For Californians accustomed to cozy treatment from Sacramento, that’s a splash of very cold water. Republican Gov. Pete Wilson, facing an $11 billion deficit, wants draconian spending cuts: 10 percent in education, as much as 25 percent in welfare programs, substantial reductions in payments to California’s counties. Democratic lawmakers adamantly resist. “If we balance the budget Wilson’s way, some of our most important social programs will simply cease to exist,” argues an aide to Assembly Speaker Willie Brown. “Typical tax-and-spend liberal claptrap,” responds a Wilson spokesman. “Tough cuts are necessary to get our fiscal house in order.” Compromise seems as elusive as a glimpse of the San Gabriel Mountains on a smoggy day in Los Angeles. “This could drag on to November,” predicts an aide to state Treasurer Kathleen Brown.
So far, few Californians have suffered from the stalemate. State employees have been paid in I.O.U.s, but if banks don’t honor them, workers will be squeezed. Nursing homes and hospitals are protected by federal court orders directing Sacramento to maintain payments through Aug. 15. But what happens after that? Companies doing business with state institutions could be hurt. “Two thirds of our revenue comes from the state,” says the director of an L.A. nursing home. “Cut that off, and it will be hard to maintain our services, or even pay our bills.”
The prospect of economic collapse will, sooner or later, force a compromise. Unfortunately, that’s when the real hardship begins. Wilson’s worse-than-no-frills proposals would reduce government salaries by 5 percent across the board. His plan to lop $2 billion from secondary education (about 40 percent of the state budget goes to schools) will compound already serious problems. California’s classrooms are among the most crowded and underfunded in the nation. L.A. teachers, facing a 14 percent pay cut, have threatened to strike when school opens this fall; last week state Controller Gray Davis warned that further economies would drive as many as 200 of California’s 1,017 school districts into insolvency.
Every day brings more bad news. A Dun & Bradstreet survey last week found that California businesses are going under at a record rate. Bankruptcies rose by nearly 50 percent during the first half of 1992, compared with 17 percent nationwide. The Federal Reserve reported that California’s economy was weakest of all the Western states, hampered by stagnant growth, defense-industry layoffs and a commercial-real-estate bust. Home prices accelerated their three-year slide, even as the housing market recovered else where in the country.
Californians have taken their misfortunes in stride, often with a zany good humor. One Los Angeles homeowner, frustrated at not being able to sell his house, last week built a flagpole-and said he would climb up and not come down until somebody bought his property. Not long ago, Californians overwhelmingly rated their state as one of the nation’s “best places” to live. These days, says a new poll, fewer than one in three thinks so.
