Thursday night in San Jose, I moderated a discussion at the
American Leadership Forum of the so-called state budget triggers – provisions
that require specific cuts if, by December, estimates show state revenues running
more than $1 billion short of what was in the budget.
The
discussion left me wondering: are we heading into an era of budget triggers?
Why? Triggers
offer a method of giving a sheen of financial responsibility to our collective
instinct to want more government than we’re willing to pay for. Instead of
merely cutting the budget to match revenues, we can assume revenues — $4
billion in the case of this budget – in hopes of an unexpected windfall. We put
trigger cuts in case our hopes don’t come to pass.
The credit
rating agencies prefer this to pure deficits (and borrowing) – it’s a guarantee
of cuts. Politicians like this – it’s a way of offering more than they really
can promise.
The trouble,
of course, is that we can’t bear to balance our triggers. The budget assumes $4
billion in new revenues. But there aren’t $4 billion in triggers. There are
$2.5 billion in triggers. And the first $1 billion in revenue shortfalls
doesn’t force a trigger. In this context,
the triggers disguise a deficit. That money will have to be made up in next
year’s budget.
But since
cutting is so difficult, what might be the best way to deal with that
shortfall?
Another
trigger, perhaps?
The trigger
isn’t new of course. California has used similar gimmicks before. And the budget
is so full of spending formulas dependent on various factors that the document
is effectively full of triggers.
How many
times can you pull the trigger before people get hurt?