Steinberg's Game Of Chicken

We figured that when Darrell Steinberg assumed the leadership post in the Senate, there would be less accommodation and more risk-taking from the Democratic caucus. Well, this potential deal floated in today's LA Times would certainly fit that description.

State lawmakers began moving toward a deal this week to close California's deficit with the help of steeper car fees that would cost many drivers hundreds of dollars annually, according to people involved in budget talks.

Under the plan, GOP lawmakers -- most of whom have signed anti-tax pledges -- would vote to triple the vehicle license fee that owners pay when they register their cars every year in exchange for a ballot measure that would impose rigid limits on future state spending. Motorists' annual license fees would rise from 0.65% of the value of their vehicles to 2%. For a car or truck valued at $25,000, the increase would be $336.

The higher fees would generate $6 billion annually, helping to fill a budget gap that is projected to reach nearly $28 billion over the next year and a half.

The proposal is being championed by incoming state Senate leader Darrell Steinberg (D-Sacramento). Democrats and advocates for the poor have opposed strict state spending limits, saying they would cripple government services.

Steinberg may be gambling that voters would reject the limits, as they have in the past.

This would be a simple restoration of the VLF to the levels put in place by Pete Wilson (yes, Wilson; the increase, which was meant to occur during poor economic times, only triggered under Gray Davis). It is not a progressive version or a "feebate," and it does not increase for higher emission-producing cars and trucks. So it's not the best way to restore the VLF, in my view.

And the exchange, a ballot measure to restrict state spending, is a long-sought Yacht Party agenda item. I'm guessing it would be substantially similar to the version voted down in 2005. A spending cap is simply a way to ratchet down government and eliminate needed services which the public has said time and again they not only want, but are willing to pay for.

I understand Steinberg's reasoning on two levels:

(1) It's probably correct that Democrats and unions would fight like hell to stop a ballot measure with a spending cap. These are tough economic times, however, and they're projected to continue in the near future, so cutting spending may look more attractive to voters.

(2) This would be a stake through the heart of Yacht Party rhetoric about taxes. You can see the effect of what this would do by just listening to talk radio:

Prospects for the plan, however, immediately began to dim after details were published on the Los Angeles Times website. Angry phone calls from constituents, advocacy groups and talk radio hosts prompted lawmakers to publicly distance themselves from the proposal.

I mean, this came out on the same day when Senate leader Dave Cogdill wrote an op-ed entitled Cut, Don't Tax. And Arnold Schwarzenegger made cutting the VLF the signature piece of policy in his platform in the 2003 recall election. For him to reverse it just 5 years later would be humiliating.

Ultimately, Republicans are probably too spineless to agree to this - they'd fear primary elections in 2010, although directly after an election would probably be the best time to pull this off, with the most distance between now and the next election. But Democrats should think hard about this as well. Is it really worth having to fight a ballot measure that would cripple the state? It may well be, especially considering there's probably no other way to raise needed revenue.

It's quite a gamble.