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A Project of The Annenberg Public Policy Center

Whitman Ad Misfires

A Meg Whitman ad falsely accuses her opponent in the California GOP gubernatorial primary of presiding over a spending increase of nearly 14 percent in the department he headed as state insurance commissioner. The true increase is half that.

The smackdown between Whitman and Steve Poizner has tightened up in the weeks since we found big factual problems in one of Poizner’s ads last month. Both candidates are straining to cast themselves as "real" Republicans and to label the other as a RINO – Republican in Name Only — as the June 8 balloting approaches.

This Whitman ad claims: "During the fiscal crisis, Poizner increased his department’s spending nearly 14 percent." But that’s not so. The Whitman campaign’s back-up for the ad shows that it chose the wrong period on which to base its calculation. It began with the 2005-2006 state fiscal year, but Poizner didn’t take office until Jan. 8, 2007. California’s fiscal year starts July 1. So the first full budget year for which Poizner was responsible was 2007-2008. The 2006-2007 fiscal year, then, should be the baseline for comparison. In addition, Whitman’s campaign conveniently leaves out the current budget year, 2009-2010, in which the department’s spending is estimated to be lower than the previous year’s.

Our calculations, correcting for these two Whitman errors, start with $197.8 million, which was the Insurance Department’s 2006-2007 actual spending. We compare that to the current 2009-2010 estimated budget of $211.1 million. The increase is 6.7 percent, less than half what the ad claims, and just a bit more than the increase in the Consumer Price Index over that time period. It’s true that the department’s spending spiked higher between those two years, while Poizner waited for the results of an outside review he’d ordered to find savings. In 2008-2009 the department spent $216.4 million. But even that is only a 9.4 percent increase over the last full fiscal year before Poizner took full control of budgeting, still well short of what Whitman’s ad claims.

The dip in spending for the current year reflects implementation of some of the cuts suggested by the outside team, Poizner has said. At the same time, though, Poizner can’t take credit for all the reductions. As he noted in his strategic plan for 2010, Gov. Arnold Schwarzenegger used his line-item veto  in 2009 to cut $22.3 million from the current year’s budget. The $211.1 million figure includes those cuts, we were told by a spokesman at the state’s Department of Finance.

It bears mentioning that in any case, the Insurance Department isn’t funded with taxpayer money. Its budget comes from fees on insurance companies.

The Whitman ad’s next claim is more on the mark. "Poizner tried to weaken Prop 13 and raise your property taxes," the narrator says, referring to the 1978 ballot initiative passed by California voters that limits increases in property taxes. In fact, a decade ago, Poizner gave nearly $200,000 to help pass another ballot initiative, Proposition 39, which lowered the vote threshold – previously two-thirds, cut to 55 percent – for passing school construction bonds. A review by the Sacramento Bee found that since Prop 39 passed, $23 million in school bonds have been approved by a vote of less than two-thirds. Those bonds almost invariably bring property tax increases.

Poizner said in March that he supported Prop 39 because of its provisions benefiting charter schools, but he now claims to have re-thought the issue and says he’d fight the initiative if he had it to do over again.

Footnote: The ad further claims that Poizner went on a "shopping spree," spending $1.7 million to buy new cars for the Department of Insurance. But according to the Sacramento Bee, the amount is actually higher, $2.2 million. A bit of context, though: The Bee also reported that other departments spent nearly $130 million in 2008 and 2009 before the governor ordered fleets reduced to economize.