The California Republican Party's Executive Committee met in Sacramento on Saturday.  The CRP's Initiatives Committee met telephonically the day prior. The Initiatives Committee recommended two things:  Support Sen. Runner's upcoming initiative on securing the ballot box against voter fraud and Oppose Props 1A through 1F as a package.

The Executive Committee, on behalf of the entire CRP, overwhelmingly approved the Initiative Committees report.  Mike Spece, the Initiative Committee Chaiman, made the motion to approve to the ExCom, and I seconded it.  Assemblyman Mike Villines spoke against our position, as did Tom Campbell--with respect specifically to Prop 1A (the "cap" initiative that inflicts a hidden tax increase on California, if passed.)  Steve Poizner spoke for the CRP's eventual position.  Debate was both energetic and civil.  It was obvious that all of the ExCom members had spent a lot of time learning about Props 1A-F.

In response to a couple of (very thoughtful, well researched) Pro-1A letters to the ExCom, I sent my own letter to the ExCom members, arguing against the entire 1A-F package, and pointing out some of the problems I believe exist with, specifically, with Prop. 1A.  This is a (slightly) edited version of my letter that I provided on Friday and Saturday to the ExCom members:

Fellow Members of the CRP Executive Committee,

First, thank you for having me serve as your Treasurer, it is an honor.  It is, especially in times like these, particularly exciting.  We have the opportunity to take a definitive stand on the May Propositions, and I believe we must stand against them.

I had the opportunity to review much of the commentary and the initiatives themselves.  I want to thank fellow Executive Committee Member Charles Munger, Jr. for his thoughtful commentary, and Tom Karako—the Director of the Claremont Institute's Golden State Center.  I also, just today, received a letter from Assemblyman Mike Villines, who is one of the few Republican Assemblymen taking a vocal “yes” position on these propositions.

As a Lincoln Fellow of the Claremont Institute, I must say that I always appreciate Mr. Karako’s clear reasoning on California policy.  If you’d like to review his writings on the initiatives, please go here.

There was always an interesting back-and-forth between Mr. Karako and a 1A supporter here: 

In summary, I write to offer a principled opposition to the recent letters sent to the Executive Committee supporting Prop 1A. I believe they are wrong.

As to why they are wrong, not just for Republicans, but for all Californians, I offer the following:

Stand or Fall Together

We must vote against all of the Propositions, even the better looking ones, to provide clarity on this entire, costly, needless election.  Confusing Republican voters with a “no here, yes there” approach will not serve us well in getting out our core message:  No on 1A and 1B. 

Political Accountability

Republicans and Californians in general must say “no” to Sacramento’s repeated “Proposition Bailout” dysfunction.  Sacramento politicians have consistently made bad budgets, bad laws, and bad decisions.  Then, when things get tough because of those bad decisions, they force the people, through propositions like 1A, to bail them out. 

This is their mess, they need to fix it:  Cut spending.  Lower spending by the more than 40% you have increased it recently, the problem will disappear.  Voting for these measures is just one more bailout that will signal the people have not had enough of their nonsense.  But we HAVE HAD ENOUGH.  It needs to end.  Budget properly.  Don’t over spend.  If you can’t, retire and we’ll find someone who can.

Potential Political Gains While Standing Up For What We Believe

This point should particularly resonate for Republicans.  The vast majority of our Republican elected leaders in Sacramento are against these schemes.  We know that if we say “no” to this latest politician bailout, the people will need to think more deeply about who they want to send to Sacramento:  a fiscal conservative—likely a Republican—or a fiscal liberal—likely a Democrat.  This is a chance for electoral gains, the people are paying attention.  But if our party goes the wrong way, especially on 1A and 1B, the average voter will see little difference between us and them.  They will see the budget mess and the tax increase triggered by 1A as “bipartisan.”  We cannot let the people think we agree with the Democrats on budgeting and taxation.  If we fight this mess, and consequent tax increase, our party will be the hero of the overburdened tax payer.

Let’s hold the Democrats accountable for their mess.  Join with me and refuse to support another bad-budget bailout.

Senseless Connection To the Tax Increase, and the Cynical Ploy

For some reason, probably hatched in a back room in Sacramento in the middle of the night, the Democrats tied a massive tax increase to Prop 1A.  But they did not do it in an honest, straight-forward way.  The tax increase isn’t in the measure, and the average voter reading the election material will never know this.  This is deceitful.  We should vote against this scheme for no other reason than we object to politicians lying to the people.

But this ploy also raises a question of timing:  if we have a “bipartisan” agreement to pass a spending cap, why not just do it?  It is either a good idea or it isn’t.  The same is true for a tax increase:  it is either a good idea, or a bad one.  Tying them together, however, exposes the cynicism of Sacramento:  this is some “deal” that the people are supposed to give cover to.  If proponents of 1A really think it is a good idea as drafted—more on that below—then why don’t we vote “no” and then bring it back when it is not connected to an economy-wrecking tax increase?  That seems far more straight-forward to me.

It Simply Won’t Work

If you are on the ExCom, you were probably around for the discussion about Prop. 58.  All the same arguments about its merits, and doomsday scenarios about it not passing, were made then.  How’s Prop 58 doing for us?  I think we will be at an ExCom meeting in a few years asking the same question about Prop 1A.

Why won’t it work?  Here’s where I offer some thoughts, specifically addressing some of the claims made by some ExCom members and the 1A supporters:

I think their position tries to rationalize a very bad proposal on the grounds that under the current system it might not get better.  It echoes Mr. Villines’s argument “we couldn’t do better.” But Republicans must do better than billions in tax increases for a phony “cap.” More importantly, the real issue is trying to change the ground rules that govern the current system, not to monkey around at the margins. 

But let make a few particular points to refute some Pro-1A arguments:

• Some supporters say that “1A is a constitutional amendment without one word about taxes in it.”  This depends upon what one means by the word “it.”  Prop 1A does contain big tax extensions, but they are not part of the constitutional amendment portion.  Distinction without a difference.  They then go on to say that this part of it could be repealed by the legislature, and that the Republicans in the minority could insist on the repeal of these statutory tax extensions.  This seems to me highly implausible.  The same narrow three-vote Republican margin that went along with the Democrats in raising the taxes cannot now be counted on to insist that these taxes be repealed in some future session—especially if we continue in a revenue-failing environment for a few years, as is projected.  It's always politically easier to let a tax ride than to create a new one, so this part of their analysis just seems like wishful thinking.  It is currently theoretically possible to suspend Prop 98 funding with a two-thirds vote.  And yet that doesn’t happen, does it? 
• On the Budget Stabilization Fund: they argue that the 3% sequestrations are “hard to evade because they are mandatory if this year’s General Fund estimated revenue exceeds last year’s General Fund expenditure.”  First, this is a big “IF”; and second, it tells only part of the story.  In the first place, the 3% is mandatory only if revenue and spending is above a figure adjusted for population and inflation.  There are other ways to get around it too, but for the next few years, we’re not going to be seeing enormous economic growth or revenue—especially if we lock in tax increases.  What we are going to be seeing for sure is inflation!—the very factor that is allowed for in 1A. 
• It is impossible to believe that there will not be ways that the money is not put into the BSF as quickly or as reliably as they say.  See more below.  The proponents of 1A and the BSF say that if this was in place a long time ago it might have helped our current shortfall.  There’s some truth to that.  But because the economy is in a shambles now, it’s going to be a very long time before any potential return comes back.  The price will be to bind the hands of the legislature and reduce flexibility at a time when flexibility may be needed.  With less flexibility, they will be more inclined to raise taxes even more. 
• In short, 1A’s BSF is simply not going to have any good effects for very long time to come—namely, until the economy improves, and there is “extra” money to put into it.  The cost of that possible future benefit is two more years of taxes: income tax, sales tax, and the car tax.  That’s just too high a cost.  If the Democrats in Sacramento are so foresighted that they want to create the BSF, they should put it on the ballot next time, and without being tied to taxes. 
• There’s nothing stopping the legislature from putting money aside on its own.  Rejecting 1A will not forbid the legislature from creating a rainy day fund on their own, and exercising some fiscal responsibility.  Unlikely?  Yes, but no more unlikely than a prediction that the Republicans (in the minority) will succeed at repealing 1A’s tax increase extensions.  Again, why not put 1A’s BSF on the ballot by itself the next opportunity, but this time apart from tax increases?  The smoke and mirrors of the BSF don’t change the fact that it was tacked on to get voters to swallow the tax extensions, which the legislature couldn’t or wouldn’t extend for that same period. 
• It’s a bit easier to take money out of the BSF/Rainy Day Fund than their analysis concludes.  You can spend any amount of money for emergencies (the governor declares a lot of these each year; why wouldn’t the legislature sit on its hands and let the money for these things come out of the BSF—that way they could allocate money elsewhere?).  Plus, the business about the money going towards debt service: don’t we have to pay those bills anyway?  So money will be going in and out of the BSF to pay bills we have to pay anyway.  

The more I look at 1A, the worse it gets.  Not just because the taxes are bad, but because the Rainy Day Fund seems like its got a lot of holes in it.  The cost is simply too high, and at the end of the day it won’t fix the real problem, which is a lack of political responsibility.  That should be what the GOP makes an issue out of.  Hold the majority’s feet to the fire for getting the state into such a mess.  Don’t support political bail outs (mainly bailing out all the Democrats and relatively few Republicans, who voted for this), and thereby lock in a permanent minority status. 

Ultimately, we need to return all spending to the General Fund, and thus get rid of all the special silo budgeting (ballot-box budgeting.)  This will force the legislature to be accountable for what they budget.  This will force the majority to be responsible or risk having the opposition (US!) argue that they are not up to the job.  This is the same argument of the Federalist Papers.  I think our Founders were on to something—I am not as convinced about Sacramento politicians backing this scheme.

But 1A makes the whole situation worse by continuing to budget by skyhooks.  It gives the majority in the legislature just one more means, one more excuse, to fail to be fiscally responsible.  By applying a band-aid to the systemic problems, Republican support of 1A will help solidify the party’s permanent minority status. 

Please join me in standing up for our ideals, don’t vote for a bail out that won’t work.  Vote “NO” with me tomorrow.

Sincerely,

Keith W. Carlson,

Treasurer

California Republican Party