Examiner Editorial: Schwarzenegger’s budget showdown

With the dramatic budget standoff in Sacramento over, Gov. Arnold Schwarzenegger must feel as if he has finally rediscovered his inner action hero and found a way to impose his stamp on a largely dysfunctional state lawmaking process.

By threatening to veto the deeply flawed $104.3 billion budget, which was late by a record time, plus 1,000 or so unsigned bills, he achieved a rare bargaining equity with the lockstep caucuses of both political parties.

Applying arm-twisting to the legislative phase where his leverage was greatest, the governor won the two demands that the majority Democratic leadership summarily rejected several days earlier. He obtained a safeguard ensuring that the state’s new rainy-day fund for bad economic times could not be opened unless locked-in spending outstripped revenues.

He also made the lawmakers discard their scheme to forcibly borrow $1.6 billion from working Californians by increasing the tax-withholding minimum. That lost revenue will supposedly be replaced by doubling to 20 percent the penalties for corporations that underpay their taxes by $1 million or more, and also by canceling a proposed tax-amnesty period.

The governor did have the example of a hard-nosed Republican minority to show him the power of “no.” Though largely irrelevant throughout much of a legislative session, the heavily outnumbered GOP holds de facto veto power over the annual budget and other fiscal bills requiring two-thirds approval.

By standing firm, the Republicans managed to block any new taxes in recent years while the state repeatedly faced record-breaking deficits. And in the past few days, word was getting out that some GOP members might not join the vote needed to override a Schwarzenegger budget veto.

At this moment Schwarzenegger is probably more disliked by California legislators than he has ever been. But until now, the governor’s most valuable reform proposals have mostly been blocked by extreme partisanship anyway. Republican lawmakers largely broke with a governor from their own party, castigating him as a closet Democrat.

Yet, by attempting to work with majority Democrats, Schwarzenegger was able to move the state forward on vital issues such as the much-needed transportation infrastructure upgrades. Still, areas of cooperation were limited and the Democratic establishment reflexively stonewalled all genuine structural reforms.

But now if Schwarzenegger has the will to use the threat of strategic vetoes and the bill-signing boycott again, he could do amazing things to make California governable again by the time he finishes his final two years in office. Next spring, he could announce that no legislation will be signed after the June 30 deadline until an acceptable budget is passed — along with a spending cap and other essential fiscal reforms to ensure that the days of wishful thinking smoke-and-mirrors budgets are over in California.

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