Saturday, December 27, 2008

Voters may get chance to settle issue of Democrats' revenue gambit

SACRAMENTO — Would voters go for a tax increase if it meant averting a fiscal crisis? Would they give Democrats a pass for finding a way around the two-thirds vote required in the Legislature to approve new — and artfully gained — revenues?

A governor's signature and a court's ruling could leave those questions in the hands of voters as soon as next spring.

As Gov. Arnold Schwarzenegger and the Democratic Legislature move toward a deal that would fill an $18 billion hole in the state budget, business groups are gearing up for what could be a historic referendum campaign that could upend the way things have been done in the Capitol for generations.

Never before have Democrats so defied the two-thirds vote rule that has given minority Republicans so much sway in budget negotiations. In coming up with a complex swap of taxes, along with new fees totaling $9.3 billion in revenues last week, Democrats were able to approve the budget solution — which included $7 billion in cuts — without a single Republican vote.

At issue is whether voters would sanction a tactic that effectively eliminates what little leverage the minority party has in crafting the state's spending and taxation blueprint and shunts Republicans aside as an irrelevancy.

If the governor comes to an agreement with Democrats and signs the budget, the business coalition Californians Against Higher Property Taxes, has vowed to collect the Advertisementrequired 400,000-plus signatures within three months to call for a referendum on the new revenue increases.

"We ... are prepared to take appropriate action to protect California's taxpayers, businesses and economy from those that are unfair, unreasonable or unconstitutional," said Teresa Casazza, president of the California Taxpayers' Association. "With billions of dollars at stake, California voters should have a say."

In the meantime, Republicans have threatened to take Democrats to court for what they call an "illegal" tax increase. But if courts are hesitant, as political observers say, to get involved in a legislative dispute, the issue — as so many are in California — could be resolved at the ballot.

Republicans and business groups say voters have been traditionally and virulently opposed to increased taxes and will be outraged by Democrats sidestepping a constitutional protection. Democrats say they have the economy on their side, and that voters want solutions rather than logjams and nonstop bickering — and they say their maneuvers were perfectly legal.

Republicans may have a tough time appealing to voters. They are at their nadir in California, said Democratic strategist Garry South, who pointed to President-elect Barack Obama's 24-point win over GOP nominee John McCain, a net loss of three Assembly seats, and their lowest voter registration in 30 years.

"They're not in a very strong position to carry their fiscal conservatism against something that's reasonable, that was passed by the majority and signed by the governor," South said. "They're just not. We're in a very extraordinary situation, which even average voters understand."

The struggling economy, Democrats say, has placed a different light on the role of government than even five years ago, when voters turned down, by a two-to-one margin, a ballot measure, Proposition 56, that would have made it easier to pass budgets and taxes — from 67 percent of both legislative chambers to 55 percent. California is one of only three states that require a two-thirds majority vote on budgets, and one of only seven that require the same supermajority on tax increases.

"Are taxes hard to sell on a ballot? Usually," said Gale Kaufman, a Democratic strategist who ran the losing Proposition 56 campaign. "But if you can show voters this was the only solution that made sense, you'd have a good shot. These are a whole different set of circumstances and people are getting really unhappy with the Legislature not being able to find solutions."

Democrats, though, would have the difficult task of asking voters to affirm their revenue increases, and Republicans could simply tap into voter resentments in asking to reject them.

"First of all, they are taxes," said Wayne Johnson, a Republican political consultant. "If you're raising $9 billion and saying it's not an increase, then on its face, that's not credible. Therefore, it violates the law if they don't get a two-thirds vote.

"The anti-tax issue has a natural constituency," he added, "but violating the Constitution adds another layer of credibility to argue. All you have to do is raise a significant doubt in voters' minds."

The battle lines will likely be drawn on traditional turf, said Dan Schnur, the director of the Jesse M. Unruh Institute of Politics at the University of Southern California: Will voters support higher taxes in exchange for a greater level of services or not?

"It comes down to the classic argument," said Schnur, a former GOP political strategist. "How much government do you want and do you want to pay for it? It's difficult to predict who would win, but it's always easier to argue against something than for something."

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