Arnold and Gavin: Opposing “Share the Pain” Budgets

by Paul Hogarth on June 23, 2009

San Francisco’s budget battle between the Mayor and Board of Supervisors bears a strange resemblance to what’s going on in Sacramento. Democrats in the state legislature have proposed a budget that “shares the pain” – which includes a tax on oil companies and other revenue measures to avoid the worst cuts in health and human services. But Governor Schwarzenegger says he will oppose “any tax increase whatsoever.” At City Hall, the Board’s progressive majority is also pushing a budget that “shares the pain” by diverting funds away from Police and Fire – to avoid the worst cuts in health and human services. Newsom accuses them in the press of “playing with public safety.” Democrats in Sacramento are not likely to win their fight, because the budget needs a two-thirds vote to pass. The Board of Supervisors don’t have that problem, but the Mayor has threatened to veto the interim budget. If that happens and the City cannot pay its bills after July 1st, it will start looking more like Washington in 1995 – when House Speaker Newt Gingrich refused to cooperate with the Clinton White House, and the federal government shut down. Does Gavin really want to go that route?

I’ve had a hard time following the state budget process, because (a) it’s infuriating and (b) it’s hard to see (besides trying to influence Republican legislators in the Central Valley) how San Franciscans can have an appreciable impact. California has a $24 billion deficit, and the “two-thirds” rule means that at least some Republicans need to vote for a budget – all of whom are fanatically opposed to any tax increases at all. Arnold Schwarzenegger (who supported a few regressive tax hikes earlier this year) has now chosen to interpret the May 19th election results as a “mandate” against taxes – even though it’s demonstrably false. He told the Sacramento Bee last week that he will oppose “any tax increase whatsoever,” making him just as bad as the legislature’s GOP minority.

Arnold’s budget would eliminate California’s welfare-to-work program, making us the only government in the industrialized world not to have a safety net. As San Francisco struggles with its own health and human service cuts, we all know that the state budget will only make things worse. California’s budget crisis is so bad, that there is no way to plug the deficit without some cuts – but it’s also true that we can’t resolve it through cuts alone. The Los Angeles Times has an interactive tool that readers can try to help balance the budget, and it’s not easy. To avoid total catastrophe, we need some taxes.

Which is what the legislature’s Democratic majority has proposed – a “share the pain” budget that includes $2.2 billion in tax increases to resolve a $24 billion problem (i.e., less than ten percent.) The revenue proposals include a $15-per-vehicle registration fee to keep our state parks running, a modest increase in the cigarette tax and – what is most critical – an oil severance tax. Despite being a far more liberal place than Texas or Alaska, California is the only oil-producing state in the nation that does not charge oil companies a fee for the amount of oil they take out of the ground. The Governor wants to raise revenue by allowing off-shore oil drilling, but incredibly won’t support an oil severance tax – that would ensure such oil speculation will bring the state real money.

Back in San Francisco, the Board of Supervisors hope to avoid the worst cuts in health and human services – by asking the Police and Fire Departments to “share the pain.” But despite abundant waste in the Fire Department, Mayor Gavin Newsom has taken a similar stubborn approach as Schwarzenegger – by saying we can’t “cut public safety.” Newsom bragged that his budget proposal does not lay off cops or firefighters (while actually giving them raises in a difficult fiscal year), because his target audience is no longer the people of San Francisco. He’s running for Governor, and wants to show Southern California that he’s not a liberal.

Today, the Supervisors will vote for the second time on an interim budget (which they have amended to divert funds away from Police and Fire), as the Board’s Budget & Finance Committee analyzes each Department’s proposal for the coming year. Rather than work with the legislative branch to achieve a compromise, Newsom has taken a combative tone – and is now threatening to veto the interim budget. Such a move, according to City Hall insiders, would be unprecedented.

The interim budget is a “placeholder” document that allows the City to pay its bills for the month of July, after the fiscal year expires on June 30th. The Board of Supervisors continues to debate the budget before passing a final version at the end of the month, which will then overrule the interim budget. Section 9.113(f) of the City Charter says that if there is no interim budget by July 1st, no spending can be authorized. In other words, the San Francisco government could have to shut down in eight days.

Rather than compromise with the Board to avert this, the Mayor is checking with the City Attorney to see how we can pay our bills without a budget. No one knows if that’s possible. I don’t believe he has a politically strategic motive behind this. It sounds like typical Newsom petulance – like when he refused to meet with the Supervisors after voters asked him to, or when he made mid-year budget cuts without consulting the Board, or when he twice vetoed foot patrols despite there being the votes to override.

If Newsom shuts down the government, he may end up looking like Newt Gingrich in 1995. Back then, the Republican House Speaker adamantly refused to compromise on a budget with President Bill Clinton – and the federal government shut down. Newt’s petulance became apparent when he was partially motivated by the fact that the President did not give him a prime airplane seat to Israeli Prime Minister Yitzhak Rabin’s funeral. It was the beginning of the end of Gingrich’s popularity, and sealed Clinton’s re-election in 1996. Newsom is running for Governor, and can’t afford any such comparisons.

Does Newsom really want to give Jerry Brown an argument that he’s not mature enough to govern the state? We’ll find out soon …

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