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California's Self-Inflicted Crisis

NOTHING fits the California stereotype more than the image of a ``laid back'' populace protected by dark glasses. With a $13 billion budget shortfall, however, political leaders here are operating at a frenetic pace to rescue the state from economic chaos. And with the dark glasses now off to better see the light, they have also noticed that the Golden State's sheen has become tarnished beyond belief. Because of its size, whatever happens in California usually is a magnification of similar occurrences soon to happen elsewhere. And because of its enormous wealth, any hint of financial difficulties in California immediately captures the attention of less fortunate states. The state's budget crisis has national implications.

Crises bring finger-pointing. In California, accusations have been organized largely along partisan lines. New Republican Gov. Pete Wison and his Republican predecessor, George Deukmejian, have blamed the legislature's Democratic majority for overly generous social programs. For their part, Democratic Assembly Speaker Willie Brown and Senate President Pro-Tem David Roberti have criticized Republicans for balancing the state's budget on the backs of those least represented in Sacramento. In fact, both si des are pointing in the wrong direction.

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The blame lies not so much with elected officials as it does with California's initiative process and the short-sightedness of its voters. Designed by reformers at the turn of the century as a mechanism for controlling irresponsible elected officials, the initiative process has encouraged an irresponsible electorate.

In the past 13 years, voter-passed initiatives have repeatedly tied the hands of elected state policymakers both in terms of their ability to collect money and the ways to spend it. In short order, the electorate slashed property taxes 57 percent, put a formula-driven cap on spending, eliminated inheritance taxes, and indexed income taxes to prevent increased revenues resulting from ``bracket creep.'' The legislature joined the fray by lowering income and corporate taxes. All this has created a revenue gap: While state income went up by 8.5 percent in 1990, tax collections grew by only 6.9 percent.

Meanwhile, the voters became equally assertive as to how state money should be spent. During the same time span, the electorate designated a fixed percentage of the state budget for education, raised tobacco taxes only for medically-related uses, and established modest fee increases only for highway spending. By the decade's end, 89 percent of California's state budget was reserved for entitlement programs whose spending was determined by formulas and excluded from the annual appropriations process to m inimize any ``politics.''

THE combination of an eroding tax base and specified expenditures is in itself a recipe for fiscal disaster. But the problem has been exacerbated by a series of other problems beyond anyone's control. The state has yet to recover from the massive October 1989 quake and the agricultural frost of 1990. California has suffered from the national recession while at the same time becoming home to half of the 1 million refugees from the Vietnam war and millions of Hispanic residents courtesy of the Simpson-Maz zoli immigration act. The needs of these groups are particularly demanding on the state's shrinking tax base.

The remedies for California's budget woes go beyond ``a little belt tightening.'' In 1989 California ranked 19th in higher education, 23rd in elementary and secondary education, 39th in mental-health programs, and 50th in highway spending. Such spending patterns predated the crisis, suggesting further deterioration in the years to come.

The state shows no sign of ending its economic free-fall, with a series of political and social consequences yet to come. Inferior education products, a torn public services and welfare net, and a crumbling infrastructure will be the new environment for a poorly-prepared work force, a larger underclass, and a deteriorated physical plant. The quality of life in the ``Golden State'' is not merely threatened; it has become an endangered species. And, to a large extent, the voters have only themselves to bl ame.

The time has come not only to solve the budget crisis, but to correct the ills from the initiative procedure that created the problem in the first place. Placement of taxing and spending responsibilities with elected state policymakers will make the process more manageable. It is simply too much to expect the public to comprehend such complex issues.

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