Democrats couldn’t ask for a better title than “Steinberg vs. Schwarzenegger” for the lawsuit challenging the governor’s right to blue-pencil nearly $500 million in health and welfare spending from last month’s budget revision deal.
It’s short, snappy and leaves no doubt that Darrell Steinberg, the Democratic leader in the state Senate, is willing to stand up to California’s movie star governor to protect the safety net for the state’s most vulnerable residents.
That’s stirring stuff that will likely show up in plenty of Democratic Party fund-raising pleas this year. But, win or lose, the suit’s not going to make much difference to a tapped-out state.
Even if the case is decided quickly and even if a judge rules that the line-item vetoes were illegal, where’s the $489 million to restore that funding going to come from?
Steinberg has complained that the cuts Gov. Arnold Schwarzenegger made to programs like Healthy Families and in areas like child welfare services and AIDS prevention were “completely contrary” to what was agreed to in Schwarzenegger’s Big Five conferences with legislative leaders.
But that handshake deal didn’t account for the $1.1 billion in revenue that dropped from the budget revision when the Assembly rejected plans to take $1 billion from local transportation funds and collect $100 million for allowing new drilling off the Santa Barbara coast.
Schwarzenegger argued that he had to make the new cuts to bring the budget into balance, but even with those program reductions, it took a mix of borrowing, financial sleight-of-hand and a wondrously magical change in the budget numbers – Alakazam! A gaping $26.3 billion budget deficit became a more manageable $24.1 billion – to pretend that California’s money problems were even temporarily solved.
About the only encouraging news in the July financial report state Controller John Chiang released last week is that California’s financial situation doesn’t seem to be getting worse as fast as it was.
That’s a long way from an improving economy, however. Personal income tax revenue last month was $335 million less than in July 2008, a drop of 11.5 percent. And no one is predicting when the skid is going to end.
Even with last month’s budget deal, the state is still paying its bills with IOUs ($1.493 billion in registered warrants by the end of July and counting). The state Department of Finance is estimating that the state will face an $8 billion in the red when the budget year ends next June and recent experience suggests that the number is only going to get larger.
Right now, there are plenty of attorneys sharpening their pencils and laying in supplies of yellow legal pads as they prepare to go to war over the question of what is and what isn’t a budget appropriation. Experts on the governor’s side argue that any spending changes are an appropriation the governor can veto while Steinberg’s own experts say that last month’s revisions were only reductions that the governor can’t touch, making his vetoes illegal.
Even Steinberg has said that the Legislature is likely to be forced to go back into the budget in January to deal with the anticipated deficit. But the half-billion in spending Steinberg and the Democrats want to put back in the budget will only make it that much harder to close any new gap.
Steinberg keeps pointing to a boost in the cigarette tax, an oil extraction tax and other revenue hikes that he says are still on the table. But the governor and Republicans weren’t willing to go along with them last month and it will be the same governor and the same GOP legislators dealing with any new effort to revise the budget.
Democrats plan to put up an initiative to change the budget rules giving the minority Republicans virtual veto power over spending increases, but that won’t happen until next June at the earliest, so the rules stay the same for any budget fixes.
If Republicans won’t let a new budget gap get closed with revenue hikes, that means the state is looking at more program cuts. And if Steinberg does win his suit and gets that health and welfare money restored, it doesn’t take a genius to figure what Schwarzenegger’s number one target is going to be in any new revision of the 2009-10 budget.
John Wildermuth is a longtime writer on California politics.