Californians overwhelmingly approved a plan to borrow a record $15 billion to bail out the state budget, handing Gov. Arnold Schwarzenegger a crucial victory Tuesday in his bid to turn around the world’s sixth-largest economy.
A companion measure that would require a balanced budget also easily passed. Both measures had to be approved for either to take effect.
With 28 percent of precincts reporting, Schwarzenegger’s borrowing plan — Proposition 57 — was favored by 61 percent of voters. The companion measure — Proposition 58 — had 71 percent.
Schwarzenegger used his celebrity and political capital to build support for the bond measure, the centerpiece of his plan to solve the state’s financial woes without what he warned would be “Armageddon” budget cuts or higher taxes.
$10 million for ad blitz
Barely a third of likely voters supported Schwarzenegger’s borrowing plan a month ago, but the former actor and bodybuilder used his enormous clout with voters to get the measure passed. He barnstormed the state in support of the measure and helped raise $10 million for an advertising blitz that flooded the airwaves.
It is only the second time in modern California political history that voters eventually approved a ballot measure which trailed in early polls. “We are talking political steroids,” said Jack Pitney, a government professor at Claremont McKenna College. “He can claim credit for turning around public opinion.”
The success of Proposition 57 was seen as the biggest test yet of Schwarzenegger’s influence with the voters who swept him into office in a recall election just five months ago.
The measure also was closely watched by Wall Street because California is a major player in the municipal bond market. California has the lowest debt rating of any state, and some feared that a defeat could have sent the state’s economy into deeper disarray.
Schwarzenegger voted Tuesday morning in a recreation center near his Brentwood home. “It is very important for people to support this because it will save the state and it will get us back on track to fiscal recovery,” he said.
Last week, the movie star-turned-governor held a rally at Universal Studios with actor Rob Lowe and threw T-shirts to supporters. On Monday, he went to Jay Leno’s “The Tonight Show” to tout the bond measure alongside the man he ousted — former Democratic Gov. Gray Davis.
New leverage
Schwarzenegger’s reward, political observers say, is new leverage with lawmakers. The governor will have the advantage in pending negotiations over everything from how to trim public health costs to reforming the workers’ compensation system.
Still, some pundits warned against overstating the mandate Schwarzenegger may take from the results.
The governor’s campaign did not face any significant opposition, and some argue that the turnaround at the polls came only after support from key Democrats, including Sen. Dianne Feinstein.
Two other issues were on the ballot Tuesday.
Proposition 56, which would have made it easier for the Legislature to raise taxes, was soundly defeated by a margin of 63 percent to 37 percent. The proposal would have lowered to 55 percent the support needed in the Legislature to pass a budget. Currently, budgets need at least two-thirds support.
Proposition 55, which would sell $12.3 billion in bonds to pay for new and improved schools, was too close to call.
The deficit bond and school bond issues would raise California’s long-term debt to about $59 billion and earmark more than 6 percent of the state’s annual budget for interest payments.