A Metastasizing Shortfall

A billion dollars at a time, the state budget shortfall is spiraling out of control as the California Legislature fiddles. The staggering $34.8-billion, 18-month budget shortfall that Gov. Gray Davis described at a press conference Wednesday would effectively reduce the current fiscal year’s general fund spending to a level not seen since the post-recession years of the mid-1990s. Then, California was home to about 3 million fewer residents.

Davis delivered the shock in his typical monotone, along with a measured warning that “there’s no time for hand wringing.... We must face this problem head-on.”

Lawmakers who were supposed to begin a special budget session Monday are now squabbling about whose figures to believe in a nickel-and-dime fight over whether Davis is exaggerating. They have failed to act on $10.2 billion in immediate cuts proposed by Davis. Every day that the state spends money at last year’s level increases the future pain for students in classrooms, drivers in line at DMV offices and the working poor waiting for public health care.

California isn’t alone. From the redwood forests to the Gulf Stream waters, statehouses are facing the morning-after realization that budgets made fat during the nation’s longest bull market are alarmingly out of balance with available revenue.

Davis promises to deliver a full budget proposal -- complete with proposed cuts and new taxes and fees -- Jan. 10. But legislators should be acting now. Today. Start by considering Davis’ painful proposed cuts.

Yes, there is waste to be cut. But that only nips a corner of the shortfall. Those angrily shouting “no new taxes” need only look at the facts. California’s overall tax burden ($11.35 per $100 of personal income) is just slightly higher than the national average ($11.04), and the state’s reliance on fees and other non-tax revenue is near the average for other states. Half of the state’s new jobs in recent years were in the service sector. The state should leverage that growth by extending the sales tax to auto repair bills, sporting event tickets, fees paid to lawyers and other untaxed services and goods.

Past governors and legislatures dealt with cyclical budget crises with appropriate budget cuts and temporary revenue increases. The days of easing a budget crisis by freezing huge transportation or water projects, though, are over. Health, education and social welfare account for 71% of state spending, so there are no big, easy cuts.

The Republican divas who are swooning over the prospect of even short-term tax increases should read the budgetary score. They haven’t proposed a plan to right the budget with cuts alone, and they know they can’t. Schoolchildren, the very poor, the elderly and the infirm would bear the greatest burden. California could shuffle toward resembling a Third World society.

This state, the world’s fifth-largest economy, can muscle through its increasingly grave budget crisis. But lawmakers, their collective level of experience sapped by term limits, have to sit down together and act like adults. California’s 35 million people can take bad news delivered straight up. What they can’t take is more fiddling.