Advertisement

Bending Toward a Budget

Share

The speedy repeal of the bill granting driver’s licenses to illegal immigrants shows that state lawmakers have gotten the message of Gray Davis’ recall and of successor Arnold Schwarzenegger’s immense popularity and political clout. Now, encouragingly, the new governor is responding with a promise to consider compromises in his complex economic recovery program, which includes a $15-billion bond issue and a state budget spending cap.

Schwarzenegger said Monday, in regard to the state’s fiscal problems, that “actions speak louder than words.” It will take extraordinary action to negotiate the final form of a bond issue and spending cap by Friday. That is the deadline set by Secretary of State Kevin Shelley for the Legislature to put the measures on the March 2 primary ballot as Schwarzenegger demands.

The deadlines have been stretched in the past -- such as for a school bond issue in the 1998 general election -- by printing a supplemental ballot pamphlet covering last-minute measures, something provided for in Schwarzenegger’s draft legislation. That would buy at least a few days of additional bargaining time.

Advertisement

The proposed $15-billion bond would refinance last year’s $10.7-billion deficit and other obligations over 15 to 20 years. The bonds would be sold only if voters also approved a spending cap designed to prevent future deficits and to save surpluses in a rainy-day reserve -- and to assure investors that the bonds would be paid back. There is no way out of the hole the state is in without making some use of borrowed money. But instead of saddling a whole generation with this one’s debt, the period of the bond should be shorter. That will be possible only if there is a temporary dedicated source of new revenue, which usually translates as tax.

No matter how the bond dealt with the old debt, it would do nothing to resolve the $14-billion shortfall expected to haunt the coming year’s budget. Schwarzenegger must send his plan to deal with next year’s budget to the Legislature by Jan. 10 for enactment at the start of the next fiscal year, July 1.

Schwarzenegger, in statements this week about the pain of cutbacks, seemed to realize what the shortfall combined with his proposed spending cap would mean. The resulting budget cuts would reach deep into local government funds. Schools would lose. Poor children would be denied health coverage. Much more road repair and construction would be canceled. Failure to close the gap in a responsible way would be not just publicly unacceptable but economically damaging.

The logical solution, as always, is some degree of additional cuts along with temporary tax increases to cover current spending and debt service. Voters don’t want even temporary new taxes, nor do businesses. They will respond if the need is made clear by the governor and the Legislature alike and if, along with the increased taxes, there is a clear plan for emerging from deep debt.

The Legislature and Schwarzenegger are bending toward one another, with a few holdouts at the right and left ends of the political spectrum. It is a refreshing change at a difficult moment, and it must continue if the state is to recover.

Advertisement