent boards that are intended to represent the public’s interest. Some of these boards might be outmoded. The Governor’s proposal should be given careful policy scrutiny outside of the budget process before any boards are eliminated.

The Governor’s most disingenuous moment was his insistence that the legislature cut the Integrated Waste Management Board before he cuts one dollar from health care, schools or public safety. We have good news, Governor: the Waste Management Board, which has overseen an increase in California recycling rates from 10% to 58% since its creation in 1989 does not cost the state General Fund one penny.

Funded entirely by fees on garbage companies, the Board’s appointees include Democrats, selected by legislative leaders, who act independently from the Governor, and that simply rubs him the wrong way.

The Governor failed to mention the $2.5 billion in permanent tax cuts that he and lawmakers lavished on profitable corporations in the 2008-2009 budget deals at a time they were raising taxes on workers and consumers and slashing funding to schools, transit and health clinics. Nor was there any mention of the cumulative effects of tax cuts since the early 1990’s that reduced revenues by $12 billion in this year alone, according to the California Budget Project.

We don’t expect solutions from the Governor, but where is the progressive campaign that escapes from the budget cut bunker and begins to organize for tax justice and proper funding for essential programs?

Last November’s election was a culmination of a major political realignment. A decisive majority of Americans ‘ and Californians – support a robust public sector, investment in education and proper funding for health and social services, and has had a bellyful of corporate tax breaks and business deregulation.

With support barely above 20%, the Republican Party is headed towards irrelevance. Yet as the nation moves to the left, in California, Democratic lawmakers seem paralyzed, trapped by a Republican 2/3 budget rule that has snuffed out any instinct to fight back.

A poll conducted at the time of the May 19 election indicates that voters are way ahead of Democratic legislative leadership in their desire for tax justice. Over 60% of Californians who voted No on Proposition 1A ‘ mislabeled by the Governor as anti-tax voters ‘ support increasing alcohol and tobacco taxes and establishing an oil severance tax.

Among all voters, nearly three-quarters support these tax measures. Strong majorities of voters also want to close loopholes that allow big corporations to pay less in taxes than average working Californians, and support a temporary tax increase on top income earners making over $272,000 a year.

It’s time to re-unite a fractured progressive movement – based on hope, not fear. We need leadership that can think beyond the imminent crisis, reach out to build a coalition, and organize for budget justice. Labor and community based activist organizations must supply the leadership.

Let’s mobilize behind broadly supported values: require corporations to pay their fair share of taxes; increase the progressivity of our tax system; and eliminate undemocratic super-majority budget and tax rules that give a handful of reactionary politicians a stranglehold over funding our schools, health and public safety services.

The campaign may take years. We can win, but first we need to get out of the budget crisis bunker.