Schwarzenegger Makes Gray Look Good

Published June 1, 2007

Three years after Arnold Schwarzenegger (R) was elected California’s governor on the promise to “cut up the credit cards,” the state’s debt burden has more than doubled.

When Gov. Gray Davis (D) left office in 2003, California state government spent $8.80 of every $100 of personal income. Today it spends $9.54.

Over the past three years, while general fund revenues have grown 23 percent, spending has grown 30 percent, significantly faster than it did under Davis.

Schwarzenegger’s spending spree has now produced the biggest budget deficit in California’s history–$8 billion, compared to Davis’s worst year of $6.6 billion.

Reserve Nearly Exhausted

California has been able to keep writing checks solely because of a budget reserve created by unprecedented borrowing in 2004 and an unforeseen revenue windfall in 2005. But that reserve will soon be exhausted.

And there’s more: The state also owes about $45 billion in pension obligations and between $40 billion and $70 billion in health care obligations to retired state employees. The health care obligation alone requires $6 billion to be set aside every year. The state has set aside precisely nothing.

The pressure for tax increases in a state that already bears one of the heaviest tax burdens in the country will grow as California approaches its fiscal day of reckoning. And it’s not likely that Schwarzenegger will stand up to that pressure very long.

Tax Promise Broken

Indeed, it took him just 72 hours after taking the oath of office this January to break his unequivocal campaign promise not to raise taxes. In order to fund a health plan that includes free health insurance for illegal aliens, Schwarzenegger has already proposed the second-biggest tax increase in California’s history. And by calling the tax a “fee,” it may be passed with a bare majority of the legislature.

In other words, hide the silver and bolt the door … the tax collectors are coming.

There is one reform that could stop them: Require government to ask voters’ permission before it takes any more of our earnings. After all, asking is the polite thing to do.

It’s not exactly a radical idea. Ever since Proposition 218 passed in 1996, Californians have had the right to vote on local tax increases. A similar law has kept Switzerland’s taxes among the lowest in Europe.

Citizens Should Decide

It has been an accepted tenet of good government since the days of the Magna Carta that the power to tax should not be placed in the same hands as the power to spend. Unfortunately, the checks and balances within our own system are insufficient to prevent reckless spending, gaping budget deficits, and, ultimately, crushing tax increases.

SCA 5, now pending in the Senate, restores that political balance at its fundamental level: the voter. It brings back the common dictionary definition of a tax and requires that all taxes be approved by voters before they can be imposed. By reinstating taxpayers to the decision-making process, voters can judge for themselves whether their money is being spent wisely and whether they wish to entrust government with still more of their earnings.

Rounded to the nearest thousandth of a percent, the chance of this reform passing the legislature is zero. But voter support is high–72 percent in one poll. It is perhaps California’s last chance to avert the ruinous tax increases that reckless spending, gaping deficits, and broken campaign promises have already set in motion.

Senator Tom McClintock (R) represents the 19th Senate District in the California Legislature and is a member of the Taxpayer Protection Caucus of Americans for Tax Reform. His Web site address is, and he can be contacted there.

Author’s Note: The Taxpayer Protection Caucus is made up of lawmakers who firmly believe in the rights of the taxpayers and are committed to stop tax increases. Each member must sign the Taxpayer Protection Pledge of Americans for Tax Reform and keep it in order to belong to the caucus.