Happy holidays, Gov. Schwarzenegger. You have about a month left to compile a spending plan for a state that operates like a miraculous but defective ATM, continuously spewing out more than comes in. You’ll finally have to be candid with the people who elected you about how little can be done through cuts alone or “blowing up the boxes” of the bureaucracy.
A year ago, Arnold Schwarzenegger boasted that he’d tear up the state credit card and put state finances back in the black. Big talk. Little action. The budget shortfall was largely papered over. Voters had to approve a $15-billion debt bond, and billions more in spending was pushed into the future. Government-watchers at the time generally gave him a pass because he was so new to the job. Those days are over.
Rising state revenues are not nearly enough to close a multibillion-dollar spending gap. Schwarzenegger seems to be relying on his massive California Performance Review, a catch-all study of ideas for reorganizing government and saving money. But a stream of experts last week told the Little Hoover Commission, a long-standing and sober analyst of government, how difficult it will be to pull off even a limited reorganization. Though efficiency is a fine goal, the billions in savings aren’t really there.
The California Taxpayers Assn., an anti-tax group, tried its own spin, declaring that holding general fund spending to a 4.2% increase would balance the budget. Sounds good, but even if the group hadn’t used any little tricks to reach the figure, much of the budget goes to programs such as Medi-Cal and welfare, for which levels of spending are dictated by federal or state law or both. That means gutting more vulnerable agencies, for instance a Department of Parks and Recreation that is already pared to the bone.
To balance the budget on cuts alone could require a slash of up to 10% in health and social services, an area that accounts for nearly a third of the budget, yet one that helps those most in need. Democrats vow to prevent that, which they should, but they also must be willing to negotiate some savings.
On the other hand, Schwarzenegger and Republicans need to back off their absolute opposition to any new revenue. Californians have enjoyed billions of dollars in tax cuts over the last 10 years, $4 billion alone last year in the vehicle license fee. A better balance could be reached with minimum pain simply by extending the sales tax to a variety of services that are routinely taxed in other major states. Movies, sports and other entertainment would send state coffers nearly $500 million a year; auto repairs and maintenance, more than $1 billion.
Both Schwarzenegger and Democrats are claiming mandates from the Nov. 2 election results in putting forth their early budget positions. Sometimes “mandate” is just an excuse for lazy thinking. Drawing lines in the sand will only lead to more budget deadlocks and new multibillion-dollar shortfalls passed to the next generation.
Governor, remember all those recall petitions? Government paralysis and mounting debt were among the reasons people signed them. Use your month to produce the real solutions you promised voters, then get the Legislature to take similar action.