Keeping the Fiscal House in Order : Sacramento must avoid last summer’s budget fiasco

For all the criticism Democrats level at Republican Gov. Pete Wilson in an effort to portray him as a rigid right-wing ideologue, the governor has on occasion shown flexibility when that is what’s needed to get things done in government.

Under pressure from key supporters, Wilson displayed at least some of that pragmatism again last week when he announced he will support extending a temporary state sales tax through the end of this year to help support local law enforcement.

Until then, Wilson had adhered to his party’s traditional anti-taxation stance on the half-cent levy, insisting that it be allowed to die at the end of this month. The temporary tax was imposed in 1991 to help get the state through what everyone hoped would be only a short economic downturn. As most Californians are painfully aware, the downturn still has not ended--indeed, in some segments of the state its impact is now comparable to the Great Depression.

Because of the prolonged slump, some members of the Legislature have been calling for an extension of the sales tax for the duration of the financial crisis, and a multiyear budget plan to rollover at least some of the state’s debt. That still may prove necessary. With state revenues down, most of next year’s budget will go for education and other state obligations mandated by the California constitution. That leaves no money for local government, particularly counties, which have increasingly relied on financial help from Sacramento since Proposition 13 limited their taxing power 15 years ago. For some counties the financial hit will be so drastic that not only will libraries and public health facilities close, but so will fire stations and jails.

THE FEAR: Los Angeles got a hint of what’s to come recently when Sheriff Sherman Block ordered the early release--subsequently rescinded--of prisoners from a women’s jail due to a lack of funds. And Dist. Atty. Gil Garcetti is warning that budget cuts could force him to lay off staff attorneys, meaning that even some felony cases will not be prosecuted. And on Friday, in a letter to The Times, the presiding judges of L.A. courts warned that all current budget proposals in Sacramento would seriously damage the state’s courts.

It was the pleas of these and other local law enforcement officials that finally got Wilson to change his mind on the sales tax--and perhaps motivated his suggestion last month that he was not entirely closed to the idea of multiyear budget approaches. Certainly, the mere fact he has budged this much indicates that a budget deal can now be cut with the Legislature by this month’s deadline. And that should at least avert the awful political gridlock of last summer, which saw the state handing its employees and vendors IOUs instead of valid checks. It’s a scenario that the governor, who will be up for reelection next year, can ill afford.

THE RESPONSIBILITY: Last year’s budget fiasco taught the state some tough lessons--not least among them that while new taxes are unpleasant and multiyear budgets difficult to work out, they are also sometimes necessary tools--in addition to severe spending restraint--to cope with a structural budget crisis. Such time-honored techniques can avert the use of IOUs and other vouchers of questionable legality. And they send a calming message to the bond markets, which remain the source of investment capital California will need for continued long-term growth, that helps the state keep its credit rating sound.

Now it’s up to Assembly Speaker Willie Brown and other Democrats in the Legislature to continue to work to strike a deal. But let there be no illusions. No one--Democrat or Republican--is going to be completely happy with the final product. But at least a budget deal will keep California’s ship of state afloat, if not moving forward, in some choppy economic waters.