There is a budget struggle going on here in Ronald Reagan's old stamping ground, of equal seriousness to the one in Washington, but of very different character. The differences shed a clear light on the issues of budget-balancing and executive leadership that now concern the nation.
For many years, California was spared the fiscal crises other states experienced in the recessions of the 1960s and 1970s. The booming economy and robust revenue system of this agricultural and industrial giant kept the good times rolling in Sacramento. During Reagan's eight years as governor and the first four years Democrat Jerry Brown occupied that office, real revenues grew between 8 and 12 percent a year.
But 1978 changed all that. The property-tax limitation in Proposition 13 and the partial indexing of the state income tax hit the treasury with a double whammy. In a time of slower revenue growth, the state suddenly faced a $6 billion annual bailout of local government costs. The current recession has compounded the problem by slicing tax collections far below estimates.
State revenue director Mary Ann Graves reported last week that the contingency reserve for the current fiscal year's $27 billion budget was a scanty $2 million. State controller Ken Cory says the current-year budget is probably $400 million out of balance, and for next year the deficit could swell beyond $2 billion.
But California, like most states, has a constitutional ban on deficit spending. And it also requires a two-thirds majority in the assembly and state senate to pass the budget. With huge deficits ahead and the Democrats several votes short of two-thirds in either house, it was clear that an unusual degree of bipartisan cooperation would be required. "Unless we get some consensus and compromise," Graves remarked, "we can't do the job in an election year."
So the governor, at the urging of assembly speaker Willie Brown (Democrat), invited the leaders of both parties in both chambers to meet with him in his office every Wednesday for private negotiations aimed at balancing the budget.
This was quite a departure from past practice. Brown, like Reagan before him, had been in the habit of submitting his budget, then standing back and letting the legislature fight over it, using his item-veto power to remove any particularly objectionable parts of the final product.
But that technique, while suitable for affluent times, was inappropriate for the fiscal crisis of 1982. "For the first time in eight years," says state senate minority leader William Campbell (Republican), "Jerry Brown is taking a serious interest in the budget process."
The Wednesday group has met a half-dozen times so far. It has agreed on an agenda aimed at producing a balanced budget by June 15, and it has negotiated a tentative deal on the first major part of that package, a $500 million cut in the state Medicaid program. Still to come are education, welfare, aid to local governments, state employees' pay--and revenue boosts.
Every topic is ticklish, and all agreements are subject to debate in the separate caucuses of assembly and senate Democrats and Republicans. But the atmosphere is somewhat optimistic. As Campbell said, "We're cutting through the rhetoric to the point of what is politically and socially acceptable."
All the players agree that Brown's personal participation has been vital. "Whatever his motivation," said Republican Campbell, "this year he's acting like a real governor."
This is no one-shot, three-hour cameo appearance, such as Reagan made at the end of the Washington negotiations, but a full working partnership on the part of the chief executive, designed to share the pain of the budget-cutting.
But, equally, the key negotiators say, the balanced-budget requirement is a spur to the success of the process. Willie Brown is a Kennedy liberal from San Francisco and Bill Campbell is a Reagan conservative from Richard Nixon's home town of Whittier. But they are negotiating under the discipline of that constitutional mandate.
Jerry Brown, who advocated the federal balanced-budget amendment in his abortive 1980 presidential campaign, says he still thinks it is a good idea. Liberals have opposed it, he noted, because it appeared to give conservatives an effective veto over spending on human- service programs. "But," the governor said, "had it been in effect in 1981, it would have slowed down Reagan's tax cuts and defense buildup."
Personally, I retain my skepticism about the proposed federal balanced- budget amendment. But I must concede that here in California the combination of the legislative leaders' flexiblity, the executive's responsibility and the constitutional mandate seems to be working toward a resolution of the fiscal crisis. It is quite a contrast to the partisanship and delay that have characterized Washington's struggle with the same problem.