The Hill, out of Washington, D.C., occasionally takes a look at what is happening in California. With the inauguration of our next Governor tomorrow, it’s a good time for them to interview a number of legislators and mine for their perspectives on what the future may hold. It does so in the piece below, where I’m sure I said “free rein.”
It’s interesting to note that The Hill was founded in 1994, the year of my unsuccessful but historic campaign to unseat Orange County’s only Democrat in either a Congressional, state or countywide seat. We used the phrase “going up silly hill” to describe the incumbent’s behavior. As interest rates rose, instead of disengaging on the technique of borrowing, Mr. Citron and others did the opposite and borrowed more. This made the impending fiscal implosion even worse (see the LOOK BACKS in MOORLACH UPDATE — OC Register — February 25, 2010 and MOORLACH UPDATE — LOOK BACKS — January 23, 2010).
The good news? I have been reassigned to the Senate Budget and Fiscal Review Committee this coming year. This will give me another opportunity to weigh in on the budget process and remind my colleagues how unpleasant economic downturns can be (see MOORLACH UPDATE — Judicious Budget — December 18, 2018). It looks like pursuing a healthy fiscal balance may be achievable. The fun starts this week.
California Dems under pressure to deliver after big gains in 2018
When California Gov.-elect Gavin Newsom (D) takes the oath of office on Monday, he will assume control of an army of progressives who hold virtually unchecked power to implement an aggressive agenda – and with it, the pressure to deliver for a horde of interest groups who got those Democrats elected.
But Democratic leaders in Sacramento are conscious that their good fortunes – supermajorities in both chambers of the state legislature, a huge budget surplus and record-level cash reserves – bear a significant measure of political risk.
The healthy financial picture of the nation’s most populous state can turn quickly with even a mild economic downturn. Its $14 billion in rainy day funds could be wiped out within a year to cover new deficits. And the Democratic supermajority would likely take the blame, even if root causes are far beyond their control.
State legislative leaders said in interviews over the last several weeks that they recognize the pressures they face from interest groups eager to make California a progressive bastion.
“Stakeholders have a job to do. Special interest groups have a job to do,” said state Sen. Holly Mitchell (D), who heads the Senate Budget Committee. “They have to push as hard as they can to the left to make sure that what we ultimately end up with is a balanced approach that helps California residents.”
At the same time, many expressed caution of going too far. Several recalled the pain of the Great Recession, when California’s budget shortfall reached north of $20 billion a year, forcing excruciating budget cuts and tax hikes.
“We are going to have to exercise some self-restraint because we have a lot of things we would like to reinvest in and fund,” said state Senate President Toni Atkins (D). “We’re in good shape in terms of our budget. We’re in the best position we’ve been in for generations in California, so I think we’re going have to be mindful of protecting our reserves.”
For the last eight years, Gov. Jerry Brown (D) played the fiscal hawk standing athwart the most ambitious urges of progressives who wanted to spend big on ongoing new projects, giving Democrats a convenient excuse when those interest groups came calling.
But Brown is headed to retirement on his rural California farm. His replacement, Newsom, won election on an unabashedly progressive platform, including health care for all and establishing universal preschool. Now Newsom must balance delivering on those promises with maintaining the state’s fiscal health.
“The governor is the one who will feel both the blessing and the curse of the overwhelming Democratic power, because he’ll be the one who has to say no,” said Thad Kousser, a political scientist at the University of California-San Diego. “It makes it easier to say no to the left flank when there’s no money.”
Already, Newsom has offered hints that he will favor short-term appropriations over creating new long-term financial obligations, which mirrors the approach both Brown and former Gov. Gray Davis (D) took during leaner budget times.
Newsom will propose spending $1.8 billion on new early childhood education initiatives in the coming days; the Los Angeles Times reported that $1.5 billion of that spending would be a one-time expense.
“One-time spending is going to be absolutely favored over ongoing appropriations,” said Mark Weideman, one of the top lobbyists in Sacramento.
Legislators “have been through these boom and bust cycles, and they’ve been burned by it, and they’re very cautious.”
Senior legislative leaders said they favored those sorts of year-by-year steps.
“Having a heavy focus on one-time costs would be a very prudent way to spend some of our revenue rather than committing in a large way to expanding ongoing programs,” said Assemblyman Phil Ting (D), who heads the Assembly’s Budget Committee.
Mitchell, the Senate Budget Committee chair, said eliminating childhood poverty and closing an achievement gap that is one of the widest in the nation will “take sustainable, core infrastructure change, not just one-time spending.”
There is little, if anything, that minority Republicans can do to block or even influence legislation. The legislature recently killed a rule that required every bill introduced to receive even a cursory hearing, meaning Republicans cannot even force Democrats to take unpopular votes. Most Republican members said they would be forced to hunt for opportunities to shape legislation.
“I think they have free reign,” said state Sen. John Moorlach (R). “If the Democrats go up silly hill and it crashes and burns, that’s going to be a disaster.”
Perhaps no issue is more fraught than creating a single-payer health care system, another Newsom priority backed by prominent progressive groups like the state nurses’s union.
A single-payer bill passed the state Senate last year, without a funding mechanism, before dying in the Assembly. This time around, legislators said they would allow a special commission to study the issue over the course of the year rather than racing to deliver something to Newsom’s desk.
“I fundamentally believe that we can get to a single payer system or something like it,” said Jim Wood (D), who chairs the Assembly’s committee on health. “There’s just a lot of things that need to happen in this process to make it work.”
Several other more immediate crises are likely to dominate the legislature’s time this year. Recovering from devastating wildfires that ripped through several Northern California cities will cost hundreds of millions, if not billions of dollars. And a dearth of housing coupled with state law that allows cities to block new density has caught lawmakers’ eyes.
“Those seem to be the two crises that members are talking about the most. Both issues are things that we’ve kind of started on, but we know we have a heck of a lot of work to do,” said Assembly Speaker Anthony Rendon (D).
The cross pressures Newsom and Democratic legislators will face will be shaped, in part, by the mandate they choose to claim from November’s elections.
Voters gave Democrats a more significant majority in the legislature than any they have held in modern history – and Newsom is the first Democrat to succeed another Democrat in the governor’s mansion since 1886 – but whether that amounts to a mandate for any significant change is unclear.
“He doesn’t really have this mandate for change,” Kousser said. “He has a mandate for continuity.”
Democratic leaders say they hope to spend the legislative session making progress, if not completing work, on Newsom’s first-year agenda. But they know interest groups stymied under Brown will come calling.
“Sometimes it’s harder to have money than not have money,” Atkins said. “But I’ll take the having money and having to be restrained and responsible.”
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