2003-10-17 / Community

The Rockaway Irregular

Arnold and Mike
by Stuart W. Mirsky
The Rockaway Irregular

The Rockaway Irregular

With the dramatic Schwarznegger win in California, Democratic critics, who have been relentlessly pummeling President Bush as they fall all over themselves in the race to the White House, have had to take a moment to re-orient themselves. Sure Arnold's a moderate and Gray Davis was uniquely disliked by large segments of his constituency, but the fact remains that roughly 60% of Californians who voted (and it was a big turnout!) put their money on a Republican. What's a Democrat to do?

Democratic Congresswoman Nancy Pelosi, Minority Leader in the House, put the usual spin on things and told us Arnold's win means only one thing: that George W. Bush better watch out! Huh? Voters sweep a leading Democratic governor resoundingly out of office, in a long time Democratic state, replacing him with a Republican, and Bush is in trouble? But wait, it gets worse. According to indefatigable Democratic presidential candidate, Howard Dean, Gray Davis was rejected by California voters because of the failure of the economy on Bush's watch. So, of course, the rejection of Davis is really a rejection of Bush, never mind that California's Democratic executive and legislative branches jointly ran up their budget by 40% during the boom years of the 90's with no thought of a rainy day! On Dean's view it's Bush who's responsible for their profligacy.

The new Republican Governor of California is going to have his hands full in this environment and with a Democratic establishment still firmly in control of the other branches of California's government. Obviously any success Arnold achieves will not be seen as a positive thing by Democratic fantasists. Arnold was voted in with a largely Republican agenda (avoid tax increases, roll back some taxes and cut waste wherever he can find it while shrinking excessive government programs and removing anti-business legislation). Any success he attains will cause countless sleepless nights for the Democratic dreamsters and work against the Democrats' playbook for the presidential election in '04. Arnold has his work cut out for him.

Like our own Mayor Bloomberg, Arnold is facing a huge budget deficit the first day he walks through the door of his new office, a deficit whose scope he cannot even be sure of at this writing. All that's known is that California's operating budget for this year could be anywhere from 8 to 20 billion dollars in the hole. But unlike Mayor Mike, Arnold is not faced with a legal requirement to balance the books. Indeed, he can run the state in the red, as Gray Davis was doing if he has to. But, of course, that's not why he was elected and it won't do him any good if he were to fall into that mode.

So what's to be done? First, of course, he needs to nail down the size and scope of the problem (which he's already begun to do). But more important, he needs to immediately start reining it in. And he can't do this by raising taxes since that would make him no better than his predecessor who was thought to have lied to the public about the problems in Sacramento when he ran for re-election! Our own Mayor Mike raised taxes shortly after walking in the door though you could make an argument that he had no choice in the short term since New York City was under a legal obligation to operate in the black. And now Mayor Mike's talking about rolling the property tax back, if he can get the operating budget under control. He's already asked for an across-the-board 3% cut in most of his agencies' operating budgets so that's a start.

Arnold, too, needs to make a start. Because he can run a deficit in the short term, he can delay closing his state's budgetary gap for a year (though it would be unwise politically to let it go longer) and phase in some of his more painful cuts over the remaining three years of Davis' term which are now allotted to him. Mayor Mike did not have that luxury! But at a minimum, Arnold needs to quickly develop and disseminate a plan that shows what's to be cut and relates these items to future tax reductions so the public will see he means business. Voters will tolerate a lot from a politician if they believe he's leveling with them (the reverse of what they saw in Gray Davis).

Also, while it's true Arnold gave his word to Californians that he would not raise taxes except in the direst of emergencies, he might want to consider creating a "rainy day fund" for  his state. Many wealthy Californians are quite liberal (think Barbara Streisand, Martin Sheen, Lou Asner, Tim Robbins, Susan Sarandon and Sean Penn, to name a few) and have made no secret of their support for higher taxes. Maybe it's time they put their money where their mouths were and demonstrated just how committed they really are to the public weal by making voluntary contributions to help keep California's services afloat in the short term! In fact, this seems like a good idea to institutionalize by creating a special account for such monies (and to which the state could also contribute in boom times). Such funds would collect interest when not needed but would be available to cushion downturns, thereby avoiding some of the cyclical budgetary disasters we are continuously witness to. Is it so unreasonable, after all, to expect politicians not to spend every cent  as soon as they get it?

Arnold has also begun gathering experts and professionals around him who have an interest in righting the states' finances and improving economic conditions and these are not just the usual suspects but a wide range of interested private citizens from many walks of life including famous investor Warren Buffett, ex-baseball Commissioner Peter Ueberoth, former government officials like George Schultz and even a local sheriff from Arnold's community. Such individuals bring commitment, interest and fresh perspectives to the effort to fix a broken administrative machine.

Come to think of it, these are all good ideas for New York City, too, i.e., laying out a multi-year plan that matches proposed operational improvements with planned tax reductions so voters can start to see what they're getting for their money, recruiting voluntary civic-minded donors to build a special fund for special purposes, and setting up a task force of civic-minded people to look at the problems in governmental operations with a fresh eye. Indeed, I happen to know of a few former city managers with real first-hand experience in city government who would be invaluable in rooting out and fixing the endemic structural problems that make city operations intrinsically more costly than they should be and who would be delighted to share what they know with this administration! Maybe Mayor Mike should start watching the West Coast to see how it's done?


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