Arnold has tried to promote a 10% across the board budget cut as the cornerstone of his plan to address the $14 billion deficit – but as Judy Lin noted in a recent SacBee article, he cannot do that:

But while such efforts have been talked about in the past, budget experts say straight reductions are impossible in a world filled with legal, financial and political obstacles.

“Can he get across-the-board cuts comprehensively? No,” said Jean Ross, executive director of the California Budget Project, a nonpartisan group that advocates for poor and middle-class families. Not only does the state have to comply with various laws and court orders, it has debts to pay, paychecks to deliver, and everything from schools to prisons to maintain.

“I could go on and on and on,” Ross added.

The Schwarzenegger administration has pledged to spread cuts in a way that “no department shoulders a disproportionate share,” said finance spokesman H.D. Palmer.

Yet the governor’s aversion to taxes has left him little choice but to make cuts that are certain to attract political resistance on multiple fronts, from Democrats who control the Legislature to powerful interest groups such as the teachers and the prison officers union.

So what IS likely to face cuts when Arnold’s proposals are released next week? Education and health care.

A 10% cut to education budgets would require suspension of Prop 98, and would have a devastating effect on schools in the middle of the school year. Here I disagree with Judy Lin, the author of the SacBee article, who claims that the cuts to education would affect things like school buses and field trips – a 10% cut WILL mean cuts in classes and layoffs of teachers. There’s not that much flexibility in the budgets of most K-12 districts, certainly not in higher ed.

As to health care, Hanh Quach of Health Access California explains what a 10% cut would mean:

• A 10% cut in Medi-Cal eligibility would mean denying coverage to 680,000 of the 6.8 million Californians on Medi-Cal–largely low-income children, parents, seniors, and people with disabilities.

• A 10% cut in reimbursement rates in Medi-Cal would be hard, given that Medi-Cal has one of the lowest rates in the nation already (it’s one of the things we are trying to fix with health care reform).

• A 10% cut in benefits would mean having to deny millions of people key services. In the previous budget crises, proposals called for denying coverage for a range of benefits in Medi-Cal, including coverage for prosthetic limbs, medical equipment like asthma inhalers and diabetic test strips, and durable medical equipment like wheelchairs.

Given the likelihood of cuts being disproportionately visited on health and education, things that Californians have repeatedly demonstrated their support for protecting, it seems that Democrats have a strong opening to contest Arnold’s entire approach to the budget.

More importantly, Arnold is trying to reopen the current budget. Whereas in the summer Democrats were under pressure to get a budget done and ensure that schools and health care got the funding they needed, there is no such pressure now. Democrats can delay until July if they like and these vital public services and the Californians who depend on them will be spared. Dems are in the driver’s seat here, as long as they resist the temptation to agree to dramatic cuts so as to not jeopardize Prop 93’s chances.

What this also makes clearer is that spending cuts are not the answer – we MUST seek a revenue solution to this ongoing budget problem.

California is dragging down the rest of the country with its job performance statistics:

California gained just 900 payroll jobs last month, the state said Friday, a lackluster showing that reflects a national slowdown attributed in part to the housing slump.

The slight gain followed a revised loss of 13,500 jobs in October, the Employment Development Department said.

The slowing job market combined with declines in taxable sales and falling home prices “paint a picture of an economy that is slowing sharply,” said Stephen Levy, senior economist at the Center for Continuing Study of the California Economy

In California, a little more than 1 million people were looking for work last month, an increase of 16,000 from October and up 186,000 compared to the year-ago period.

The state’s unemployment rate was unchanged from October at 5.6 percent. It was 4.7 percent in November 2006.

Significantly, it’s the rising cost of living that is playing a part in sinking the state.  With people unable to fall back on their home equity for cash, they slash spending, and nobody’s buying any homes, which leads to declines in the construction industry.

So don’t expect payroll taxes to somehow save us from our budget woes.  And don’t expect the magic 10% across-the-board cut fix to work, either.  First of all, it’s unconstitutional.  And that’s just part of the problem.

“Can he get across-the-board cuts comprehensively? No,” said Jean Ross, executive director of the California Budget Project, a nonpartisan group that advocates for poor and middle-class families. Not only does the state have to comply with various laws and court orders, it has debts to pay, paychecks to deliver, and everything from schools to prisons to maintain.

“I could go on and on and on,” Ross added.

And this is where the recession meets up with the proposed health care reform.  Before such a program would kick in, you’re looking at a governor who may attempt to throw the health care system into more chaos than it’s in now, because it’s one of the only areas where he isn’t legally constrained against cutting:

“I think some people think that 10 percent may sound fair and it’s not that much, until you recognize what that means on a human level,” said Anthony Wright, executive director of Health Access, a statewide health care consumer advocacy coalition.

Wright said a 10 percent cut in the state’s health insurance program for the poor means 680,000 of 6.8 million recipients could be left without coverage.

If people aren’t denied coverage, Wright said the governor could slash benefits dramatically so that patients can’t get wheelchairs, prosthetic limbs or asthma inhalers.

Whether ABx 1 1 would restore all this public money or not (and the price tag is low if they think it will), the amplification of costs from two years of a lack of even the most basic care for the poor would be enormous.  Yet the Governor will claim on one day that our health care problems are solved, while on the next day slashing budgets so that they end up even worse.  This is his modus operandi, and you can’t trust someone with this track record.

Gov. Arnold Schwarzenegger won re-election in 2006 by selling himself as a problem solver who boosted California’s economy and resolved the state’s budget problems, all without new taxes.

The Republican governor declared in January that “through discipline and through new revenues that come from economic growth, we reduced the deficit over time and got our fiscal house in order.”

But less than a year into his second term, the narrative has run dry […]

“I think the problems were deeper and more structural than the governor realized when he was first elected,” said Jean Ross, executive director of the California Budget Project, which advocates for poor and middle-class families.

“There is a fundamental imbalance between revenues and expenditures,” Ross added. “Many budgets that were signed into law, including those signed by the current governor, made the problems worse, not better.”

Remember the 2004 “Performance Review,” which we were told was all that was needed to fix the budget problems (“Open up the books!  Then we’ll see the numbers!”)  Practically nothing that came out of that review was put into law.  Everything this Governor has ever said has been hype, as he plowed ahead with the same wrongheaded conservative solutions of passing off crises to future generations.

That’s why, given the fact of watching this guy operate over 4 years, it’s nearly impossible to give him the benefit of the doubt on anything.

Here's some interesting stuff:

• Hillary's lead is shrinking! Oh my goodness, the newspapers and horse race crowd will have something to cover! Yay, can we hear some more incessant blather about how people are “connecting emotionally” or whatever.  Wouldn't it be nice to hear about policy for once? But, I suppose it's not to be. Anyway, the Field Poll for the presidentials(PDF) came out today. Hillary leads Obama by only 14 these days. However it seems much of this has to do with the famous “momentum” drawn from Iowa. Ah, fun compressed primary schedule. Oh, and if you are a CapitoAlert subscriber (and why wouldn't you be, now that it's free?) you can get the cross tabs.  Interestingly, Clinton's lead is strongest amongst 18-29 year olds.

  By the way, pretty much any Democrat trounces the GOP field in California.

• Even the Wall Street Journal (it's behind a paywall) is talking about the need to raise revenue in California. But, as Assembly Minority Leader Mike Villines says oh so frequently, taxes will not be raised on his watch. So, Arnold has another great idea: flush our money down the toilet that are P3s:
  • “Mr. Schwarzenegger and his advisers say the real problem is that the way the state's budget is devised needs to be changed. One suggestion: more public-private partnerships for infrastructure projects to lessen the state's financial load.

    “What we have to do is fix the budget system,” Mr. Schwarzenegger said in a speech Friday in Long Beach. “The system itself needs to be fixed, and I think this is a good year, this coming year, to fix it.””

• Duncan Hunter has lost once again on opening Santa Rosa Island to hunting. The Congressman and Presidential Candidate (haha) tries this pretty much every year, and has not yet found a way to get 'er done.  The Park Service is trying to get rid of the invasive deer and elk, and Hunter wants to let them be hunted by disabled veterans(?). Lois Capps, whose district includes the island, opposes Hunter's persistant attempts every time.
• [update by Julia] Speaking of the presidential race, the Drum Major Institute in partnership with The Nation has a new project caled Mayor TV.  The goal is to try and get the candidates talking about issues facing our major cities.  Here is Mayor Villariagosa's video, and yes he does flack for Hillary at the end.

By Dave Johnson, Speak Out California

Our ongoing Speak Out California series on the California budget is interrupted by an “emergency.”  With California state budget deficit projections rising from $10 billion to $14 billion the Governor plans to declare a budget “emergency,” saying he might propose “slashing” the state’s budget by 10% “across the board.”

But doesn’t a budget involve spending and revenues?  Why is the Governor tying one hand behind our backs?  Why is the Governor only proposing that the people who are in a position to really need our government’s help be the ones who must sacrifice in this “emergency?”

I’ll begin with some background for those readers who don’t spend their days scouring California budget news.  According to Saturday’s San Jose Mercury News story, Fiscal emergency for California,

Facing a projected $14 billion budget deficit, Gov. Arnold Schwarzenegger on Friday said he will declare a fiscal emergency, which will allow the governor and lawmakers to cut spending more quickly and also sets the stage for slashing state services and programs – perhaps by as much as 10 percent.

Who will be most affected by these cuts? The rich? The powerful?  What do you think the odds of that are?  According to the San Jose Mercury News story,

Much of California’s general fund budget, which totals $102 billion for the 2007-08 fiscal year that began July 1, is designated for education, transportation and other uses. Therefore, cuts often fall disproportionately on social services and the poor, elderly and disabled residents who rely on them.

But in an “emergency” why would the Governor make a pre-emptive announcement that takes half of the state’s budget options off the table?  A budget consists of spending and revenues.  Yet the Governor proposes to solve the problem entirely by cutting government services like education, social services and law enforcement, and is not even discussing raising taxes.  Shouldn’t half of the solutions toolkit warrant half of the discussion?

This one-sided debate on budget priorities is gaining attention.  A Dec. 9 Los Angeles Times op-ed, Why won’t The Times talk tax hikes?, by Robert Cruickshank, a political science teacher, addressed this unbalanced approach, writing, “There are ways for the governor to balance the budget without cutting spending.”  Questioning a one-sided approach to solving budget problems, he continued,

Here’s the problem. The politics of the budget crisis are in large part shaped by media coverage. When the state’s largest and most influential paper focuses on spending — while largely ignoring the revenue side — in budget articles, it implies that the solution to the budget crisis is slashing spending rather than raising taxes. That’s not balanced journalism.

Citing several pieces that discussed cutting spending but not raising taxes, Cruickshank wrote,

To its credit, The Times, in a Nov. 9 editorial titled “Red-ink realism,” correctly noted that Schwarzenegger is partly to blame for the budget mess by lowering the vehicle-license fee. But rather than call for tax increases — or even just a study of possible new sources of revenue — to pay for locked-in or new spending, the editorial offered up the bromide that California needs bold, courageous leadership to solve the budget problem.

This debate is not just happening in California.  A recent New York Times op-ed by Robert Frank, Reshaping the Debate on Raising Taxes, addressed how a reluctance to discuss taxes affects the country.  Frank wrote,

POWERFUL anti-tax rhetoric has made legislators at every level of government afraid to talk publicly about a need to raise taxes. The constituents of the few who dare speak are typically bombarded with attack ads that go something like this: “It’s your money, but your esteemed senator thinks the bureaucrats in Washington know how to spend it more wisely than you do.”

Because of our inability to talk sensibly about taxes, the United States has been sliding toward second-class status in the world economy. …

And California is well along the path to second-class status as well.  All we need to do is visit our schools or drive on our roads to see what the drumbeat of anti-tax, budget-cutting propaganda brings us.  

It is tricks like declaring an “emergency” while taking half of the possible solution off the table, while at the same time our newspapers and other information sources refuse to inform the public of all of the ways that budget problems can be addressed, that got us where they are.  This is not a sustainable path.  The day must come when the budget just breaks down: when there is nothing left to cut, the interest paid on all the bonds catches up to us, and we wake up to see that our California Dream was sold off to the lowest bidder.  It is better that we wake up now and reclaim the dream, asking those who have benefited most from the state we built to contribute their share.

Click to continue.

In light of the projected $14 billion budget shortfall, Senate leader Don Perata said late yesterday “‘it would be imprudent and impolitic to support an expansion of health care’ before addressing the state’s budget deficit and its impact on existing programs.”

Meanwhile, Fabian Núñez is “so confident that we will be successful in reaching agreement that I have called for the Assembly to meet on Monday, December 17 in order to take up and pass AB 1X.”  So where are we actually heading on this?

Governor Schwarzenegger is calling for 10% spending cuts across the board in response to the budget shortfall that everyone knew was coming.  And as Dave points out, this means everyone who can’t afford to live without government gets screwed while the rich continue on their merry way.  It also means that next year’s budget fight will likely turn this year into the good ole days of budget wrangling.  And if Perata is serious about not passing anything as long as there’s a shortfall, then we ain’t passing anything for a while cause the shortfall isn’t going anywhere.

But before we even get to that, we find out whether all the extended sessions, coalition-shredding wars over an acceptable level of health-care (I’m looking at you Shum/Maviglio), time, money and both literal and cyber ink may end up coming to nothing because Don Perata can’t see spending on an important mandate when the political leadership in Sacramento can’t figure out how to balance a budget.

This is ultimately going to encapsulate most of the Calitics greatest hits from the past year; starting with health care, this runs through privatization, water usage, high speed rail and transportation, prison reform, Núñez pecadillos, labor relations, term limits, clean money, taxes, and the 2/3 rule.  Because it all runs back to the ability of people to get elected and pass a budget.

Most of all, it’s likely to reinforce the absurd lack of strong, public political leadership in this state.  There are no advocates.  Nobody has tried to convince me to sacrifice.  Nobody has tried to convince me of the inherent wisdom in a program that I might not otherwise think was a good idea.  The art of the possible is starting to discover that, as it turns out, not very much is possible with a $14 billion shortfall and no bold attempts at change.

Perata’s statement closed by saying “The real issue now is the deficit and how this squares with everything else that we are going to do.”  Everything is back up for debate.  Now that we’re staring at the very real possibility of getting less than we started with, it might not be such a bad time for a return to the fundamental principles of budgeting and state spending.  I’m not sure it could end up much worse.

Well, it was obvious, but we apparently know how the Governor is going to deal with the massive projected budget deficit.

Faced with what his staff now estimates as a $14 billion budget hole, Gov. Arnold Schwarzenegger has decided to seek across-the-board cuts to state operations.

The administration last month asked departments to prepare hypothetical budgets based on 10 percent reductions for the fiscal year beginning July 1 in case such a move was sought.

But now, as the fiscal outlook has worsened, the Republican governor has decided to go forward, according to advocates for social services and local government the governor has summoned in recent days for budget discussions.

That’s 10 percent across the board, but of course there are some spending mandates in there, so some of those cuts will not be allowed.

Schwarzenegger also said that he is hesistant to call for tax increases because of legislative and voter resistance.  In other words, he’s hesitant to lead.  This seems like one of those classic trial balloons to check the reaction.  Well, here’s one.  It’s clear that Republican policies of creating, artificially and against the will of the majority, a structurally unsound revenue model, will not be changing, at least not next year.  And so we’ll end up with a one-sided approach to a dire budget problem, when such an approach will only put off the problem.  This is how government shrinks, this is how public confidence in government saps, and this is how a belligerent, UNPATRIOTIC minority (California and America are worth paying for) gets its way.

UPDATE by Brian: I wanted to tack Sen. Perata’s statement on health care onto this post. (h/t CapitolAlert  )He doesn’t sound very optimistic:

“I am encouraged by the progress the Governor, the Assembly Speaker and I have made this year developing a plan for extending health care insurance to the many Californians who do not have it.”

“While I still strongly favor the concept, I have been shocked by the recent revelation that next year’s budget is facing a $14 billion deficit and what that could mean.”

“It would be imprudent and impolitic to support an expansion of health care coverage without knowing how we’re going to pay for vital health programs the state now provides for poor children, their families and the aged, blind and disabled.”

“The real issue now is the deficit and how this squares with everything else that we are going to do.”

By Dave Johnson for Speak Out California

Two previous posts explored the outline of the California state budget, and the process by which the budget is developed and passed into law.  But these overviews don’t directly touch most Californians in their daily lives.  To begin to connect the budget and the budget process with the concerns of regular Californians let’s look at one department that almost every adult in California encounters regularly: the dreaded Department of Motor Vehicles, commonly known as the DMV.

According to the DMV website, the department:

…registers vehicles in California and licenses their drivers. This amounts to about 33 million vehicles registered and approximately 23 million licensed drivers.

Other major DMV functions include:

• Recording ownership (certificate of title) of the vehicles DMV registers
• Maintaining driving records (accidents and convictions) of licensed drivers
• Issuing identification cards for individuals
• Registering and recording ownership of vessels
• Licensing and regulating driving and traffic violator schools and their instructors
• Licensing and regulating vehicle manufacturers, transporters, dealers, distributors, vehicle salespeople, and dismantlers
• Administering the Financial Responsibility Law
• Investigating consumer complaints
• Maintaining records in accordance with the law
• Collects approximately $6.5 billion in revenues annually

That’s a lot.  To accomplish this for the state’s population of 36,457,549 (2006 census bureau estimate), with 23,270,087 licensed drivers and 4,248,807 ID cardholders (2006)  The total budget is $903 MILLION (proposed, 2007-2008) with 8,280 employees.

While this sounds like a lot of money and people, this amounts to only approx. $33 and only .0003 employees per license/ ID card.  How much service can you expect from three ten-thousandths of an employee?

The DMV is a symbol of state government to most people — and not often a positive one.  Few people have good things to say about the DMV, and by and large this boils down to the need to show up at the office and stand in a line, fill out forms, and regularly pay fees.

Few people understand that one of the reasons for the lines is that the DMV just doesn’t have enough people working there – just three ten-thousandths of a person for each license or ID cardholder.  When 27.5 million people are demanding services from 8,280 employees, lines can indeed get long.  

But even under these constraints, they find ways to manage as well as they have.  In fact, according to the Governor’s Budget Document, “Over the past two years, the DMV has reduced field office wait times in the largest offices from nearly one hour to 20 minutes and reduced customer telephone wait times by more than 50 percent.”  These lines were decreased because the Governor committed to additional funding (demonstrating the direct relationship between funding and good service to the public.)  

We frequently hear that government spending must be cut, but few places bring home the impact of government spending cuts as directly as the experience of a visit to the DMV.  In our example the DMV is a symbol of the state government, and the experience of the DMV is the experience of underfunded schools, roads that need maintenance and services that are approaching a breaking point.  Spending can only be cut so far.

Click to continue.

I’m on my way over to Salinas for the “First Presidential Primary in the Nation” (a local straw poll event), but I thought I’d share with you an op-ed I have in today’s LA Times: “Why won’t The Times talk tax hikes?”

Obviously you’ll have to go to the link to read the whole thing, but the basic point is that the Times has, in its recent reporting, been framing the budget crisis as a problem on the spending side, while not being sufficiently attentive to structural revenue deficiencies. If we’re really going to fix the state budget without using this crisis as an occasion to further gut badly needed public services, we need to understand the entirety of the problem, not just one dimension of it.

( – promoted by Robert in Monterey)

A couple of weeks ago, I stumbled across a brilliant metaphor for how the debate over problems often totally misses the root of a given problem itself: “How Best to Fill a Sieve With Water”:

There are many arguments over which is the correct course of action which I liken to debating how best to fill a sieve with water. By this I mean that they ignore the fact that their premise is wrong.

Obviously the first thing an impartial observer would say when the two camps are debating whether to use a spoon or a cup would be to point out that one can’t fill a sieve without first plugging the holes. This seems to be my current role, pointing out assumptions which are either wrong or taken as being obvious without any examination.

Here are a few current (and not so current) examples.

The best way to stimulate the domestic economy is by raising/lowering taxes. Perhaps the best thing is not to stimulate the economy at all but to redistribute the present wealth better or to shrink the economy to a sustainable level. “Growth is good” is the sieve.

The best way to aid the development in the third world is by foreign investment/local projects. That the goal should be “development” goes without saying. What development means is the sieve.

[…]

The way to control foreign powers is by the use of military might/diplomacy. That other states need to be “controlled” is the sieve. Perhaps they just need to be left alone.

The writer, rdf, offers a bunch of other examples, but the principle is clear enough.

Then, I came across this post at Davis Vanguard that brings out one such example of debating the filling of sieves with water, in the context of intra-educational battles over California’s Proposition 92, which would set minimum levels of Community College funding and limit tuition to $15 per unit, paying for it out of prop. 98 funds.

There is no doubt in my mind that community colleges are one of the most laudable aspects of the American educational system, if not the most laudable. The second chance (and third chance, etc) that they offer to students who may not have been ready for college at 18, or people for whom life’s hard realities intervened, or who don’t have the cash to go to a state college, or who are just interested in a skill or a given subject serves to make the American educational system far more democratic in terms of openness and serving the whole population than the far more tracked systems of Asia or Europe (even as our structural flaws and barriers to true equality of access to education place our systems at a distinctly inferior position when looked at from the vantage point of the systemic or societal level). Community colleges are, in a broader educational context that leaves a lot to be ashamed of, a justifiable point of pride. And they only serve that critical educational function when the cost of attending is nominal if not entirely free. So at a gut level, while I’m unsure if prop. 92 is the best means to get to that end, generally I’m quite sympathetic to what they’re trying to do with it.

But it is a mistake to get sucked into fighting over scraps of the pie, when we should be asking why the pie is insufficient for public education at all levels in this state. The CCs work synergistically with the UCs, CSU and the primary educational system. If they’re all hurting for funding, let’s look at where waste can be rededicated toward more productive ends (namely, by moving funds from the embarassingly overpaid administrative area to the long-neglected salaries of staff and faculty or physical plant area). It would probably cut costs significantly were we to have decent public health insurance, to contain that exponentially rising cost of forking over a grotesque profit margin to the insatiable insurance and pharmaceutical corporations. But after you cut the obvious waste, we really need to get serious and start acting like adults about raising taxes to pay for this public good. Jacking up fees is a terrible (and illegal, if you look at the 1960 California Master Plan For Higher Education‘s requirement that fees never go to pay for educational costs, long since breached in bipartisan practice from Gov. Reagan on down to another B movie actor-turned-Governor) way to make up the shortfall, because it strikes at the very heart of an open public educational system by rationing the common good of education by ability to pay (or at least by willingness to accrue sizeable student debt).

Tuition in Calfornia has risen at a rate far exceeding inflation or state costs since 2003, while state spending on higher education has been falling as a % of the state budget for decades now. This is not by accident, this is the result of a deliberate plan to gradually privatise the whole educational system by Governor Schwarzeneggar’s finance director, Donna Arduin. From an LA times article two months ago:

To reorganize the state’s finances, Schwarzenegger recruited Donna Arduin, an advocate of privatizing government services who had been Florida budget director under Gov. Jeb Bush. As California finance director, she soon became known as Schwarzenegger’s “bad cop.”

Her budget plan for UC and CSU called for hundreds of millions of dollars in cuts for the third consecutive year, major student fee hikes, a reduction in enrollment and a plan to steer thousands of students to community colleges instead of the universities.

These “crises” are not accidental or temporary, they’re structural, and are instrumentally used to set different parts of the educational community against each other to distract from the privatization and slow destruction of what was once a world class public institution with free tuition and low fees, open to anyone with the grades. With every tuition and fee hike, and every shift to corporate or private donations (with strings attached, it should go without saying), the very idea of the public is watered down and eroded, and we all get suckered into just accepting it as a natural state or random “crisis” instead of as a system under deliberate atack on ideological grounds.

The solution here is not to fight over the scraps from the table, but rather to demand that funding matches the needs of a world class, accessible educational system. you cannot have quality on the cheap, and there is a vast public interest in having the social mobility and economic dynamism that comes from such an educational system, from the CCs on up.

When you look at what benefit has accrued and continues to accrue to the state of California from the existence of our public higher educational system, it is well worth the money. As these fees continue to be raised, that once great engine of social mobility will slow down and eventually grind to a stop, and those social benefits will not accrue in the same way. Cutting a segment of the population out makes it harder to justify paying for the system collectively. Turning away California’s poor, California’s working class and increasingly its middle class as well as starves our economy and our culture from the dynamism and works that those students might have created with the stimulus of a world class education.

If one believes in an educational meritocracy, education ought to be completely free, to let the cream rise to the top. What privatizers like Schwarzeneggar and Arduin mistakenly assume is that those with the money are the cream by virtue of their having all that money in the first place. The history of America and the history of California suggest otherwise.

I’m going to have to read up on prop 92 to decide whether it’s worth pursuing, but in the big picture, it’s a symptom of a greater problem that we’re not addressing as a state.

(This grew out of a comment on the Davis Vanguard thread, that got so long I figured it needed its own diary. Originally at surf putah)

(Bumped to move the 2 budget diaries together. – promoted by Brian Leubitz)

The Schwarzenegger era will be remembered as the era of “blockbuster politics,” where the Governor took the same marketing techniques that made his movies popular and transferred them to the political stage.  He wouldn’t just make an issue a priority, he would structure the entire year around it.  “The Year of Reform!”  “The Year of Education!”  “The Year of Healthcare!”  “The Year of The Environment!” As an actor he only put out one movie a year, so one legislative initiative a year sounded about right for the average attention span.  The details of governance would be pushed backstage; the thrust would be to go big on one issue and hope the goodwill gained from success would mask whatever failures occurred.  This has not been a slam dunk; the year of reform crashed badly, other signature issues have yielded fruit.  Now, with this year’s blockbuster on the rocks due to Republican resistance, legal challenges, initiative politics and structural roadblocks, the inattention to the small problems that weren’t on the big agenda are starting to consume the state.  In an excellent editorial, Assemblyman John Laird, Chairman of the Budget Committee, explains how our current mess of a $10 billion dollar shortfall could have been easily avoided if the Governor would have paid attention to something other than staging the next blockbuster.

… [T]he chronic boom-and-bust budget cycle is rooted in a simple problem: Californians generally believe in government and want it adequately funded — so much so that they repeatedly have voted for laws or constitutional amendments that lock in guaranteed spending for, say, education or transportation. At the same time, the state’s revenue system is antiquated and volatile. It is heavily reliant on income taxes, for instance, and so the pains of an economic downturn have a magnified effect on state revenue.

The short-term solutions that get us through on a year-to-year basis all have been tried — and tried. It’s time for bipartisan hard work to bring California’s long-term spending demands into balance with long-term revenues. It won’t be easy, but the easy paths have been taken, and they’ve left the state awash in red ink.

Wingnut conservatives are calling on the Governor to declare a fiscal crisis.  It’s one of their own doing.  When California could have eliminated the constant catastrophes of the budget process by restructuring the revenue offsets to services the population desires, instead the Governor floated a $15 billion dollar bond in 2004.  The result is $3 billion a year extra in debt, every year, to repay the costs of a senseless short-term fix.  If sound Republican budgeting means “put the problem off to children and grandchildren,” then we’ve got a lot of sound budgeters in Sacramento:

On paper, it may look like spending has increased in recent years, but that is largely driven by the expiration of earlier budget-balancing tricks — such as temporarily shifting school funding to local governments, shifting costs to special funds and the multibillion-dollar temporary cut to education.

There really haven’t been significant program spending increases, with three exceptions: public safety, the result of various court cases regarding our prison system and implementation of “Jessica’s Law” to track sex offenders; debt service, primarily the annual $3-billion payment on the $15-billion deficit bond; and local government funding, a result of the vehicle license fee cut because billions from that fee used to go to cities and counties.

Sacramento does not have a spending problem.  It has a denial-of-reality problem.  The cuts are always accommodated in the state budget, like this year’s delay of COLA (cost of living adjustments) for elderly public assistance, and the $1.3 billion in transportation funding.  The revenue increases are always blocked.  Stopgaps that run out and increases in population wipe out the cuts.  We’re left on an unsustainable track.

The state is rapidly headed toward bankruptcy if it continues down this stupid, temper-tantrum approach to the budget.  if Arnold Schwarzenegger wants to leave a lasting legacy, and let’s face it, that’s all he wants to do, he can work hard to fix the structural problems that will always put the state’s financial picture in peril.  That would require sitting in his office and doing his job, not holding big speeches behind backdrops that say “The Year of the Tiger!” or whatever he’s trying to peddle to the electorate.