State Budget = Smoke and Mirrors

September 16, 2008 by dave

Well, it looks like we might finally get a state budget for this fiscal year. The bad news is that apparently the budget they've crafted in the dark doesn't actually address any of the underlying fiscal problems, but instead uses yet more "smoke and mirrors" to delay facing our problems for another year.

I thought this San Francisco Chronicle editorial did a good job describing the problem.

It's hard to come up with a more contrived and bogus state budget than the deal concocted this past weekend by leaders of the Legislature. It reaches new heights in trick accounting, banks on a fairy-tale financial future and caves in to a subset of hidebound politicos.

This fraud of a spending plan will harm California, maybe not this month or next, but surely by next year when another gap between revenue and expense wells up. This year's package does nothing to prepare California's badly flawed budget process for the next go-round.

The budget-makers should be ashamed to present these numbers. Its designers say it avoids past financial gimmicks and grabs, such as raids on gas-tax funds and money owed to counties. But look what it does instead: It speeds up tax collections (thus taking money away from next year's budget) and counts on leasing the state lottery for a quick cash infusion. That comes on top of $9 billion in spending cuts.

This is nothing close to what is needed: sensible, broad-based reform of the state's feast-or-famine tax collection system. Nearly half of the state's revenue comes from personal income taxes, which is prone to wide swings with the ups and downs of the economy - and thus the take has dropped sharply this year. The state is also encumbered by Prop. 13 limits on property taxes and a string of voter-approved spending mandates. All of this combines to straitjacket the budget process.

In place of a genuine debate over overhauling this system, California gets 11th-hour deal-making. This year, nearly 80 days late, the state is handed a $110 billion spending plan announced on Sunday and approved by legislators the next day.

In my mind, this is just further proof that our state government is completely out of touch with reality. Instead of doing what is best for the state, their concerns rest on increasing their own power and satisfying their special interest masters. Let's kick them all out. It is time to just start over in Sacramento.

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