May 5, 2004 - From the June, 2003 issue

Republican Keith Richman On The Loneliness Of An Assembly Centrist

With the effort to recall Gov. Davis looking ever more likely to find its way to the ballot, the politics surrounding the passage of the state's budget have gotten increasingly heated. Partisanship appears to have commandeered negotiations for a resolution and a perfect political storm appears on the State's horizon. Sen. Jim Brulte (R-Rancho Cucamonga) has already threatened all Republican members of the Legislature that their political careers would be over should they vote for a tax increase to help bridge a record state deficit. In this interview with MIR, Assemblyman Keith Richman (R-Northridge) addresses what is needed to pass a responsible budget this year and why standing in the ideological center of the Legislature has become lonely and politically risky.


Assm. Keith Richman

Keith, a PPIC public opinion poll just released suggests that voters believe California is not only broke, but that our government is broken and unble to fiscally fashion a solution to our budget crisis. As one of the moderate Republican legislators still in the State Assembly, is that an overstatement? Is there grounds for concern about the capacity of the legislature and governor to grapple with the problems now facing the State?

No, I think it's a fairly accurate statement. The Legislature is dysfunctional. In fact, the government in California right now is dysfunctional. What's happened is that term limits-and I support term limits, I just think that they ought to be longer-in combination with the redistricting that we did a couple years ago that drew safe Republican lines and safe Democratic lines have resulted in serious problems.

When individuals are in the Legislature, commonly because of term limits, they're looking forward to their next race or their next seat. And, they recognize that the key race is going to be the primary. If you're a Democrat and you're going to be running in a Democratic district that is safe, you don't want to be outflanked on the left. If you're a Republican and you're going to be running in a safe Republican district, you don't want to be outflanked on the right. That results in this debate in Sacramento being driven by the extremes of both political parties.

Using the budget as an example, on the left you have the special interests saying no to spending reductions. On the right you have special interests saying no to tax increases. With a $30 billion deficit, it's difficult to solve the problem if both sides stick to their guns.

Does the ideological paralysis you refer to have a political fix? By way of historial precedent, on May 21, 1907 a small group of Teddy Roosevelt Republicans gathered in Levy's Café in Los Angeles to consider what measures to take to take control of the legislature back from the Southern Pacific Railroad. These founders of what became the Progressive movement put forth a platform that evening that changed the State's Constitution to permit the initiative, referendum, and recall. Is the climate present today to have a like group emerge to craft and fund a campaign to "give back control of state goverment to the people."

I think it could. The special interests on both sides of the aisle have undue influence and are placing tremendous pressure on legislators. That's been shown recently on both sides of the aisle.

What would be the elements of a campaign platform? What reforms would help right the ship and give representative government in California a chance to go forward for the next 25 to 100 years?

I would support an open primary. That would bring more centrist representatives to districts. If we could, I would undo the redistricting that we mistakenly did a couple years ago. That isn't going to happen, but the lines need to be redrawn in a more apolitical manner next time. It's important that we establish much more legislative oversight of the executive branch, putting in place a regular review of the various departments and agencies in the state government to determine their effectiveness.

In our sister publication The Planning Report, Fred Keeley comments both on the volatility of the present state revenue picture, with its dependence on the personal income tax, and on the unintended consequences of Prop. 13, which really destroyed the notion of separation of sources and uses by having the property tax collected locally but allocated by the Legislature. Should structural fiscal reforms be in such a package of reforms if we're to right the ship of state?

Let me just comment first about the volatility. The extreme volatility that existed three years ago was really out of the norm. If you look at our state tax revenues over time, they routinely were not as volatile as they were in the year 2000. What happened in the year 2000 was a result of the run-up in the stock market and extraordinary capital gains tax receipts coming into the state of California. At that time, the state took in about $18 billion of tax receipts based upon capital gains. This year, we'll take in about $4 billion. But that volatility is really the exception. It didn't happen before and it is unlikely to happen in the near or medium term future.

We certainly do need to make sure that our tax revenues are stable. There are other fundamental reforms that need to be put in place. There needs to be a mandated reserve in the state budget that would be five-percent. I support a spending cap that's adjusted to population and inflation growth and think that we ought to budget conservatively and at 95-percent of revenues.

As far as changing Proposition 13, there's no question that Proposition 13 has protected homeowners. There is discussion on whether a split role would be beneficial. But, I would be very concerned about the impact a split role would have on business and would not support it at this time. Businesses are leaving California on a regular basis and we already have a very difficult environment in which to do business.

There is a growing concern that the most powerful interest groups in Sacramento are disconnected from the private economy. On the left are teachers, trial lawyers and gambling interests and on the right an emerging anti government/libertarian dogmatism . Is the private sector center disproportionally underrepresented? How would you re-engage them in state politics and the formation of public policy?

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Again, the open primary would help. It's also important that the business community and those who are generating private sector jobs pay close attention to how their representatives are voting. On a daily basis in Sacramento, legislation is being passed that kills jobs. Here in Los Angeles County, we have fewer jobs now than we did in 1990. We have higher rates of poverty and lower per capita income-that's a society going in the wrong direction. If we're going to be able to invest in healthcare and education and infrastructure, then we need to have a vibrant economy, one that is gaining new middle class jobs where people can then pay taxes so we can make those needed investments. I'm very concerned about the business environment in California.

How many of your colleagues in the Assembly are likewise concerned?

Well, it's clear that the liberal Democrats in the Legislature do not understand the impact of the legislation that they're passing on business and commerce. Whether we talk about workers compensation premiums, unemployment insurance, burdensome regulation, the inability to have a flexible 40-hour workweek or high energy costs-all of those are impacting business in a negative way. But, even last week, numerous pieces of legislation were passed out of each house that will make it more difficult for businesses to do business in California.

Returning to the fiscal issues which challenge the state, first the Constitutional Revision Commission, then Speaker Villaraigosa's Commission on State Local Government Finance, and finally Speaker Hertzberg's Commission on Regions expressed concern that local governments are too dependant on state allocations of property tax, sales tax, and have too little discretionary resources to themselves shape an infrastructure plan of investment necessary to accommodate the anticipated growth in the state's population. Is there not a need to mitigate Prop 13's uninteded effects-unrelated to the property tax cap-to revert the allocation of property tax revenues to local government?

Well, it is important to restructure that. There's no question that decisions in local government have been based upon fiscal decisions primarily relating to the sales tax. That does need to change. But, it needs to done in a careful and thoughtful manner in which cities and counties will not be harmed in the short term and will have time to make decisions for the long term.

Changing focus, what's life as a moderate Republican like in the Capitol?

On many occasions, it's lonely. I think that there are other moderates in the caucus, but again, the pressures are brought to bear by various special interests to keep people in line. So as long as people are overly concerned about their next race in this term-limited era, then it's going to be difficult.

We do this interview a few days before the official deadline for the budget. Give us your view of what's likely to happen over the next three to six months with respect to the budget. What can we expect?

First, it's critical that we pass a budget on time, although that is very unlikely. The budget should not only be balanced, but it should address the long-term structural imbalance between revenues and expenditures. The budget should include fiscal reforms, such as a reserve, a spending cap and also include an economic stimulus package that tackles workers compensation, liability reform, flexibility on the forty hour work week, implementing the manufactures investment credit on a permanent basis and reducing energy costs.

I am concerned that the most likely scenario will be the passage of a budget that simply pushes the problems into next year. It's possible that by borrowing the money and rolling over the debt, we could pass a budget that gets us through this year but does not answer any of the fundamental problems that California faces. That to me would be fiscally irresponsible. If we're going to be fiscally responsible, we should not only balance the budget, but we should make sure that we address the structural imbalances and implement both fiscal and economic reforms.

And how long will it take to pass this budget, responsible or irresponsible?

If it's an irresponsible one-year budget to get out of town, it might be passed in a few weeks. If a budget is not passed soon, before the signatures are gathered for the recall, then there may be significant delay in passing the budget. That would be a fiscal catastrophe. If we don't pass a budget on time, local governments and school districts will not be able to plan and Wall Street will have even less confidence than they do now in the leadership of California.

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