By Daniel Weintraub
As Gov. Arnold Schwarzenegger prepares to end his second and final term as California’s chief executive Monday, his public approval ratings are at an all-time low, the media are beating him up for his record in office, and few if any of his fellow politicians are rising to his defense.
Schwarzenegger deserves much of the flogging that he’s been absorbing in his final days on the job. But the real story of his seven years as governor is more complex than it appears at first glance. And historians may view his tenure in a better light than those who are judging him based only on the condition of the state and its economy on the day he leaves office.
Schwarzenegger certainly can’t duck responsibility for leaving his successor a budget shortfall bigger than the one he inherited seven years ago. Back then, the Hollywood actor and novice politician belittled Sacramento’s lawmakers as incompetent boobs who couldn’t find a way to balance spending and revenues. But he discovered in office that the job was far more difficult than he had imagined.
Schwarzenegger also gets low marks for wasting an historic mandate that might have let him retool California’s government for the 21st Century.
He could have led a revolution embracing technology to boost productivity and save money – as the private sector has done — while creating a consumer-friendly culture within the government bureaucracy. But instead of giving California a government as good as the high-tech, Web 2.0 industries driving the latest growth in the Silicon Valley, Schwarzenegger promised to “blow up the boxes” on the organization chart, then commissioned a weighty study with hundreds of recommendations that mostly died on arrival in the Legislature. Then he lost interest in the project.
That’s the true tragedy of Schwarzenegger’s time as governor. Although he came into office as an outsider with no experience in elective office, his biggest fault was that he was too tame, too conventional, and too eager to fit in with the governing culture he was elected to upend. Before even taking office, Schwarzenegger attended a welcoming party in Sacramento where he was heard telling lobbyists not to believe all those nasty things he had said about their profession and its special interest patrons during the campaign. His transition team was packed with longtime Capitol insiders, all but ensuring that he would mostly play it safe as governor, to his detriment and the state’s.
But that’s only part of the story. Schwarzenegger, on balance, was probably a better governor than he has been given credit for. And he may look even better a few years from now.
He deserves a lot of credit for tackling big issues that many thought were insoluble, fighting doggedly for goals that others thought were out of reach, and for using executive power and his largely independent status to work, when he could, with members of both parties in the Legislature. For a governor who spent seven years in office without the benefit of a consistent set of allies in either party in the Legislature, he actually accomplished quite a bit.
He was sometimes moderate, trying to split the difference among the partisans on the far left and far right who dominate California’s Capitol. At other times he sided with the Democrats, most famously on a new law to fight global warming, or with the Republicans, on behalf of business interests and employers.
If you judge Schwarzenegger not on how well he achieved your goals, but on how he did reaching his own policy ambitions, he tends to score a lot higher. And several of his most important accomplishments might take years to bear fruit — an unusual kind of legacy in this era of instant gratification and term-limited, short-attention-span lawmaking.
His biggest failure, clearly, was on the budget. He inherited a mess but made it worse by cutting the state’s car tax, although in his defense, this was the signature issue of his first campaign and had he abandoned it, he also would have abandoned all of his credibility as a leader.
His next blunder was to embrace a $15 billion bond to pay off the state’s deficit with borrowed money. This idea might have worked had it been linked to an enforceable spending limit, even a temporary one, that slowed the growth in spending while economic growth allowed revenues to recover. But Schwarzenegger settled for a mostly phony “balanced budget amendment” and a rainy day fund that was riddled with loopholes. He took the two to the voters in an impressive campaign that was a short-term success. But he never lived down his dramatic vow to “cut up” the state’s credit cards, a promise he clearly could not, and did not, keep.
Even so, he almost got the budget balanced before the bottom dropped out of state revenues amid the financial panic of 2008 and the international economic recession that proved to be the worst downturn since the Great Depression. Tax revenues in the state’s general fund have dropped by $8 billion during the past three years, easily the largest and longest decline in tax receipts in the past 50 years, if not in the history of the state. Even California had entered that economic decline in good shape, the state’s budget still would have been plunged back into the red. Unfortunately, it was already there when the recession began.
In the face of that crisis, Schwarzenegger managed to cobble together bipartisan support for the earliest budget in recent memory, a February 2009 agreement that included historic spending cuts, temporary tax increases and budget reform. But the full plan required voter approval to take effect, and the voters rejected the final two years of the temporary taxes, dooming the reforms, which were linked to the higher revenues. Schwarzenegger did a good job designing that package but a terrible job communicating its worth and importance to a cynical public, and voters never understood that their involvement was required for any policy changes big enough to transform the state’s budget reality.
But Schwarzenegger kept pushing. In October, 2010, in his final budget, he won approval from the Legislature for yet another reform plan — a rainy day fund that would have teeth and could eventually build a reserve of 10 percent of the state’s general fund. The new plan also requires the Legislature to set aside unexpected spikes in revenue of the kind for which California has become famous.
In the same budget deal, Schwarzenegger persuaded the Democrats to agree to pension reform that will roll back richer benefits enacted in 1999, at the height of the dot-com boom. The rollback will save the state billions of dollars over the next several decades.
Along the way, he also got Democrats to repeal automatic cost-of-living increases that were built into many government grants. Even if you think the recipients need those increases to keep pace with rising prices, it makes sense for legislators to make that decision annually based on all of the state’s priorities rather than have the increases take effect automatically, adding to the government’s projected deficit.
Schwarzenegger was also a big supporter of new constitutional rules that will keep state lawmakers from shifting local tax revenue among the cities, counties and schools, and he supported other new laws to ensure that money set aside for transportation projects is not used for other purposes. These laws make it harder for the Legislature to balance the budget, but they are popular with voters who want to know where their tax dollars are going and prefer local control over decision-making in the Capitol.
Beyond the budget, Schwarzenegger will be remembered most for his advocacy of global warming legislation that requires the state to reduce its emission of greenhouse gases to 1990 levels by 2020. Although Democrats and environmentalists complain that Schwarzenegger was a late-comer to this cause and then stole the credit for its passage, he actually used an executive order to put the state on course to reduce its emissions, brought the law international attention and then defended it fiercely in the face of a ballot initiative that sought to suspend its implementation. No one knows if the law, known as AB 32, will trigger a boom in green-energy jobs here or become another burden on the state’s fragile economy, but Schwarzenegger believed in the idea, made it happen and has implemented it faithfully.
But that was only of the fronts on which he was active and successful. Some of the others:
–Early in his term he used the threat of a ballot initiative to win changes in the state’s system that compensates workers injured on the job. California had some of the lowest benefits but the highest costs to business, and the bipartisan plan trimmed costs so much that many Democrats later regretted voting for it, trying to repeal a law they had once embraced.
–Schwarzenegger’s leadership prompted the Legislature to pass $37 billion in bond measures on the 2006 ballot, which the voters approved. Although the annual debt service on the bonds is expensive, they are paying for much needed improvements to roads, schools and other public works. Repairs to the weak levee system in the Sacramento River delta might prevent a Katrina-type flood in Northern California, a disaster averted that no politician, including Schwarzenegger, will ever get credit for.
–Schwarzenegger was a champion of political reform, and he helped pave the way for two big changes that should alter California politics over the next decade. One was the creation of an independent commission to draw new political boundaries after the census, taking that job out of the hands of incumbent legislators, who had an interest in skewing the lines to benefit themselves and their allies. The other reform was the open primary, which will allow California voters to choose among all candidates in the first round of the election, regardless of party, with the top two finishers moving on to the finals. The two changes combined might result in the addition of more moderates to the Legislature, giving future centrist governors a few more potential allies to work with.
–Although he never delivered on a promise of major education reforms, Schwarzenegger did accomplish two important goals he expressed during his first campaign for office. First, he loosened the strings on state money going to the schools, giving local districts more authority over how they spend their budgets. Second, he was a strong defender of parental choice, supporting independent charter schools and, in a move that got national attention, giving parents the right to convert low-performing schools into charter schools free of central district control.
–After years of badgering, he cajoled the Legislature into supporting a compromise that could improve the state’s water supply while also protecting the environment, especially the sensitive wetlands in the Sacramento-San Joaquin Delta. If it wins voter approval in 2012, the plan will produce the most significant change in the state’s water system since the construction of the state water project in the 1960s.
A common thread runs through most of these accomplishments: they favor the long term over short-run thinking and results. At some point during his tenure, Schwarzenegger realized that the annual budget fights with the Legislature, while perhaps necessary, were mostly futile. About the best a governor and lawmakers could do under the present circumstances is to tread water and try to avoid making things worse. The annual fights were mostly along the margins, how to spend, or cut, the last dollars in the treasury.
Although Schwarzenegger, by cutting the car tax and giving business billions in unnecessary tax breaks, definitely worsened the deficit, he also used the shortfalls to win important long-term reforms that should help keep future budgets balanced once the red ink finally stops flowing.
And on other issues, from flood control to water policy, political reform to prisons, Schwarzenegger overcame partisan polarization to fashion policies that will give him a lasting effect on the state long after he leaves the Capitol and returns to Hollywood and the international stage.