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    NEWSLETTERS

    Let's start by praising, not burying, the analysts at Standard & Poor's:

    Because to be fair: they're hardly the only people who don't know what they're talking about when it comes to the California budget.

    Of course, it's the not the job of most people to opine on the budget and rate California's debt.

    So S&P's latest analysis of the state budget -- including a warning about recent changes in the budget -- is worrisome.

    S&P has bought into three fictions.

    1. That last year's budget was balanced.

    Previously, S&P issued positive reports on California's budget despite the fact that that budget was "balanced" with phony assumptions and gimmicks. S&P seemed to buy the spin that tough choices had been made and progress achieved.

    2. That mid-year cuts now under consideration make a difference.

    Now S&P is warning that the legislature's failure to make the governor's mid-year cuts are dooming the budget to more gimmicks and phoniness (after having endorsed the recent phoniness). The budget was broken before the mid-year cuts, and it's broken after the mid-year cuts. The mid-year cuts make no material diference to the state's fiscal outlook.

    3. That Controller John Chiang's power to withhold legislators' pay would make budgets more honest.

    S&P's new report argues that a court decision that restricts Chiang's power to withhold lawmakers' pay is a threat to the budget. That's nonsense--and flies in the face of what actually happened last year.

    After Chiang refused to pay lawmakers for passing a budget vetoed by Gov. Brown, another budget was passed -- based on phony revenue assumptions.

    So the controller was not a force for budget balance. Indeed, giving a controller the power to withhold lawmakers' pay is a risk factor for the budget.

    A controller seeking to curry political favor has great incentive to block pay as a way of pushing back against politically difficult cuts or revenue increases in the budget to score political points (since no one likes cuts ore revenues increases).

    If anything, the decision limiting Chiang's power probably is good news -- albeit very mild good news-- for budget hawks.

    Here's reality, in case S&P is interested. The budget process is broken in California. The budget can't practically be balanced under these conditions. And no one is working to redesign the budget process -- and the governing system -- into something that could be managed and balanced.

    S&P -- and Californians for that matter -- shouldn't get bogged down in minor items like mid-year cuts and controller powers, and focus on this big picture.

    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).

    Send us your thoughts via Twitter @PropZero or add your comment to our Facebook page.

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