Notes from Los Angeles

Heavy borrowing, no new taxes, and no budget reform. See you next year — same time, same place.

California lawmakers are set to approve a new budget for the largest state in the US Monday night, allowing Governor Arnold Schwarzenegger to end the longest budget impasse in California history.

The 77-day impasse was prompted by a record 15 billion dollar shortfall in state finances. The Democratic majority in the legislature wanted to raise taxes and avoid drastic cuts but were stymied by the Republicans. The budget needs a two-thirds vote to pass.

The compromise proposal increases spending for education and healthcare, while borrowing huge sums against the state lottery. It d relies heavily on manoeuvres that would push the state’s financial problems into the future at a time when economists have little hope that revenue is on the rebound.

* Measure R proponents breathe a sigh of relief.
** Assemblyman Chuck DeVore says the compromise budget does include budget reform provisions, but nothing the Democrat-controlled Legislature can’t throw out down the road.

Savvy

And it’s weird — you almost get the sense he cares.

Here’s an opportunity to create a comprehensive plan to get traffic moving again in Los Angeles County and [Measure R] captures every part of the county.

About you.

It’s not just a bunch of huge projects.

And your commute.

We’re going forward. The time has come to do this. This is about making a case to voters.

Steve Hymon interviewed Smith — former Clinton and Villaraigosa campaign manager — about his new job selling you a tax increase to build trains:

Smith emphasized several times that one of the important aspects of Measure R is that it would return money to cities for smaller projects such as pothole repair and traffic-light synchronization. It’s very clear that that is going to be a big part of the message the campaign for Measure R will hammer home.

As for the politics, Smith’s selection in my view reaffirms what a big deal this campaign is for Villaraigosa. At this point, Villaraigosa’s reelection next March doesn’t appear to be very competitive — Smith is running that campaign too — but there remains the chance that Villaraigosa runs for governor in 2010.

There are already a pile of names being thrown around for that job, including Sen. Dianne Feinstein, San Francisco Mayor Gavin Newsom and Atty. Gen. Jerry Brown, to name just three. It’s beyond obvious that if Villaraigosa gets into the race, he will need some big-time accomplishments to tout, of which securing $30 billion in sales-tax revenues for transportation — the Achilles heel of L.A. County — would be a big one.

OK, so there’s no news here — Ace and Tony need paychecks, taxpayers bend over — but it is interesting to follow the ongoing word game; in breaking the Smith story last week, Rick Orlov accurately described the proposal as a “half-percent” sales tax increase. Hymon and Zach Behrens, on the other hand, choose “half-cent” and “half-penny” respectively.

Once upon a time, it was acceptable to point fingers. But five years on, Governor Arnold Schwarzenegger continues to blame the incompetence of prior governments for California’s current budget mess, despite the fact that revenues are up 40% while borrowing and spending have shattered all records.

The only difference today is that he’s finally getting called on it. Reporters and columnists are asking pointed questions, to which he responds with jokes, or by changing the subject—hoping we’ll forget that he once promised to blow up the boxes, cut spending, reduce bureaucracy and waste.

Schwarzenegger is incapable of admitting wrongdoing, so rather than finally do something honorable—like, perhaps, fight back against lurid propagandist Senator Don Perata—he’s back on the corner, like a dope dealer, pushing another quick fix. This time, a one-percent increase in California’s sales tax, delivered in cynical Arnold wrapping paper: “compromise,” “temporary.”

After weeks of stalemate, the momentum appears to be on his side, and it comes at the worst possible time for the MTA bosses and County Supervisors, who are pushing a half-percent LA County sales tax increase to build several mass transit projects, most notably the Wilshire subway. If Arnold gets his wish, LA County voters will be asked in November to approve what would amount to a 1.5% sales tax hike—to 9.75%.

Printing the ballots would be fiscally irresponsible.

Even staunch tax opponents can see the contrast, in this confluence of events, between the MTA sales tax and the Arnold sales tax. One would build permanent infrastructure. The other would buy one politician an easy ride through the end of his term.