State Budget: Over the Cliff

Gov. George Deukmejian is trying desperately to hold onto his reputation as a prudent fiscal manager through the final two years of his second--and last--term. But that reputation is rapidly slipping through his grasp, no matter how much the governor protests that the state has not already fallen into deficit spending. In fact, last year ended in red ink. This year probably will, too. And the governor’s new proposed budget for 1989-90 would make matters far worse.

The governor’s fiscal managers already have resorted to accounting and management gimmicks to try to make it appear that the state finished fiscal 1987-88 with a surplus of about $4 million. But every other source, including the bipartisan legislative analyst and the state auditor general, says that the red ink amounts to as much as $590 million. So much for the Ronald Reagan-George Bush argument that the federal-deficit problem would be solved if only Washington had a balanced-budget amendment and the line-item veto like Sacramento and some other capitals do.

The quibbling over last year’s deficit is just that, however: quibbling. The important point is that the nation’s richest state is failing to meet its commitments to the people on health care, highways and virtually any other program that one can name. State services are falling further and further behind what has been promised over the years, compared to what California is legally obligated to do and what California needs to do to maintain a healthy economy and a promising future. The Deukmejian Administration is canceling contracts, postponing expenses and permitting an erosion of services in a losing battle to bridge the gap between spending and revenue, and promises and deliveries.

How does the governor react to all this? By stamping his feet and denouncing the experts who can see the red ink through the haze of the Administration’s accounting sleight-of-hand. If they don’t stop disbelieving him, the governor said, he would show them by cutting even further into state services so that there would be a budget balance for sure. There are lots of old sayings to cover such situations: robbing Peter to pay Paul, for instance, or penny-wise and pound-foolish.

The heart of the problem is the governor’s refusal to consider any new general revenue. There is nothing unique about a governor not wanting to be remembered as the fellow who raised taxes just before leaving office. Many governors have come to office inheriting massive deficits for that reason. Deukmejian was one.

But Deukmejian is flirting with an even greater problem: that of putting personal pride before the very basic needs of the state. Unless the situation changes dramatically in the coming months, Deukmejian could leave a legacy of the man who risked California’s general health, welfare and economy by refusing to provide adequate revenue for essential programs. His new budget, for instance, thwarts the voters’ will and plays loose with the law by diverting more than $300 million in Proposition 99 tobacco-tax money to cover existing state health costs.

California cannot afford this sort of so-called prudent fiscal management.