Budget Fix: How About Two Years? : Wilson is right to be careful, but bedlam looms

Let there be no misunderstanding: Everyone will feel the pain of this year’s state budget crisis. Beginning with cities, counties, schools and higher education, and filtering down to individual police officers, schoolchildren, welfare mothers and college students, deep cuts are bound to hurt--badly.

The sting could be lessened a little, however, if Gov. Pete Wilson is willing to go along with a proposal, offered by a number of Democrats, that would allow the state to deal with part of the current deficit over two years instead of one.

Under the plan, if the economy does not pick up enough to bring in revenues to pay off the debt, the current half-cent sales tax--due to expire in 1993--could be extended.

So far, Wilson and the Republican leadership have spurned this idea. They want the budget balanced purely by cuts to programs--no rollovers, no new taxes. But this would require far too deep cuts in programs, especially education and local government.

Even a two-year plan, of course, would not solve the state’s severe budgetary problems.

In all, the state is a massive $11 billion short, counting what is needed to repay a $3.8-billion deficit from this year, rebuild a reserve to $1.2 billion, keep programs at current levels and pay for increased demands on schools, welfare programs and prisons.

Given the size of the problem, negotiations in Sacramento so far have been relatively calm. But now lines are being drawn in the sand. Meanwhile, July 1--the beginning of the fiscal year--looms ever closer. If no budget is in place by then, the state may be forced to issue IOUs instead of checks.

At the heart of the partisan dispute over the budget are the schools.

On Friday, Wilson outlined the Republican leadership’s plan that would keep California’s schools at a level of funding set by Proposition 98, the school-spending guarantee passed in 1988.

In an odd twist, because the economy has been so weak, the state says schools actually were overpaid their minimum by $1.1 billion this year. That means that technically the state could dock the schools $1.1 billion and then reducing spending next year by a similar amount--a total cut of more than $2 billion. Wilson proposed doing that. Democrats are proposing that schools be cut by only $600 million.

Given the prospect of the kinds of cuts to schools the GOP is proposing, a rollover is not such a bad idea. Yes, there are concerns about deficit financing. But if worse comes to worst, the sales tax could be extended to pay off that debt by 1994.

The situation is so grave that this proposal looks like the least bad alternative.