The Only Grown Up in Sacramento

Give it up for the Big Fella.

Gov. Arnold, who's been bashed in this space over the past few months, deserves credit for coming out in public Wednesday and putting his cards on the table for all to see. He offered a compromise proposal to end the seven week stalemate over California's red ink budget that gives something to everyone and everything to no one - embodying the quaint notion that politics is the art of the possible.

Naturally, the plan was immediately attacked by Republican Knuckle-draggers on the right, Jacobin Democrats on the left, and, in between, every special interest with its snout burrowed deep in the Capitol trough.

The key elements of Arnold's plan to close a $15 billion deficit and build up the state's reserve fund include:

1) A three-year increase of one cent in the state sales tax. Higher sales tax revenue, combined with internal borrowing from bond and special funds, suspension of a business tax deduction and some accounting gimmicks together account for 51 percent of the budget solution under his plan.

2) Another $2 billion in program cuts beyond earlier reductions of $9 billion. This means that cuts would account for 49 percent of the solution; in dollars, overall spending would be flat from last fiscal year, but $11 billion less than what it would cost to run all programs at current levels and with cost of living increases.

3) A plan to gin up state lottery revenues, which requires voter approval, to help ease deficits in future years.

4) A batch of budget reforms, including a requirement to fund and maintain a state reserve fund, targeted to grow to 12.5 percent of the budget, and an increase in the power of the governor to cut spending during a fiscal year if revenues lag.

(Personal note: This is the place in the column where quotes from Republican and Democratic legislative leaders reacting to the budget plan would normally go, but frankly they're such predictable platitudes and pablum that I can't bring myself to type them. (Warning: strong language ahead): As one of my journalistic mentors used to put it, with great delicacy: It's enough to make a hog puke).

You can find and read Schwarzeneggers's compromise proposal right here, and judge for yourself whether or not it offers a reasonable pathway out of the thicket of reflexive ideology and smarmy sanctimony in which the Legislature's dumb and dumber brigades have been wandering for the past two months.

As a political matter, of course, it must be added that Schwarzenegger still bears heavy responsibility for the budget mess, because of his continuing failure to scare up a single Republican vote for a budget plan that includes higher taxes. That may have more to do with the state of the GOP in California, however, than with the Terminator's sweet powers of persuasion.

Must read: Big Bad Dan Walters hit one out of the park this week, with a terrific piece that offered the plainest and clearest analysis yet of how the state got into this mess.

The tightly edited package of numbers and facts: a) shows that state spending, adjusted for inflation and population growth, has grown $7.4 billion, or nine percent, over the past five years about 1.8 percent per year; b) demonstrates that spending as a percentage of personal income has increased from 6.75 percent to 6.82 percent over the last five years - and is now quite close to the same level as 25 years ago; c) presents a list of decisions that account for much of the budget problem, including commitment to soaring costs for prisons and prison employees, Arnold's ill-fated, pandering decision to cut the car tax, plus growth in K-12 education and Medi-Cal health spending; d) offers a capsule 30-year history lesson of key events that shaped the budget sinkhole, from the passage of Proposition 13 to the dot-com bust. You can find the column here.

Must listen: The day before he uncorked his ire on R's and D's alike in a press conference presenting his budget compromise, Schwarzenegger lost his cool during a radio call-in interview, which he initiated, to a couple of right-wing talk show hosts in L.A. You can read all about it and link to a podcast of the show from here.

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