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Poor California: No money and no leadership

In the new movie "2012," whose video trailers were bombarding television airwaves last week, the world as we know it gives way three years hence under a siege of floods, eruptions, undulating continents and earthquakes. In other words, it's not much different from what is happening in California, fiscally speaking, except that the state will be lucky to hang on that long.

To recap: the state's chief budget analyst reported last week that California faces a $21-billion deficit through the next fiscal year. For the two budget years after that, deficits will total $44 billion more, the analyst said. Those are not updates on the budget deficits that California twice faced earlier this year; these are new projections. We are getting to the point when, if you take a long nap, you're at risk of missing the next dire pronouncement.

There were positive economic signs this week, if you looked hard enough. Housing prices in Southern California went up a bit in October, propelled by a federal tax credit for home purchases. But foreclosures remain rampant. The state added almost 26,000 new jobs last month. But unemployment stood at a shattering 12.5%, the highest rate since World War II.

Into this yawning gap, not much in the way of leadership strode. As the budget deficit numbers were released, Gov. Arnold Schwarzenegger issued a call to harness "the power of regional and local governments to drive change." He issued it not from Modesto or Murrieta but from Milan, Italy, where the governor had traveled for a climate change and green jobs forum.

(On the plus side, at least for him, the governor did appear to enjoy his jaunt to Iraq, Italy, Austria and Israel. "Saying hi to Prime Minister Netanyahu," he reported via Twitter from Jerusalem. "Hanging with Pres Clinton, PM Netanyahu, and Haim Saban at the Saban Forum," he noted a bit later.)

Most of those who seek to succeed him tried to ignore the startling deficit.

Republican candidates Meg Whitman and Steve Poizner continued to whack each other with the weaponry of tactical press releases. Whitman touted her endorsement by Ed Reinecke, who served as lieutenant governor from 1969 to 1974. That means he was in state office before former governor and unofficial current candidate Jerry Brown, whose tenure Republicans have argued makes him an aged relic. (The import of Reinecke's endorsement was that he was, as the headline of the press release noted, "Reagan's Lieutenant Governor.")

Whitman, the former EBay chief executive, also announced her Latino Coalition and accused Poizner, the state insurance commissioner, of misrepresenting his record.

"Why is Steve Poizner deceiving Californians on the campaign trail?" asked Whitman's Los Angeles County regional chairman, in a piece posted on an influential conservative website.

Poizner retaliated by citing a news article about Whitman's past donations to environmental groups and declaring that "she must be stopped."

"Californians cannot afford to elect a dishonest billionaire who sides with fish over people," Poizner's campaign manager fumed in a fundraising letter.

Neither offered anything in the way of solutions to the $21-billion gap. Nor, for that matter, did Democrat Brown, whose highest-profile action of the week was to declare, by virtue of his present job as attorney general, that salary cuts for state officials are legal.

Standing apart from the pack, as usual, was Republican candidate Tom Campbell, who has talked of nothing but the state's budget woes as he mounts his long-shot campaign for governor.

"We will probably have another budget crisis before the end of the calendar year," the former state budget director predicted, accurately, on Oct. 14 at an appearance at the Orange County Forum. He had placed 12 pages of handouts at each table setting before the event, and throughout his speech directed listeners through "U.S. GDP and Federal Budget Overview ($ in billions)" and "The Money Supply--An Exercise in Basic Economics." They are supplements to his excruciatingly detailed budget plan, released last spring but seen as a non-starter among conservatives because it included a temporary increase in the gas tax.

He cautioned that California had long budgeted "on the basis of optimism," which is approximately what the budget analyst confirmed in his projections last week. "When the real bills come due, your optimism may not," Campbell said.

The relative silence of most of the candidates who wish to lead California out of its canyon of deficits is all the more striking given what else was going on in California last week. The one-time gem of the state, its university system, was taking another hit.

Turning aside protests by students, the University of California Board of Regents approved a 32% increase in student fees. That amounted to $2,500 per student.

"I hate to say it, but if you have no choice, you have no choice," UC President Mark G. Yudof told reporters before the vote. The students, he said, should protest state lawmakers who have cut education funding.

Similar cutbacks have strained all levels of education.

State Superintendent of Education Jack O'Connell calls the education budget "ugly." For classes from kindergarten through community college, he said, the budget is $18 billion less than what had been projected a short time ago. He blames Sacramento.

"It's been very disappointing, very disappointing, the absence of commitment to education," he said.

School districts have taken to wrangling money from private organizations; the state and localities are running in search of federal grants. In some places, voters also have responded: In November, seven of the 11 measures on local ballots to hike education funding passed. O'Connell, a former teacher, has spent nearly seven years as schools superintendent and spent 20 before that in the Legislature. He has long been talked up as a candidate for governor himself but has taken himself out of contention in 2010.

As a politician, he was not shocked that, last week, the candidates who want to be governor mostly took a pass on the budget deficit.

"There are no easy solutions. All the approaches will be painful. So that's why the silence was deafening, and it's not surprising to me," said O'Connell. But, he added, "it is a time when real leadership steps up to the plate."

cathleen.decker@latimes.com

Each Sunday, The Week examines implications of major stories. It is archived at latimes.com/theweek.

Copyright © 2014, Los Angeles Times
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