Legislative Analyst Mac Taylor officially let all Californians know what a lot of insiders were whispering about for months. The budget is already in the hole for this fiscal year and combined with the projected deficit for the next budget the state treasury is short a cool $21 billion.
Elsewhere on this site, Greg Lucas runs the state’s tab on a woeful future. And, John Wildermuth explores the difficulty in finding a solution.
The question at hand is who’s picking up the tab and how do we get to a solution?
Maybe Governor Schwarzenegger and his buddy, movie director James Cameron, can team up to make the equivalent of 21 blockbusters like Titanic, all in one year, each grossing $1 billion—and donate it all to the state.
We are talking 21 disaster movies here.
Mac Taylor, who I imagine to people on both sides of the aisle is looking like the Grinch for suggesting the need for both revenue enhancement and budget cuts, is just the messenger. Even Taylor had no specific recommendations to end the spiral of deficits and fake budgets that have plagued California these past years. However, on the nifty tape the LAO put together of Taylor summarizing the dilemma facing California, he listed the following keys to balancing the budget:
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Take early action
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Focus on long lasting solutions
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Make hard decisions on priorities
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Include revenue options
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Consider extending temporary tax increases
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Closing tax expenditures (Government jargon: Is raising the Vehicle License Fee back to the rate it was before it was reduced a tax increase or closing a tax expenditure?)
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Targeting fees
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Aggressively seek new federal assistance
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Consider going to the ballot to ask voters to change ballot measures to add flexibility
Hmm. This looks like the list that was considered before the budget was signed in July. And, before that, a similar list of suggestions was made before a budget deal was approved in February.
Nothing much has changed. So will the legislature and governor come up with more fake revenue savings this time around? Will they seek to borrow until the crisis ebbs? Taylor actually suggests an upturn in the economy in his report. But asking voters to approve borrowing to balance the budget while the legislature also hopes voters will pass an $11 billion water bond seems unlikely, not to mention foolish.
Which leads to some unpalatable choices. Raise taxes and keep the economy down. Tax increases in February didn’t exactly meet expectations. Cut spending deeper than it was cut in the last couple of rounds. Continue the temporary taxes from the February budget deal, which the people resoundingly rejected in May’s special election.
In these trying times, will we go where observers never thought California would go? New revenue from offshore oil drilling, for instance? Releasing prisoners or legalizing and taxing marijuana?
Perhaps the candidates for governor have a good idea. I’m sure they will be bringing them forward any day now.
California Performance Review Part II, anyone?