Governor Schwarzenegger’s Lottery-Lending Scheme

Voters Fear the Vig

While the pols and pundits mercilessly pounded Arnold Schwarzenegger’s scheme to liquidate California’s bazillion-dollar budget deficit with state lottery lucre, the Governator may have hoped that voters, at least, would buy into his plan.

Turns out, they can’t stand it either.

“I think the governor’s trying his best, I really do,” said Dan Gibbings, a pro-Schwarzenegger Santa Barbara Republican. “But, gee, this just seems like more borrowing on the future.”

Gibbings, a 41-year-old father of two and self-described “regular guy,” was one of 2,003 Californians recently polled about the budget plan by the nonpartisan Public Policy Institute of California. Known to Sacramento’s cognoscenti as “PIP-ick,” the San Francisco-based think tank regularly churns out the gold standard of research and polling about all things political in the Golden State.

When Mark Baldassare, PPIC’s president, presented his latest findings to several hundred policy wonks and partisans at the Capitol last week, there’s wasn’t much good news for the Schwarzenegger team-or for anyone rooting for an easy or early resolution of the current budget mess. According to the poll, Californians:

• Disapprove, by a ratio of nearly 2-1, of how Schwarzenegger handles budget and tax issues.

• Oppose, by a nearly identical split, his specific proposal to help pay off a $17 billion deficit by selling $15 billion in bonds secured by future lottery revenues.

• Express unhappiness with the overall job Schwarzenegger is doing as governor, with 51 percent disapproving and only 41 percent approving of his performance.

As a political matter, Schwarzenegger and his minions, in unfurling the effort to get creative with lottery bucks, scrupulously avoided unpleasant words like “borrow,” “loan,” or “interest payments.” Mindful of the campaign dictum that he who wins the race is he who defines what the race is about, the Arnoids instead robotically repeated their claim that the plan was an innovative way to “securitize” the lottery.

However, those pesky citizens read the budget gambit as more shylock than security, with our hometown guy Gibbings a one-man focus group, standing squarely in the mainstream middle of California voter sentiment on the issue. Gibbings, who labels himself a “soft Republican,” strongly backed Schwarzenegger’s 2003 recall ouster of Democrat Gray Davis. Since then, however, he’s felt that the governor and Legislature have relied far too much on borrowing billions for short-term fixes to hardcore budget woes, and that this deal is just one more bad example.

“All the big issues seem to keep getting lost,” he said.

Somewhat surprisingly, Schwarzenegger’s fallback plan to raise the state sales tax temporarily by one percent, if the lottery scheme goes down in flames, won a clear majority of those surveyed by PPIC.

“I’d give them one percent,” agreed Gibbings, part of that majority, “but it’s got to be for a limited amount of time.”

Lest Democrats be lulled by this finding into thinking their fondest fiscal fantasies are about to come true, the poll also made clear that tax increases are by far the least favorite financial prescription among Californians: Only 8 percent said the budget gap should be handled mostly by raising taxes, a fraction of the one-third who believe the job should be done mostly through spending cuts.

In fairness to the Terminator, Californians hold an even lower opinion of the Legislature than they do of him. More than two-thirds of those polled disapproved of how lawmakers handle the budget and taxes, and a larger majority dissed them for poor performance than did Schwarzenegger.

P.S. Despite his GOP registration, Dan Gibbings said he expects in November to vote for Barack Obama, again mirroring the poll’s finding: The Democratic senator from Illinois trounced Republican John McCain, 54-37 percent.

Political junkies can find the complete PPIC poll at The group was established in 1994 with an endowment from William R. Hewlett.

(Full disclosure: I worked closely with Linda Strean, recently hired as PPIC’s media affairs manager, at several newspapers during the last decade.)


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