With Proposition 25, Democrats may get just what they asked for

If one looks beyond the borders of California, there is no way to interpret the mid-term elections nationally other than as a blow-out win for the Republican Party – at least six new U.S. Senators, at least sixty new U.S. House Members – and control of the House of Representatives, at least ten new governors, and 16 state legislative chamber flipped to the GOP.  

That said, there is certainly much for Democrat leaders to crow about when you look at election results here in the Golden State.  Victories by Jerry Brown and Barbara Boxer atop a potential complete sweep of the rest of the state’s statewide offices – retention of a majority in the state Senate and a pickup of a seat in the Assembly.  

No doubt legislative Democrats are pleased as punch at the passage of Proposition 25, which allows for the passage of a state budget on a majority vote.  After all, they have constantly decried a system that, “allows the minority party to hold the budget hostage.”

The challenge before Democrats now to present a balanced budget for the State of California, that doesn’t increase taxes or fees.  Because while the voters signed off on a majority vote budget (or did they sign off on penalizing legislators for a late budget, as the ads highlighted?), they also passed Proposition 26, locking down a two-thirds requirement to raise revenues – whether through general tax increases or through taxes labeled fees.

It is significant to note that there has been some controversy over whether the language in 25 would allow majority-vote taxes if included in budget trailer bills.  That said, the non-partisan Legislative Analyst and the proponents of the measure were quite clear that this does not do this – in fact the language presented to voters was quite specific that passing this measure would not reduce the two-thirds vote requirement for new taxes.  While there is no doubt that promises made on the campaign trail hold little sway over Capitol Democrats who will attempt majority-vote taxes, experts I talk to think that in front of a judge, their case is very dubious.

 One observation that can fairly be made about Tuesday’s election in California is that, where they could, voters rejected tax increases – I would note the rejection of Propositions 21 and 24 to make that point, and also the decisive defeat of the Proposition D sales tax proposal in San Diego.

Since it is less than unlikely that Republican legislators are going to provide any votes to increase fees and taxes (only one GOP legislator has refused to sign the no tax pledge), all of which now require a two-thirds vote, and the public clearly has no interest in passing tax increases when placed on the ballot, Democrats will now be able to unilaterally pass state budgets – but only if they do not include new taxes or fees.

 That said, it is acknowledged by all that  the financial picture for the 2011-12 budget looks bleak.  With tax revenues still down and not expected to recover, with the expiration of 2009’s temporary taxes, with increased payments needed to deal with unfunded pension liabilities – and now add the impacts of the passage of Proposition 22, there is an immediate multi-billion dollar negative impact on the current state budget, as well as impacts on cash flow for this and future budgets.

 It isn’t pretty.  But voters will now be looking to Democrats to put forward their state budget, unfettered with the need to work with Republicans.

No doubt Gov. Brown will be anxious to sign that no-new-taxes budget, right?

As rapper Eminem would say, “Be careful what you ask for – you just might get it.”

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