Bluff Right Over the Cliff? : Wilson and Democrats need to cut a deal

Taking the state budget process down to the wire of a new fiscal year is not unusual. But this year, the disarray and confusion in Sacramento are so great that California, for the first time since the Great Depression, may have to resort to issuing IOUs to pay its bills.

In launching a statewide media blitz, Gov. Pete Wilson made a television appeal Thursday to the people of California, asking them to support the deep cuts he is proposing in an effort to deal with a $10.7-billion budget shortfall.

He dismissed the Democrats’ comparatively more detailed proposal; it would buffer spending cuts by using a two-year budget and through the time-honored income-producing device of closing some tax loopholes. Wilson is insisting on balancing the budget in one year even if it means painful cuts for the poor, the sick and the public schools. He is steadfastly rejecting any tax increases. The governor has even gone so far as to say he would rather go to the November elections without a budget than agree to raise taxes and roll over the deficit.

Though Wilson has called for steep spending cuts--in welfare, health services, education and prisons--he has yet to present a fully articulated plan for balancing the budget. He should do that. That’s the only way to evaluate whether his proposals are doable and to assess the reductions in state services.

Wilson argues, with evident sincerity, that the Democratic budget would wreak havoc on the state’s sputtering economy. But what would be the economic impact of his own plan, which would cut public school funding and--based on what can be gleaned from his proposed cuts in health and welfare--cost California as much as $1.3 billion in federal matching funds? Why sacrifice those funds? What job losses would the spending cuts trigger? And would the resulting unemployment put a greater burden on welfare and health programs, creating higher costs? How many school districts might be pushed to the brink of bankruptcy?

The governor should not reject the idea of a two-year plan. Last year, his willingness to compromise earned him widespread respect. This year, Wilson is willing to court chaos. He should set forth a compromise that puts the budget process well above the partisan bickering now paralyzing California’s fiscal policy. The uncertainty engulfing the state is unnerving and sends all the wrong signals at a time when California needs economic stability. This game of chicken is not a good idea.