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California budget impasse continues

by Bob Morris, published

"Well now it's just gotten silly" - John Cleese, in Monty Python

What can you say to Gov. Schwarzenegger's  latest  ploy to balance the budget except that he now has indeed, just gotten silly. Our supposedly fiscally conservative governor wants to borrow $2 billion from CalPERS, the giant state public pension fund, to help balance the still-to-pass California budget for 2010-2011. There's just so much wrong with this bizarre idea that it's difficult to know where to start.

First, and foremost, the state will pay CalPERS $3.6 billion this year to cover their immense funding shortfall.  Then the governor wants to borrow back $2 billion of that money? This is nonsensical. Since CalPERS can legally force the state to cover its deficits, could it just come back and ask for the $2 billion again? Maybe this is a ploy by Schwarzenegger to simply not fund CalPERS fully. It certainly seems to be a desperation move ((especially considering that he also just ordered a delay in payments of $2.9 billion a month to school districts and counties so the state can pay debt and pensions.)

Second, the money would be an advance against future savings paid back over at least 20 years, assuming Schwarzenegger gets to pole axe pensions for new hires back to the 1990 level, saving the state many billions.  Even if he can force that, I'm unclear on the funding for the loan payback.  Specifically, where would the money come from?

Third, if California is ever to recover financially, it simply has to stop borrowing against the future to cover a deficit now. This is both fiscally irresponsible and deeply cynical. It just kicks the problem down the road a few years while politicians pretend to have fixed it now.

Meanwhile, Sacramento Democrats are stonewalling too. Senate President Pro Tem Darrell Steinberg pledges no deep cuts in education or welfare-to-work programs. These would be funded by higher taxes, but he promises individual citizen's taxes won't go up, something the nonpartisan Legislative Analyst's Office disputes.

Republicans say that education funding is at the same level as last year. Democrats say $3 billion more is needed, in part because deferred costs finally had to be paid off. This is a clear example of why trying to push financial problems out a few years always comes back to bite, usually at inopportune times too, and when the state is even further financially weakened.

Some college students aren't able to plan their year or even know if they can go to college, because of the budget gridlock. Their Cal Grant money is frozen. State workers hardly know from one week to the next whether there will be further furloughs, if they will get a check or an IOU, or even have a job.  Gee, I bet morale is just great in many state agencies now. But the problems of state workers or college students appear inconsequential to politicians of both parties in Sacramento. Republicans scream "No new taxes." Democrats yell "No budget cuts."

There have been no substantive budget negotiations in weeks, even though the state constitution mandates the budget be passed by June 15. Really, what we have is a bunch of overgrown infants in expensive suits banging their rattles on the high chair until they get their way. But this is no way to run a government.

California is becoming a laughingstock, the national poster child for legislative incompetence, as the budget crisis continues.  The longer they wait, the worse things get for the state too.

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