California’s Budget: Tough Choices or Budget Magic?

One of the inherent problems with California’s budget is that time and again lawmakers have managed to put off difficult decisions and pending “disasters” through a series of  band-aid budgets, shell games and ‘kick the can down the road’ solutions.  Now the state faces a $24 billion deficit, and

The menu of options to close California’s massive deficit is short and seemingly clear: Cut spending, raise taxes or money magicborrow.  But faced with a money crunch the likes of which the Golden State has never seen, Gov. Arnold Schwarzenegger and legislators have pulled a less obvious tool out of the box. Call it budget magic – the simple reincarnation of budgetary gimmicks and paper mache solutions.  Mike Zapler looks at some of the “proposed solutions”: 

“Need an extra $2.3 billion? Easy — just make people pay more of next year’s taxes this year, by increasing paycheck withholdings and estimated tax payments.

“How about selling a chunk of a state insurance fund? That’s good for a cool $1 billion on paper, even if experts say it’s highly uncertain the sale would fetch that much, if it can be executed at all.

“Expenses still too high? Here’s a really creative one: Push back state employees’ monthly paychecks in June 2010 by a single day — from June 30 to July 1 — and thus onto the next fiscal year’s books. Just like that, $1.2 billion “saved.”

Those are just some of the maneuvers — or, to use a less charitable term, gimmicks — that the governor and lawmakers have suggested to help fill a $24 billion shortfall through June 2010. The proposals add up to about $10 billion, depending on what one defines as a gimmick.

Yet as Reason Online points out, finding places to cut costs without reducing the state to post-apocalyptic squalor is not the difficult task some lawmakers would make out to be.  As explained in California’s political newspaper Capital Weekly a few weeks prior:

[N]ew revenue estimates released by the Department of Finance this week place the state’s general fund revenues at $85.9 billion—nearly $4 billion higher than they were just five years ago.
Even with the depleted funds caused by plunging home prices and a global economic slowdown, Gov. Schwarzenegger’s budget is still larger than his first budget in the 2004-05 budget year.


But in that first budget year, state spending was at $79.8 billion. Over the next two years, state spending jumped by more than 21 percent, to more than $101.4 billion in the 2006-07 budget year.
So the question still remains.  Will lawmakers sit down and make the difficult decisions that lay before them?  Or will they once again take the easy way out through a game of budgetary charades, leaving perhaps an even bigger problem for the coming year?



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