Acceptance Speech by David Cogdill

First and foremost, I’d like to thank my amazing family. My rock, my partner in life and love – my wife, Stephanie, could not be here today but in reality, she’s always with me in that special place in my heart she conquered and occupied more than 40 years ago. Members of my family and also several members of my exceptional staff are here today making this event all the more special.

I would like to thank Caroline Kennedy and the Kennedy Library Foundation for this recognition.

Only time will tell what’s said about California’s chronic budget problems and how four lawmakers did their best to lead the state they love during one of the most difficult times in its history.

Let me make it clear – I am, and always will be, a fiscal conservative.

Nowadays, many, if not all, Republicans run on a platform extolling the virtues of Ronald Reagan.

I share their admiration, and the truth is, he was a Republican, who as California governor, was forced by circumstances to raise taxes. But he wasn’t alone – all three Republican Governors over the last 50 years faced a similar dilemma and all of them had no choice but to approve tax increases as part of a budget compromise.

In fact, if you look at tax increases proportionally, Reagan’s tax hikes were the largest in history…and were permanent, not temporary.

Also, as a part of that budget deal, he signed the law initiating payroll income tax withholding. Something he pledged he would never do, his “feet were in concrete.” At the budget bill signing, he famously remarked, “the sound you hear is the cement cracking around my feet.”

Yes, often there is a big difference between political rhetoric and practical reality.

Almost two years ago, the proverbial edge of California’s fiscal cliff was within sight.

In October of 2008, state revenues dropped by a staggering $15 billion – or roughly 15% of the state’s total spending plan. This was on top of an existing $20+ billion deficit. No matter how we tried to pencil out the numbers, that single hit meant the state could no longer pay its bills without a workable budget compromise that would necessarily include unprecedented spending cuts, increased revenues and real reform.

To this day, no one has presented a realistic solution that could have closed that gap without those necessary components.

The state had stopped vital infrastructure projects – and was on the verge of putting the brakes on hundreds more – due to lack of cash. In short, we faced not only a budget crisis but a liquidity crisis.

The failure to address this situation would have exposed taxpayers to hundreds of millions of dollars in damages owed to contractors and meant putting thousands of Californians out of work at the worst possible time. The state, for the first time in its history, was also at risk of not paying its most essential bills by defaulting on bond payments. This would have resulted in a hidden tax increase by saddling taxpayers with higher costs of borrowing for decades.

We were on the brink of sending hardworking California families and businesses IOUs instead of tax refund checks.

You see, unlike the federal government, California can’t print its own money. And unlike local governments, the state is legally prohibited from declaring bankruptcy.

In fact, just before the budget was passed, California’s credit rating fell to the lowest of any state in the nation.

No one likes higher taxes, and most economists agree, the worst time to raise taxes is during an economic slowdown.

President Kennedy understood the relationship between tax cuts and economic growth. He proposed sweeping tax cuts, and said that, “Every dollar released from taxation that is spent or invested will help create a new job and a new salary.”

But we were forced to make a Sophie’s choice: close a record $42 billion deficit or allow the state’s fiscal disaster to continue to spiral into a catastrophe.

We chose the lesser of the two evils.

Don’t get me wrong, I agree that unchecked growth in spending contributed greatly to this mess.

That’s precisely why, as Republicans, we fought so strongly for a sensible and responsible spending limit and a rainy day fund. That’s also why we fought for “real” reductions in spending. As a result, for the first time in state history, California’s General Fund spending was less than the prior year.

This budget compromise was far from perfect – by definition, no compromise is. But it was better than no compromise at all.

Republicans are usually portrayed as the party of “no”…but this budget delivered on the permanent reforms that Republicans had sought for decades by:
• forcing government to live within its means,
• getting more Californians to work through economic stimulus, and
• giving schools the tools they need to direct more resources to the classroom.

Last year, divergent special interests spent millions to defeat the reforms we proposed, chief among them a spending limit and rainy day fund. As such, based on the decision of just 28% of the eligible voters who bothered to participate, the state missed an opportunity to stop the fiscal roller coaster and bring discipline and stability to our budget process.

But, alas, the state finds itself right back where it started from with another staggering $20 billion deficit, but without the same prospect for permanent reform.

I shudder at the thought of how much more grim the situation would be now without last year’s budget compromise.

Voting “yes” for this budget was, by far, the toughest decision I’ve made as an elected official and yes, it has had negative consequences for me personally and professionally.

And it’s been emotionally difficult for those I love and those who love me.

I’ve had Republican colleagues privately concede to me that last year’s budget compromise was, at the time, the only available solution to move the state forward.

Perhaps it was out of fear of retribution from the bloggers, talk radio hosts, and political activists, but they were unwilling to cast an “aye” vote.

As elected representatives of the people we must do what’s in the best interest of the people, not what’s best for us personally.

Today is somewhat bittersweet for me. I’m greatly appreciative of this honor, but I don’t think of myself as courageous.

I chose to serve the state where I was born and raised because I felt compelled to give back to the same state that gave me every opportunity to succeed.

My only hope is that future leaders will succeed in freeing California from the shackles of power-hungry special interests, on both sides of the political spectrum, who stop at nothing to protect and grow the power they wield.

Now that’s a profile in courage I look forward to hearing more about.

Remarks of Senator Dave Cogdill on accepting the 2010 Profile in Courage Award, May 24, 2010 -- As Prepared for Delivery