Not only are there no good options for passing a budget before the money runs out, there aren’t even any bad options. As too often happens, negotiations and machinations over the budget could go on for many more months before an agreement is reached. The state could run out of money as early as July, triggering yet another season of IOUs, delayed payments to vendors, and slashed funding for schools. We’ve been here before. This is getting tiresome. The people of California deserve better than what they’re getting from Sacramento, which has mostly been endless gridlock, no new ideas, and a budget crisis that gets worse every day.
California somehow has to reduce the current $15.4 billion deficit in order to pass a balanced budget. Over $12 billion in previous cuts have already been passed. As draconian and severe as those cuts were, they pale before what is probably coming. The likeliest outcome is a Doomsday Budget of horrifying cuts. This could pass the legislature on a majority vote, with serious education cuts requiring a two-thirds vote. But this would certainly be opposed by enough lawmakers to make passage problematic.
Other options include passing a special election vote for June on a majority vote by the legislature rather than two-thirds. This would certainly lead to multiple lawsuits opposing it. Plus, time is running out for the state to prepare for a statewide election asking voters to extend temporary increases in taxes. Gov. Brown could also try to get this on the ballot in November via the initiative process. But this is also problematic, because it can take months, plus by then, the state will already be having serious cash flow problems.
Making things even worse, the budget may be another $23 billion short. How can this be, you ask? It’s because the federal government gave California $120 billion last year in various funding. $23 billion of that was in stimulus money and is not expected to be repeated. Thus, there could be yet another gaping hole in the budget that seemingly no lawmaker or state official managed to predict or plan for. Further complicating the situation (if anything could) is California must meet federal requirements for spending on education and health care even as the budgets for those areas are being decimated. Why was this not anticipated by those working on the budget?
Unfortunately, the probable response to this train wreck will probably be yet another round of accounting tricks, taking money earmarked for special funds for use by the general funds, stealth borrowing at increasingly higher interest rates, and other such irresponsible actions that only push an even bigger budget problem off until the next year.
Sooner rather than later, that ploy will no longer work and California will then be faced with a worse problem than it has now. If we solve the budget problem this year, then we can do it on our terms. If we wait for events to force a solution (and they will), then the choice may no longer be ours to make.