Prop Zero
The Starting Point for Commentary and Coverage of California Politics

The State's New Fairy Tale: a Balanced Budget

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    NEWSLETTERS

    Shock of all shocks: the State Budget is out of whack to the tune of $6 billion for the rest of this fiscal year ending June 30th and almost another $20 billion for the 2011-2012 fiscal year.

    Hold on, wasn't it only a few weeks ago that the legislature and governor hammered out a "balanced" budget? 

    Only if you believe in fairy tales.

    Anyone familiar with the workings of Sacramento knew that the budget was anything but balanced when leaders cobbled it together in October, only weeks before the Nov. 2 election. Democrats refused to make further cuts in public education and social services for the poor, aged and ill. For their part, Republicans were unwilling to raise revenues to bridge what was then a $5 billion gap.

    The answer: creativity.

    Legislators and the governors changed assumptions to make the numbers work. They projected $5.3 billion more from the federal government when no such promises had been made. They also predicted an additional $1.4 billion in taxes in an economy still in the doldrums.

    The result: unrealistic projections lead to a predictable deficit.

    This is hardly a surprise.

    The real question is what will be done? Some people are operating under the misperception that the passage of Proposition 25 will make it easier to pass a budget at a special session of the legislature scheduled by Gov. Arnold Schwarzenegger in December. You may remember that Proposition 25 changed the required vote for a budget from two-thirds to a majority. But a majority vote to pass a budget will be meaningless inasmuch as it still takes a two-thirds vote to raise taxes.

    The issues now are very much the same issues that existed during the budget standoff. The choice is to either cut spending (where?), increase revenues (from which sources?), or a combination of the two.

    Any other action steps will simply kick the budget can down the road once again--and we're nearing a dead end.