The Legislative Analyst’s announcement that the state budget may be $8 billion out of balance despite the recent budget deal has focused attention on the May 19 ballot measures designed to fix the budget problems. Critics and commentators argue that this announcement puts the budget reform package in danger of being defeated. The Los Angeles Times carried a sub-headline that said the shortfall “could make May ballot items a tougher sell.”
How’s that? Defeating the ballot measures won’t close the budget hole. In fact, it will do the opposite; it will make the budget hole larger in the out years as predicted by the LAO.
But, the announcement is both a warning and an opportunity for the legislature to start working on long term solutions to California’s budget and government structural problems.
The first thing the legislators should recognize is that, with the economy down, the expected revenue boost from the new taxes will not be as high as projected. For one thing, this means that if Proposition 1A on the May ballot passes, the new spending cap based on revenues will be that much tighter.
For another thing, it means that the legislators have to face the reality of fixing the way the state does business that much sooner. Given the fact that the recently raised taxes are all temporary, even if they are extended by the voters for a couple of years, the legislators have to streamline government to adjust for when the taxes sunset. The LAO’s warning that we also will have a long term growing deficit problem means legislators should start immediately to get a grip on the problem.
If Proposition 1A passes there will be no going back to the tax well for more revenue. The voters will say: Been there, done that. For those who think they can defeat Prop 1A in anticipation of seeking a larger tax package, they are sorely mistaken. Rank-and-file Democrats and Republicans are in no mood for additional tax increases.
Republican legislators who voted to pass tax increases in February are extremely unlikely to do so again, so the two-thirds vote requirement to pass a tax will not be secured. In addition, Legislative Analyst Mac Taylor said he is "extremely reluctant to recommend that the state raise any more tax rates" in coming months.
For those who want to defeat Prop 1A to force more efficiencies in government, that has to happen anyway with this new deficit projection and the reality of temporary taxes. The road to get there will be that much more difficult and painful if 1A goes down.
So the opportunity is now to begin creating a 21st century government. Every effort must be made to use new technologies, create efficiencies, revise pension plans and consolidate programs and departments.
To borrow a catch phrase: Blow up the Boxes.