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Massive California budget deficit awaits Jerry Brown, and us

by Bob Morris, published

Outgoing Gov. Schwarzenegger has made a final attempt to solve the budget crisis by calling a special session of the legislature. But the Democrats yawned, saying they'd sooner wait for incoming governor Jerry Brown whereupon they resolutely plan to work on a "global solution" to the budget rather than the "piecemeal" foolishness being proposed by Schwarzenegger.

No, really, they actually said that. Where have they been then, these past several months? Because piecemeal approaches are all we've gotten - except of course when the legislature adjourns for lengthy vacations in the middle of a demonstrable crisis, something they've done several times. While the budget problems do seem intractable, our lackadaisical legislature certainly appears disinterested in it. Plus, everything in Sacramento seems to happen in ultra-slow motion, except for them voting themselves more vacations, that is.

The Republicans are just as detached from reality. They vow no new taxes, at all, ever. The Democrats don't want to cut spending. By law, California must pass a balanced budget. But the numbers just aren't there. Expenses exceed revenues for the foreseeable future by a staggering $20 billion a year. Legislators can huff and puff all they want, but the simple fact is California will inevitably default on debt if drastic measures are not taken. This means that taxes must rise and spending must be cut. There is no way around that.

The first order of business is that Sacramento legislators learn how to count, because they clearly do not know how to. The budget deficit for this year is now $6.1 billion. But wait, you say, didn't they pass a balanced budget in October? Why yes they did, only to discover that the assumptions they made were overly rosy and deeply wrong. This happens with predictable regularity regarding the California budget. Optimistic and perky assumptions end up being smashed against the reef of reality. So, inquiring minds want to know, why is it that the numbers the legislature relies upon are virtually always wrong? Is it stupidity, wishful thinking, or deliberate? Whatever the cause, it needs to end, and accurate and realistic estimates need to be made instead. You can't get where you want to go until you know where you are now.

Into this ball of confusion walks Jerry Brown. Those looking for a quick fix and easy answer will be disappointed, because there isn't one. For years, California has relied on temporary taxes and spending cuts, accounting tricks and subterfuges, and taking money from one area to fund another. But these are temporary fixes and do not solve the underlying problems. It's not just the legislature that is detached from reality. A recent poll showed that California voters don't want new taxes, and support spending cuts as long as they aren't in education or health care.

The Sacramento Bee says "That position is unsustainable, as the analyst's projections suggest", then quotes Schwarzenegger's former finance director saying:

     "I have thought for many years we've been headed for an absolutely impossible, unthinkable kind of situation. I still believe that."

The real problem is we have a legislature and citizenry mostly living in denial as to how bad the situation really is. Everyone supports spending cuts - as long as the cuts don't personally affect them. And if there are new taxes, then make someone else pay them.

It's not hopeless, though, not at all. Legislative Analyst Mac Taylor says if genuine and continuing progress is made on the permanent budget problems, the state could be solvent by 2015-2016. The alternative is financial catastrophe. The choice is ours.

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