Joel Fox spent years battling the state establishment as president of the Howard Jarvis Taxpayers Association. Now he’s battling many of those same players, this time on behalf of Gov. Arnold Schwarzenegger. Fox is co-chairman of Citizens to Save California, the group established to raise funds and campaign for the slate of initiatives the governor is backing for a possible special election this fall. But a counterattack has been launched by public employee unions and Democrats in the state Legislature. Already abandoned by Schwarzenegger are the pension and teachers’ pay initiatives. Meanwhile, Citizens to Save California has raised $11 million towards its goal of $50 million.
Question: How did you become an adviser to the governor?
Answer:
I first did some informal consulting on state tax policy for Schwarzenegger three years ago when he was trying to pass Proposition 49, the after-school programs initiative. Then, in July of 2003, I got a call from (Schwarzenegger campaign adviser) George Gorton asking me if I would like to join the Schwarzenegger gubernatorial effort. But then I was told that the campaign was on life-support because Schwarzenegger was leaning toward not running.
Q: So what happened next?
A:
Peter Ueberroth’s folks called and asked me if I would like to join their team. I told them my first commitment was to Arnold. I was actually sitting in (Ueberroth’s) office in Newport Beach when Schwarzenegger surprised everyone on the Jay Leno show and announced he was running. Peter then asked me to leave the room I was already considered part of a rival campaign. The next thing I knew I was senior policy consultant to Schwarzenegger.
Q: What was the campaign like?
A:
It was the strangest and most amazing campaign I had ever been a part of. With all the court rulings and uncertainty, you never really knew if the election was on, on-hold or off completely. My highlight came early on. I was attending a President Bush event in Orange County when Warren Buffett made his comments (about having to change) Proposition 13. All the press at the Bush event then immediately turned to me because of my long connection with Proposition 13 and demanded a response. I hurriedly got on the phone to Schwarzenegger’s folks and said, “We need to do something here.” That’s when he told the press that he had ordered Buffett to do 500 push-ups.
Q: Well, what about Proposition 13? Is it time for the initiative to be scrapped or tinkered with?
A:
Proposition 13 is not ruining the state’s finances or the state economy. The only thing I would change is some of what the Legislature did after Proposition 13 passed namely taking some tax collection power away from the local governments and pushing it up to Sacramento. I want to see some of that power restored to local governments. That can be done with an initiative statute without amending the constitution.
Q: So the proposition has not ruined state finances?
A:
Absolutely not. In fact, since Proposition 13 went into effect 27 years ago, state property tax revenues have been the most stable income stream for state and local governments, growing an average of 7 percent per year. That’s above the rate of inflation and population growth. If that doesn’t provide enough money for governments, it’s because their priorities are wrong, not because we’ve choked off the money.
Q: What about removing Proposition 13 protections from commercial property owners in cases where 50 percent of the ownership changes hands?
A:
I’m opposed to this split-roll proposal. Commercial property does not change hands at a slower rate than residential properties and in fact makes up two-thirds of overall property taxes.
Q: Back to Schwarzenegger. After he got elected, what was your role?
A:
I was put in charge of getting a campaign together to put a workers’ compensation reform initiative on the ballot.
Q: What was that campaign like?
A:
There were three initiatives seeking to reform workers’ comp: ours and two others. The governor wanted only one initiative, so I had extensive talks with the authors of the other two. It was touch-and-go, but we finally settled on one measure and started gathering signatures. Three days before the deadline to submit signatures, the Legislature came up with a reform package.
Q: There’s been criticism of the workers’ comp deal. Permanently injured workers are complaining their benefits have been decimated and employers are growing impatient waiting for significant cuts in their premiums.
A:
It’s a good package. Yes, there might be some need to re-examine the implementing guidelines on the injured worker benefits, but most of the complaining you’re hearing is actually coming from the plaintiffs’ attorneys, who stand to lose from these reforms. As for the insurers, I was very pleased to read recently that one insurer has instituted a 40 percent rate cut. I expect more double-digit cuts are coming.
Q: How did you first get started working for Howard Jarvis?
A:
A friend I knew from college told me of an opening in the Howard Jarvis organization for a travel aide to accompany Howard on his nationwide speaking and book tour. At the time, I was looking for something that combined my interests in writing and public policy, so I figured I’d try this for a year or so. Of course, that turned out to be 20 years, the last 12 as president.
Q: What was Howard Jarvis like?
A:
He had this very gruff personality on camera, displaying a bulldog determination. But off-camera, he was a very easy-going person, very eager to listen.
Q: Do you think Californians still pay too much in taxes?
A:
Income taxes are too high and so are sales taxes. Property taxes are only slightly above the national average thanks to Proposition 13. So I’d say we pay slightly more than we should in taxes but it’s in the tolerable range.
Q: So why has the governor backed off on two initiatives?
A:
On the pension reform initiative, it all came down to the title and summary drafted by Attorney General Bill Lockyer. Those titles and summaries are always, always political. In this case, Lockyer said the disability and death benefits of police officers and firefighters would be impacted. Of course that’s nonsense. We never intended that to happen. I was prepared to take Lockyer to court after the initiative had qualified for the ballot and I believe I would have won. But the politics of the situation spun out of control.
Q: And merit pay for teachers?
A:
That, too, is being modified. We dropped it from consideration for a special election because it can’t be filed again in time.
Q: There’s a lot of criticism that this is a campaign being run by and for the interests of business and other Schwarzenegger contributors.
A:
Look, we’re trying to change the status quo. Those who are contributing to this effort want to see a better economy in California. A better economy will benefit not just business, but residents and ultimately the fiscal condition of the state and local governments.
Q: So what’s the appropriate response?
A:
The response has to be to link this to taxes. We’ve reached the end of the road in our ability to sustain our current level of government without raising taxes. Either we make reforms or people are going to have to pay higher taxes. Once they realize that, the average citizen will jump on board.
Q: Why isn’t the governor getting this message out?
A:
He’s starting to link this to taxes. But it hasn’t been fast enough. We’re running the risk of having our opponents define us. There’s still time however a lot of time to bounce back.
Q: Whom did you support for mayor?
A:
I supported Bob Hertzberg. When he didn’t make the runoff, I decided not to actively support anyone.
