The California budget is beginning to look like a
slow-motion train wreck, which everyone can see is coming but no one can do
much about.
You might remember the 2011-12 budget. That’s the one Gov.
Jerry Brown first vetoed as an unbalanced travesty in early June and then
happily signed two weeks later after state finance officials absolutely,
positively guaranteed that the coming good economics times would pump a previously
unexpected $4 billion into the state’s coffers. By fortunate chance, that was
just enough to balance the budget without spending cuts the Legislature’s
Democrats wouldn’t support or tax hikes Republican legislators had vowed to
block.
But just in case outside financial types found that that
sudden projection just a little too convenient – not to mention optimistic –
Brown and the Legislature agreed to a plan that would trigger drastic cuts in
spending if the state’s accountants found in December that the $4 billion
wasn’t likely to materialize.
All the friendly backslapping and bonhomie was easy in June,
since the budget was passed and December was a long ways away. Even when the
state’s July revenues came up $531 million short of estimates, hey, that’s just
one month.
But then the August numbers came up another $65 million
below forecast and folks started to get nervous.
The prospect of watching as much as $2.5 billion in
automatic cuts to K-12 schools, the university and state college systems and
other state programs convinced legislative Democrats to come up with a bill
that required state financial types to give 10 days notice if they decided
those "trigger" cuts were needed and force the state Department of Finance to
"consult" with the Legislature on alternatives to the cuts set out in the
budget agreement.
Brown quickly vetoed the bill, saying the changes would
undermine the budget plan.
But arguing that things will be just fine with the budget is
getting harder to say with a straight face.
In just the past day or two, local school officials have
sued the state for $2.1 billion they say their districts are owed under
California’s Prop. 98, the League of California Cities is looking to collect
$130 million in vehicle license fund money Brown has redirected to counties and
a Calpers official admitted that the pension fund’s rosy estimates of a robust
7.75 percent annual return might be hard to meet this year, given the economy.
And while the good news is that Amazon has agreed to start
collecting sales tax in California in 2013, that doesn’t do much for the $200
million in new online tax money that’s already figured into the 2011-12 budget.
To push the pressure even higher, a Field Poll last week
showed that California voters like the governor, hate the Legislature and, by a
66 percent to 24 percent margin, aren’t happy with the idea of the automatic
cuts that are looking more likely every month.
Now there’s still a while until December and the state’s
September, October and November financial numbers could turn around completely,
rendering all the concerns about trigger cuts moot. But anyone looking at the
recent economic headlines – and the stock market numbers – likely isn’t singing
an upbeat "Hallelujah" for California’s fiscal future.
So you have the Legislature worried about the trigger cuts,
voters unhappy with the idea of program slashes on autopilot and schools and
other potential targets of the cutbacks wondering what they would have to do to
deal with a huge, midyear budget cut.
On the other side is Brown, who knows that the prospect of
guaranteed cuts in case of a budget shortfall is desperately needed to boost
investor confidence in the state’s ability to handle its finances. While a
change in the trigger could be a political winner, it could end up costing
California big time.
It’s a recipe for potential disaster. Which is why it’s
impossible to look away from it.
John Wildermuth is a
longtime writer on California politics.