Friday, June 4, 2010




All through his almost seven years as governor, Arnold Schwarzenegger’s most basic priority has always been clear: As much as possible, feather the nests of his largest political donors.

A secondary priority has been to “get” his political enemies.

This has been true in almost every budget proposal and many of the legislative deals he’s struck to get his fiscal plans passed. Never was it more visible than in the budget bargain of February 2009, providing $2 billion a year in corporate tax breaks.

So it is again with Schwarzenegger’s latest budget plan, which takes aim squarely at the poor and at state employees, most of whom earn under $60,000 per year. Perhaps this proposal is mostly a bargaining ploy, designed to force Democrats to propose new taxes, which they have already done.

Yes, the plan has some positive components, including restoration of $140 million in state parks funding and, at long last, leaving steady the state's already much reduced contributions to its public university systems.

But Schwarzenegger would fob the responsibility for providing any safety net to the poorest Californians onto counties – themselves cash strapped. He would remove almost all state aid for 1.4 million persons. There are also huge cuts in the Medi-Cal program covering the same people and many others. And there’s no certainty about what any county could or would do for its poor.

Schwarzenegger would also subtract one day’s wages each month for all state employees, giving them eight hours of personal leave instead. This pay cut would come atop the 5 percent reduction he proposed in January, essentially docking state workers 10 percent of their pay. At the same time, their pension contributions would be upped by 5 percent of each paycheck because of bad investment decisions by government pension plans. Taken together, all this would give highway engineers, Department of Motor Vehicle clerks, park rangers, tax auditors, agricultural inspectors and many more a net of 15 percent fewer take-home dollars than they’ve gotten in prior years. The three days most state employees have lately been furloughed each month would end, leaving net pay about the same as in the last few months but much lower than before. Another way to look at it: employees would work two more days per month for the same pay they’ve recently gotten.

Meanwhile, the plan asks absolutely nothing new of private sector workers or businesses. Corporations would keep their tax breaks, old and new, and might get even more. California would remain the only oil-producing state without a severance tax on oil and would become the only one without a welfare-to-work system.

It’s plain what’s going on here: The poor don’t vote as reliably as others, so they have little clout in Sacramento. And Schwarzenegger has vilified public employees and their unions for years, beginning with his late 2003 promise to kick their rears. Those unions have thwarted Schwarzenegger for years, defeating several pet ballot propositions designed to increase his power, and this is the last chance for the termed-out governor to get back at them.

As he proposed his budget revisions in mid-May, Schwarzenegger said the state could easily afford to keep its health and welfare programs going -- if state workers’ pay and pension benefits are reduced even more than he’s already proposed.

Schwarzenegger has no use for either of these interest groups, so he’s now in effect inviting them to compete politically, telling them to fight over what scraps may exist on California’s bare dinner table.

The governor would like to befuddle union-backed Democratic legislators who also generally support programs benefiting the poor, pitting the two constituencies to which they are most devoted against each other.

“We can’t fall for Arnold’s wedge,” warns Robert Cruickshank, public policy director for the liberal Courage Campaign.

But Democrats almost certainly will have to concede something to Schwarzenegger. That’s because they can’t raise a dime of new taxes without a Republican vote or two in each house of the Legislature, and none now seems available.

Will they reduce pension benefits for new state employees to raise the money needed for keeping welfare alive? Will they keep pensions at present levels and allow removal of virtually all aid for the poorest of the poor, thus expanding the existing homeless problem and likely creating new public health issues? Will they find another way, via taxes or borrowing or something else?

No one can answer these and other questions just yet. But two things are clear: Schwarzenegger has put organized labor and advocates for the poor in an unprecedented quandary. As a result, this year’s budget battle could be longer and more bitter than even the extended fights of the last few years.

Email Thomas Elias at His book, "The Burzynski Breakthrough," is now available in a soft cover fourth edition. For more Elias columns, visit

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