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If Budget Is 'Finance-able,' It's Fine

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    32nd State Treasurer of California

    If you're a lonely soul paying attention the state budget news, you'll hear a ton of debate about whether the governor's budget or the legislative Democrats' budget is balanced. But that's a phony debate. Neither plan is balanced.

    Because no budget is balanced in California. At least not for long -- since the broken state budget process is always ratcheting down revenues and ratcheting up certain types of spending.

    No, the better question about a California budget -- the baseline question -- in this broken era is whether the budget is "finance-able."

    What does that mean? It means that the budget is good enough that the state can go to the markets to borrow at a reasonable rate.

    California needs to borrow to pay its bills -- even in good times. That's because the cash flow of the state government varies throughout the year, with much of the money coming in during the spring tax season. So in other parts of the year, the state needs to be able to borrow at a reasonable rate to pay its bills.

    So when State Treasurer Bill Lockyer declared the budget bill passed last week "financeable," that really was the end of the story. Yes, Gov. Jerry Brown and the legislative Democrats will fight over balance and welfare policy and a host of other small issues that have become tied to the budget.

    But in the most important sense -- whether the document is real enough to let California borrow -- this budget is done.

    Lead Prop Zero blogger Joe Mathews is California editor at Zocalo Public Square, a fellow at Arizona State University’s Center for Social Cohesion, and co-author of California Crackup: How Reform Broke the Golden State and How We Can Fix It (University of California, 2010).

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