Why There Will Be No Budget Until After the Election

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Politicians never act sooner if there is more to be gained by acting later. Which is why everyone can give up the budget watch for the next couple months.

There won't be a new California budget til after the Nov. 2 election.

Yes, that will mean IOUs, and pain for people who depend on the state for incomes. But many of the programs most cherished by politicians are protected from cuts by the courts. And all of the players in the budget debate have incentives to wait. Among them:

  • Gov. Schwarzenegger: He's already so unpopular that public anger at a late budget can't make him much more unpopular. In truth, a prolonged stalemate in which he battles for structural changes in the budget and pension system might help him slightly. And Schwarzenegger, who must leave office at the end of the year because of term limits, has no incentive to fold on his reform demands to get an early budget. He could and should hold out as long as it takes to get what he wants, particularly on pensions, where it is much easier for a lame duck governor to demand changes from the unions than it will be for a new governor next year.
  • Legislative Republicans: The organizing principle of the GOP in California is: we hate taxes. The entire state could be on fire, and legislative Republicans would still insist that the number on priority of California is not raising taxes. It's election season, and legislators don't want to give their voters any reason to revolt. They'd rather not have a budget than give in to anything that sounds like a tax or fee increase.
  • Legislative Democrats: They're also up for re-election, and their constituents are angry about the budget cuts that have already been made over the last several budget cycles. So Democrats have no incentive to frustrate voters further by leaping to make more.

Plus, there's this potential upside. Prop 25, which would eliminate the two-thirds vote requirement for passing budgets, is on the November ballot. Some Democrats think that having a record-long budget crisis would make voters more inclined to vote for the measure, thus giving more leverage to the Democrats in the legislature. So if Democrats wait, the voters may make it easier to pass a budget. (Another benefit: Prop 26, which would impose a new two-thirds supermajority for passing fees, is opposed by Democrats, some of whom think a budget stalemate also would undermine support for that measure.)

The situation reinforces just how dysfunctional the state budget system is: everyone gains through acts of delay and irresponsibility.

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