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“I Never Knew It Could Be Like This”  Lessons from the 1980s for California’s Budget Crisis

Author:  Daniel J.B. Mitchell.

Source: Volume 29, Number 04, Winter 2009 , pp.101-124(24)

Municipal Finance Journal

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Arnold Schwarzenegger is not the first governor to take office in a state budget crisis, preside over a budget improvement, and then find himself in another fiscal crisis. George Deukmejian, first elected in 1982, met a similar fate. Both Schwarzenegger and Deukmejian had to operate in the post-Proposition 13 era. By drastically cutting local property taxes, Prop 13 transferred major burdens of local government--especially schools--the state. Both governors had to deal with a state budget that was balanced only in good times but not over the cycle. In addition to the problems faced by Deukmejian, Schwarzenegger has had to deal with the consequences of voter initiatives earmarking school finance and imposing term limits on the legislature. California’ 2008 budget crisis is not a surprise. It is in many ways a repeat of the Deukmejian era.

Keywords: Proposition 4

Affiliations:  1: UCLA Anderson School of Management.

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