Passing the $117.5 billion budget along party lines, majority Democratic legislators are betting on the come – that revenue will be there to match expanded budget demands in the future. In another kind of bet dealing with sporting events, gamblers often wager whether the number of total points in a contest will be over or under a number predicted by the gambling house pros. Put my bet down on the UNDER in a few years on what the state will collect in revenue needed to keep up with the expanded budget passed by the Democrats.
Perhaps, the budget that passed the legislature yesterday can be meet with the dollars in the treasury today, and maybe even next year. The Democrats confidently believe the revenue will continue to be there when needed, just as the majority did in 1999 when the pension system was changed because the legislature bought the notion that the state’s retirement investments would always cover the cost of increased benefits. They were wrong then and they are wrong now.
As Gov. Brown so succinctly put it, the next recession is around the corner. We do not know how big that recession may be. Any major downturn in the economy would send state revenue spiraling downward and the rainy day fund would not be enough to cover a big shortfall. If California’s fiscal history has taught us anything, it is that a downturn will occur and profligate legislators will express shock that they weren’t prepared.
The budget passed by the Democrats can be called the “phased in budget.” There are a number of items that will be funded part way through the year and reflect a smaller amount than if the funding covered an entire year, which it must in future budgets. Examples include funding for health care for children in the country illegally. The program starts in January at a cost of $40 million, but a full year cost is more than three times that.
Once phased in, the costs of all the programs will add up, and probably expand, so when, not if, the next recession hits, deep cuts will be in store.
Gov. Brown will have his say on the budget. Legislators should beware of a governor carrying a blue pencil.
I expect some of the spending offered up by the Democrats in the budget will remain. But if Brown holds true to his recent pronouncement on budgetary caution, he will be wielding his blue pencil and there will not be the votes to override any veto.
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