State Budget: Getting Closer

Even an extraordinarily cautious and fiscally responsible politician like Pete Wilson knows that hard times often require unorthodox measures. So goes the latest Sacramento budget saga.

At first Gov. Wilson proposed to balance the state budget by shifting $2.6 billion in property tax revenues from counties, cities and special districts to schools. That idea went over like the proverbial lead balloon: The governor now is heeding many calls, including a heartfelt plea from Los Angeles Mayor-elect Richard Riordan, to mitigate the property tax shift.

The sense is growing that the only way out is with a multiyear approach--not to avoid fiscal responsibility but to spread the pain of making do in these tough times. Otherwise the hit on local governments would be horrendous: significant cutbacks even in law enforcement and fire and health services. L.A. County, Southern California’s largest employer, would have to eliminate more than 9,500 jobs. Many other government workers also would lose their paychecks, adding instability to California’s economy.

So bipartisan support is growing for phasing in a property tax shift over two years. Senate Republican Minority Leader Ken Maddy of Fresno has floated a proposal to gradually shift money away from local governments in a plan that amounts to a two-year property tax shift of $3.9 billion. Wilson’s initial instinct was to shift $5.2 billion over the same period. The proposal of the Republican Maddy is closer to one proposed by John Vasconcellos (D-Santa Clara), the chairman of the Assembly Ways and Means Committee, in his “California smart budget.” The theory is that by spreading the cuts over two years local governments would be able to slash more carefully and humanely.

The two-year proposals rely, in various forms, on extending a half-cent sales tax --either on a statewide basis or locally. So far, Wilson has agreed only to extend the current surcharge for six months, through the end of this year--with proceeds earmarked for local police, fire and other public safety services. He wants each and every county that requires extended sale-tax revenue to ask local voters to approve a county sales tax on Nov. 2.

Wilson’s May budget revisions contained hints of a willingness to go beyond a year’s time frame for the current budget. He proposed an 18-month pay-back period for a portion of the deficit. He used two-year figures in his revisions. All in all Wilson has been shrewdly--albeit necessarily--pragmatic this year. He compromised on his initial refusal to extend the sales tax. He indicates he would reduce the amount of property tax shift. A multiyear time frame would make that easier.

Sacramento needs to wrap up a responsible state budget this month--and avoid a repeat of last year’s debacle.