Sacramento’s Bag of Tricks

State lawmakers are beginning to cook up gimmicks that pretend to solve the $38-billion budget shortfall without tax increases or devastating cuts. That’s what they did last year, producing a $10.7-billion deficit that now has to be financed with borrowed money. If Gov. Gray Davis and the leaders of both parties do not face the shortfall head-on, California is doomed to years of red ink and a state government that can’t adequately deliver basic services such as education and health care, much less the “luxuries” like state park maintenance and coastal protection.

Today is the state’s third day with no budget. But debt keeps piling up to the tune of $29 million a day, if you go by last year’s red-ink flow. One day’s debt amounts to half of the state’s yearly budget for fighting forest fires. The debt for last year alone equals the budgets of all 108 community colleges for nearly two years. Without a budget, the state will run out of cash on hand by late August or early September. Funding is already drying up for community colleges, public schools, nursing homes with Medi-Cal patients and anyone who does business with the state. The damage is done to the state’s image as a place to live and do business, with credit agencies mulling yet another downgrade.

Republicans say a temporary half-cent increase in the sales tax would drive business from California, a claim disputed by many economists. However, Wall Street demands such a specific source of revenue to retire the deficit. That is what led to talk Wednesday of a complicated revenue swap to finance the deficit within existing revenues. That requires $1.7 billion in cuts in addition to the $8 billion to $11 billion already axed in various budget plans but, more important, piles up even more debt in future years.

When Democrats proposed $7 billion in budget cuts and $4 billion in higher taxes while debating last year’s budget, this page suggested, “The state would be more responsible if it increased taxes more than the $4 billion, at least until the economy rebounds.” But because California is one of only three states to require a two-thirds vote to pass a budget, the Legislature punted. Unable to raise taxes at all and unwilling to cut deeply enough, the Legislature opted for bonds, loans and other tricks that made things worse. Davis was running for reelection and saw nothing to gain from getting tough with the Legislature -- or with state employees, to whom he granted raises of at least 5%. No matter when the economy recovers, it will take years to return state finances to normal.

Today, Davis faces a possible recall and Republicans, more intent on embarrassing Davis than governing, are dug in deeper against even temporary taxes. Davis and most Democrats keep protecting favored groups, including the insufferable prison guards with their raises of more than 30%. Sacramento has to stop avoiding the hard budget decisions that everyone else has to make. Households and businesses can’t live on credit cards. Neither can the state.

To Take Action: Gov. Gray Davis at (916) 445-2841, e-mail: governor@governor.ca.gov. To identify and contact your legislators, go to www.senate.ca.gov or www.assembly .ca.gov and call up member lists for telephone numbers and e-mail addresses.