California’s budget fiasco

Ventura County Star

California budget negotiations have an eternal air of unreality about them. Negotiators make lofty assumptions about income and revenue, only to be proven wrong later. Complicated proposals requiring the approval of eternally squabbling factions are floated as though they have a fine chance of being passed. Democrats resist spending cuts, while Republicans insist taxes must never be raised. Both sides accuse the other of villainous maneuvers, of moving money around from entity to entity in a mad pretense that somehow constitutes balancing a budget. Yet they both do it.

All of this is done in slow motion and with apparent unconcern, as if to say that California is so filled with wonderfulness that such problems will no doubt just magically be solved because of the inherent specialness of the state. Or so it seems. There is no sense of urgency, no thought given to the obvious. The financial clock continues to tick. California becomes more insolvent each day. Yet, a budget agreement is now months late with no solution in sight.

Gov. Brown’s ambitious plan to ask voters to approve an extension of temporary taxes will clearly not be happening. Thus, the usual mix of ideology and special interests from all sides ensured that voters will not have a chance to express their will about taxes, public pension reform, or a spending cap. Goodness no, we can’t have that. Assorted special interests might be negatively affected. And that would just be so wrong. Instead, Sacramento continues to sleep walk. They’ve been doing it for years.

Did you know that Utah diagnosed and reformed its public pension plan last year? That’s right, its legislature realized its current public pension system was in deep trouble and that the state could become liable for huge amounts of money that it could not afford. So they went from a defined benefits plan to defined contributions in 2010. No muss, no fuss, they just went ahead and did it in one year.

Meanwhile, California has been squabbling about its increasingly insolvent public pension system for years, with no coherent plans floated, much less instituted. Sure, public unions have far more power in California than in Utah. But our legislature in Sacramento has been gridlocked on budget matters for years. Gov. Gray Davis went down in flames over the budget, recalled by Schwarzenegger who tried valiantly and failed to fix the budget. Now Gov. Brown, just a few months after his election, is similarly stymied. The Sacramento swamp claims another one. No one here gets out alive.

Gov. Brown is now reduced to theatrics like cutting back on state travel that is not mission critical and trying to persuade the DMV to wait on sending out vehicle renewal registrations for July in hopes they can prolong an existing rate hike. But such measures are Band-Aids on a major wound as the deficit is at least $15 billion, and growing. Brown also, with more word games, wants to extend the current base sales tax of 7.25% rather than let it drop back to 6.25%, and to do the same with a retroactive 2009 and 2010 income tax surcharge. All of this is being done under pretense, by saying this is the allowing of extensions rather than being called tax increases.

Sadly, no one in Sacramento seems to speak clearly and truthfully, and to state the obvious – which is that California is in deep and worsening financial trouble and that tough solutions are needed now.

(crossposted from CAIVN)

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