The Moment of Truth Arrives in California

Here we go again. Up against the start of the new fiscal year, the state legislature and governor have just about reached the point of no return. As in 22 of the past 25 years, the parties have failed to agree on a state budget.

But this impasse is different than any others in the past. In this round of political boxing, the governor has taken a hardened position: not a single cent in new taxes to offset the huge $24 billion gap.

Instead, Gov. Arnold Schwarzenegger argues, the budget must be balanced through spending cuts, almost all of which would affect the elderly, disabled, mentally ill, universities, and public school children.

The reason for no new taxes? Schwarzenegger says that the voters’ decisions last month to turn down ballot propositions with $6 billion worth of new taxes signaled that the voters want no new taxes. Period.

Democrats counter that they have offered to meet about 85 percent of the governor’s demands. But they have added three sources of revenue: an oil tax (California is the only one of 14 oil-producing states without an oil tax), higher cigarette taxes (currently the state ranks 30th), and a $15 per car tax to keep open state parks. Together, these new sources would generate about $2 billion. The rest of the budget would approximate the governor’s plan.

As for last month’s election defeat, Democrats say that the results occurred because the voters didn’t want to see popular programs ravaged as the way to raise more revenues. So far, no one has been harmed too much. But tomorrow, the blood-letting begins in earnest. With no budget in place and no money to pay the bills, the state controller will put a hold on payments to vendors. Later in the month, state employees will get IOUs.

We’re now at the point where machismo has overtaken moderation. The governor may get is way in this round, but how the people accept the outcome remains to be seen. Clearly, the last punch has not been thrown.