State budget: The times, they aren’t a-changin’

By Wendy Soderburg

Two former governors and a former state finance director had plenty to say about California’s current budget woes at the UCLA Anderson Forecast’s most recent quarterly economic conference.

Former Gov. Pete Wilson, former Gov. George Deukmejian and former director of California’s Department of Finance Tim Gage served as panelists for a session of the March 11 conference, called “California’s Budget Crisis: How Many Times Can We Say ‘Never Again’?” The three men fielded questions from moderator Larry Elder, host of his own KABC radio show, before a crowd of about 350 at the Millennium Biltmore Hotel in downtown Los Angeles.

Topics ranged from Gov. Arnold Schwarzenegger and the current State Legislature to problems the participants faced while in office. The overall message on the budget, however, was simple and clear: Don’t spend more than you take in.

(From left) Former State Finance Director Tim Gage and former Governors George Deukmejian and Pete Wilson. (Photo by Bill Short)

Wilson, who served as governor from 1991 to 1999, recalled giving that bit of advice to his successor, Gray Davis, whom he left with a $12-billion surplus. “I said, ‘Gray, the only thing standing between financial ruin for the state and the utterly irresponsible conduct of the Legislature is you.’

“ ‘You, as the governor of California, and you alone, have the power to prevent them from doing what they’ll otherwise do. You can say to them, “I’m not signing that. Back to the drawing board, and don’t bring it back until it’s balanced.” If you don’t do that, Gray, I guarantee you they’ll spend their way right through the surplus, all $12 billion.’ ”

Deukmejian added, “I thought Gray Davis did a great job his first two years. But then the pressures kept getting pushed on him by various constituencies and by the Legislature. They went ahead and spent all that surplus, and then some.”

When Deukmejian served as California’s governor from 1983 to 1991, he attempted to create a 5% reserve and ultimately convinced the Legislature to agree to a 3% reserve. “Unfortunately, neither Gray Davis nor Gov. Schwarzenegger, in my opinion, has used their veto authority enough to keep in control,” he said. “The bottom line is a lack of political fiscal discipline.”

The lone Democrat on the panel, Gage served as state finance director from 1999 to 2003 under Gov. Gray Davis and is currently founder of the Blue Sky Consulting Group. He expressed appreciation to Wilson and Deukmejian for pointing out that voters often place measures on the ballot that physically tie the Legislature’s and the governor’s hands when they attempt to make budget decisions.

“K-12 and higher education, health and human services, and prisons make up almost 90% of the budget, and I would suggest that, by and large, the voters are not going to say they don’t want to spend [money on those programs],” Gage said. “The question is, can we get voters in a dialogue that speaks to … the fact that this is really all about priorities? If we have programs we want to fund, are we willing to tax ourselves in order to fund those programs?

“The current situation, unfortunately, is much more difficult because at the end of the day, we know the answer is, ‘Cut programs or raise taxes.’ ”