California budget follies continue

After a year of covering the ongoing budget crisis, it now appears to me to be 1) insoluble (except via outside intervention) and 2) comical (even if unintentionally so.) While this indeed is a ‘Very Serious Matter’, the truth is that the stonewalling antics of the various involved parties in Sacramento resemble the Keystone Kops more than any serious attempt to balance the budget.

There’s been much running around and frenzied activity in Sacramento – but practically no results. Did you know that the State of Utah revamped their entire public pension system in 2010 and it took them less than a year to do it? Meanwhile, California has known about their pension problem for years and hasn’t even attempted working towards a solution. What accounts for such spectacular dysfunction?

The biggest culprit is the utterly broken proposition system which is happily gamed and manipulated by special interests. Propositions can mandate that huge amounts of money be spent for years into the future without specifying where the funds will come from, something which seems neither rational nor fiscally responsible. Even worse, they can mandate large percentages of the budget be spent in a specified way, as is true now with education spending. Propositions have also mandated that tax measures must pass by a 2/3’s vote, something which few if any other states do, and which guarantees gridlock. The granddaddy of all the budget killers is of course Prop 13, which keeps property taxes artificially low. It needs to go.

The California public pension system is also broken. It is unfair to the citizens of California that they must make up any shortfall in public pension funding. But that’s the law. Incredibly, our rather spectacularly mismanaged public pensions can force the State to make up any of their funding gaps. Last year this amounted to over $3 billion, and that number is expected to rise continually in the coming years. Excuse me, but why can a pension fund force a state to give it billions? This is wrong and needs to be changed.

Meanwhile, the current budget follies for this week contain the stunning news that Gov. Brown’s massive budget cuts will not decrease spending in the short-term as spending is expected to rise 31% by 2015. How can this be, you ask?

It’s because 1) education spending mandated by Prop 98 must rise and accounts for 1/3 of the budget, and that money cannot be used for anything else, 2) Obamacare mandates additional costs for California, 3) more people are on welfare, food stamps, and collecting unemployment, 4) public pension costs are increasing, and 5) there is less stimulus money from D.C.

The ongoing solution for this in Sacramento continues to be blaming the other side for being stubborn and recalcitrant.

The absolute drop dead deadline for a vote of having a special election and asking voters to extend a tax hike has come and gone, with a new drop dead deadline being instituted that will likely be amended yet again.  Cities are squirreling their redevelopment money away into other accounts in hopes the state won’t grab it if the proposed budget passes.

In a fine piece of political theatre, five “rogue” Republicans have been negotiating with Gov. Brown directly on a budget vote, something which has predictably angered the right. Only the most hardened of cynics might opine that perhaps those legislators might ask something for themselves or their districts.

All of the above may and probably will change. But what hasn’t changed is the inability of California to solve its problems. That’s why an external event like a default or loss of major federal funding may be the trigger that forces California to act.