5 Reasons California Went From A $42 Billion Deficit To A Surplus

5 Reasons California Went From A $42 Billion Deficit To A Surplus


In June of 2003, California’s Democratic governor, Gray Davis — faced with a $38.2 billion budget deficit, as big as all the other 49 states combined — announced that he would raise $4 billion by reversing a cut to his state’s vehicle registration fees.

Vehicle registration is a mostly progressive fee that is assessed based on the value of the car, but Davis’ move ended up tripling the fee the average driver would pay. In a state still reeling from the worst of the dot com bust, the outrage was palpable.

California’s Republican Party seized the moment to launch a recall effort personally funded by millionaire Darrell Issa (R-CA) — who has always had a unique interest in cars. Issa, of course, thought he would be the natural replacement for Davis, but Arnold Schwarzenegger joined the race.

The newly elected Governator reversed the fee and ended up growing the deficit to as large as $42 billion in 2009.

A mere four years later, California has a new problem: What to do with the projected $850 million surplus it will have by the end of the year.

We’ve told you about the worst ideas from the Tea Party governments of Louisiana, Mississippi, North Carolina and Texas. So we figured you might be ready for a story with a happier ending. Even though the state is not completely free of problems, it is in vastly better fiscal shape than it has been in more than a decade.

Writer David Dayen has laid out how California’s progressives remade the state’s politics and corrected those who think Jerry Brown is deserving of most of the credit.

But the steps California’s Democratic majority took to erase tens of billions from the deficit and return their state to fiscal sanity are pretty simple. And they can be replicated in other states to overcome Republican obstruction and polices that favor the wealthy at the expense of working families.

Here are five of the best ideas from California’s Democrats.

Photo: Damian Gadal via Flickr.com

Independent Redistricting Commission



It all started in 2008. As California voters were rejecting same-sex marriage, they approved a ballot measure that would take redistricting out of the hands of the politicians. The measure created the 14-member California Citizens Redistricting Commission to redraw maps for the state’s legislative districts. The Commission includes five Republicans, five Democrats and four independents. Bipartisan agreement is required. The result has been districts that “look more like the electorate,” according to Dayen. That means they’re far more Democratic, which has inspired challenges from the state’s Republicans. But voters seem to approve. In 2010, they handed Congressional redistricting over to the same commission.

Photo: Justin Brockie via Flickr.com

Reinstating Majority Rule On The Budget



California’s budget has been perpetually late and perpetually hostage to a provision that required a two-thirds majority. Proposition 25, approved by 54.1 percent of voters in 2010, changed the law to allow a simple majority to suffice. It also holds up legislators’ pay if the budget is late.

Democrats led by Governor Brown were able to speed up the budgeting process, pushing through painful cuts. However, with a two-thirds majority they were not able to match those cuts with the tax increases that were necessary to actually balance the budget.

Photo: Capitol Weekly via Flickr.com

Online Voter Registration



State Senator Leland Yee (D-San Francisco) authored a bill that makes registering to vote in California available online to all citizens. A huge push followed, which led to 800,000 residents registering in the 45 days leading up to the election and the state setting a record for the number of eligible voters. Some credit this one innovation with giving Democrats a supermajority in both state houses, as Democrats registering online outnumbered Republicans by a margin of 2 to 1. The system was especially effective with poorer voters.

Yee now wants to expand the law by making sure that a link to the registration site is on all state webpages. Legislators are also now working on bills that test online voting.

Photo: Sean Dreilinger via Flickr.com

Asked Voters To Raise Taxes



The anti-tax movement that led to the election of Ronald Reagan was born in California with Proposition 13, which capped property taxes and left the state with nearly constant deficits. When Brown couldn’t get Republicans to approve the tax increases he campaigned on, he decided to go directly to voters for an increase in state income tax. Progressive groups challenged the governor’s plan, which would have raised the sales tax on Californians earning $250,000 or more. They persuaded Brown to limit the income tax to those earning $500,000, the top 3 percent, targeting those funds directly for education and safety. It also cut the sales tax increase down to a quarter of a percent.

The measure passed with 55.4 percent of the vote.

Photo: Casey Konstantín via Flickr.com

A Massive Turnout Effort



Dayen believes that Prop 30 would never had passed if not for a massive voter turnout effort that capitalized on all of the state’s new voters:

This combined with a comprehensive mobilization of infrequent voting communities, particularly low-income voters, students and communities of color. The outreach to immigrant and youth voters, through groups like California Calls and the Alliance of Californians for Community Empowerment (ACCE), also made a huge difference. “It became clear that winning Prop 30 and saving schools was key to low-income and student communities,” said the Courage Campaign’s Jacobs. “So our coalition partners went out and found them. (Voters) turned up under rocks all of a sudden.”

Despite the fact that the presidential election wasn’t even close to competitive in California, the state posted a 72 percent voter turnout rate, its highest rate ever in a general election.

With a little democratic reform and a lot of civic participation, California made change happen fast. And the fact that the Golden State often sets trends for the rest of the nation must terrify Republicans.

Photo: AP Photo/J. Pat Carter, File

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