One more budget workaround has collapsed in the face of reality.  This time it is the proposed sale of the state compensation fund.

Last summer, the governor convinced state lawmakers that he could raise $1 billion by getting investors to buy some of the business of the century-old State Compensation Insurance Fund.

That idea was one of a handful of creative solutions and accounting maneuvers concocted to balance the $90-billion, recession-wracked spending plan, at least on paper. But the planned sale of part of the State Fund was tied up in court after California Insurance Commissioner Steve Poizner filed a lawsuit contending that a sale could weaken the insurer, raise premiums for thousands of employers and damage an already weak state economy.

“State Fund was set up in the California Constitution for the sole purpose of supporting the workers’ compensation system,” Poizner said. “It’s not there for the purpose of taking out money.” (LAT)

It is interesting to see Poizner bring down one of these gimmicks, but in a way it makes sense.  He is going around demanding accountability and lusting for cuts.  Whereas Arnold is at least nominally begging the feds to save welfare, Poizner would be pretty enthused to really get a chance to take down all aspects of the social safety net.

As Robert pointed out yesterday, this year saw a significant blow to the safety net and the California Dream. Next year brings more challenges, if we do this right, we don’t have to make next year a continuation of this year.