165 or fight? Would the Taxpayers Protection Act do enough - or too much?

Would the Taxpayers Protection Act do enough--or too much?

BACK IN 1973, Governor Ronald Reagan, commenting on California's fiscal future, wrote in NATIONAL REXnEW: "Unless something is done to curb the government's unlimited power to tax, this years $9.3 billion budget will grow to a staggering $47 billion by 1989." The future President's uncanny foresight turned out to be a bit shy of the mark: the 1989 budget topped $50 billion.

The irony is that California did something in the intervening years to curb government's power to tax. Voters ignited the tax revolt in 1978 with Proposition 13, the property-tax-cut measure. Later, income taxes were indexed, and a constitutional amendment was passed to limit overall spending. But California's budget calamities of the past two years have exposed the soft underbelly of the tax revolt. Big-government forces has chipped away at tax-limitation devices. California's constitutional spending limitation has already been gutted. More than $15 billion in state tax increases have been passed in the last three years. And liberals have their gunsights on Proposition 13, particularly its twothird majority vote requirement for raising taxes.

Enter California Governor Pete Wilson and Proposition 165, the "Taxpayers Protection Act," which is on the November 3 ballot. Proposition 165 would cut welfare payments, require that legislators forfeit their salaries if they don't pass the budget on time, and grant the governor considerable powers to reduce spending in a "fiscal emergency." The measure has drawn the full ire of liberals--but many conservatives aren't thrilled with it either.

Conservatives' apprehension is due partly to the fact that the initiative, coming from a governor who was willing to raise taxes more than $7 billion last year to finance a steep rise in spending, doesn't go far enough to restrict government growth.

Proposition 165 would give the constitution's fiscal timetable new teeth. If the legislature didn't pass a budget by the July 1 deadline, the previous year's budget would remain in effect. The measure would also let the governor make spending cuts after a budget is adopted, by declaring a "fiscal emergency" whenever revenues fall short. These cuts would take effect automatically unless lawmakers passed alternative cuts (or tax hikes) within thirty days.

Right now, more than 80 per cent of the budget is dictated by entitlement requirements and other legal mandates, meaning the legislature and the governor are haggling only over the other 20 per cent. In 165, Wilson is saying, if the legislature won't act to untie this fiscal straitjacket by pruning spending mandates, give me the power to battle their effects.

Which sounds great--in theory. Trouble is, the spending control in Proposition 165 is dependent on the political willpower of the person in the governor's chair. Wilson himself hasn't always demonstrated the kind of resolve that would translate these new powers into real progress.

Still, many anti-tax activists acknowledge that the measure is a step forward, if only an incremental one. The very existence of these new powers to curb spending would act as new pressure on a governor to be riscally responsible. "Anything we can do to create an institutional incentive to cut spending creates the right kind of bias in government," says Lew Uhler of the National Tax Limitation Committee. Nevertheless, he's more involved this year in opposing a couple of tax-hike measures on the ballot; he'd have been happier if the governor had proposed a comprehensive tax and spendinglimitation initiative to fill in the gaps left by Proposition 13.

There is not much confidence among conservatives that Wilson, whose social liberalism has led him to talk about new "preventive government," would use the powers in normal economic circumstances.

Some tax activists are excited about the idea, however. The Howard Jarvis Taxpayers Association is a strong supporter. "Taxpayer groups  have to begin looking at the expenditure sides," says that group's Jonathon Coupal. "It is not enough to be 'onesong-Charlie' and simply say 'no new taxes, no new taxes.' We have to have effective spending controls..."

Meanwhile, the pro-life establishment is wary about the initiative's welfare cuts--specifically, the fact it wouldn't increase payments to mothers who bear additional children. The worry is that this would encourage abortions. "It sets a bad precendent for social policy for the state to say it will pay for an abortion, but not for an additional child," says Pete Henderson of the Capitol Resource Institute, a profamily think tank.

Other conservatives counter that subsidies are also an inappropriate way to curtail abortions; in fact, the estimated abortion rate was much lower before dependent-children subsidies became so pervasive.

Yet the pro-life movement's suspicions are understandable, if only because of the disturbing interest Governor Wilson has shown in Big Brotherish policies that would seem to border on eugenics--various means of state manipulation of population and demographics. He's a zealous proponent of public financing for abortion, and he has floated the idea of mandating the Norplant birth-control device for welfare morns. On a recent CNN Evans & Novak interview show the governor did little to quiet concerns by allowing a comparison between Proposition 165 and coercive population-control measures: the problem with China's policy is not that it's wrong to limit the size of the family, but that "it's probably unenforceable," he said.

If conservatives are lukewarm about Proposition 165, there's no ambivalence among liberals, who are led by Assembly Czars Willie Brown and David Roberti in fighting it. TV ads blast it as a "power grab" for Wilson. Brown calls it the "purse-snatching initiative," saying it will make Wilson a "dictator." Several newspapers have followed the Sacramento Bee editorial theme: "Say No to King Pete." This fury alone is enough to justify conservative support for the measure. No, Propositon 165 isn't the comprehensive tax and spending restriction that is ultimately needed, but the big spenders know a threat when they see one-and their hostility is about the most reliable sign that Proposition 165 is much more than a gimmick.