Bad to Worse
As Brown Begins Budget Reboot Meetings, California’s Bottom Line Keeps Sagging Lower
Thursday, December 16, 2010
Jerry Brown began his first kumbaya conference on California’s budget mess by making clear the session was not intended to find solutions to the state’s dreadful fiscal woes.
Lucky for him.
For by the time the opening act of Governor-elect Brown’s budget road show wrapped last week, the only agreement that had been reached was that the problem is much worse than anyone had thought.
Making good on a campaign promise, Brown kicked off an unusual series of statewide hearings on the red-ink horror show that he’ll be officially responsible for handling once he’s inaugurated on January 3, 2011. One part financial seminar, one part political theater, the meetings are meant to educate pols and public alike about the size, significance, and sources of the state’s struggles. Brown’s hope is to develop, at the least, a shared vocabulary and set of assumptions for informed debate about the complex issues and, beyond that, to forge strategy for what to do about them.
“Today we’re not going to argue about solutions or do anything but try to get on the same page,” Brown said as he opened the meeting at Sacramento’s Memorial Auditorium, surrounded by fellow constitutional officers, legislative leaders, area officials, and several hundred other interested parties. “It’s very hard to come to an agreement if there is no consensus on what the underlying problems are.”
To his credit, Brown produced a lineup of state experts who spent several hours speaking truth to power. Presenting a hard, honest, and unvarnished analysis, they revealed not only the full scope of the fiscal crisis but also the rotten foundation of the smoke-and-mirrors budgets produced by lame-duck Republican Governor Arnold Schwarzenegger and the Democrat-dominated Legislature in recent years.
Among the lowlights:
• California faces a $28-billion chasm between its current spending obligations and its estimated tax revenues during the next 18 months — significantly more than the $25-billion figure previously advertised. The key difference is this: One of many bookkeeping gimmicks Schwarzenegger used to paper over part of the problem has been to book as future income the money that is allegedly to be paid by the federal government as the state’s share of estate tax collections. President Barack Obama’s recently negotiated deal with Republican congressional leaders, however, would cut inheritance taxes to a small fraction of the amount on which the governor has been banking.
• The state’s flow of red ink is likely to accelerate further because about $60 billion worth of budget “solutions” — an amount equal to three-fourths of the current budget — were phony gimmicks that simply pushed shortfalls into future years or, in some cases, made them worse. For example, the governor and lawmakers in the last few years have borrowed $30 billion from financial markets and local governments, long-term payment-with-interest commitments that will fuel future deficits, while the state’s debt load has grown from $34 billion when Schwarzenegger took office to $91 billion today.
• Public schools have been hit very hard by the cuts and delayed payments that Capitol leaders have included in recent budgets — about $21 billion in just the past two years. California now ranks 49th in the nation in its teacher-to-student ratio — 21-to-1 compared to the average of 15-to-1 — amid widespread teacher layoffs and an annual statewide drop-out rate of nearly one in four students.
The plight of schools was slated to be the centerpiece of Brown’s second big budget hearing in Los Angeles this week, as the incoming governor presses a strategy aimed at educating the public about the stark choices Californians face between slashing services or voting to raise their own taxes — a precondition Brown has said must be met for any new taxes or increases.
“What we’re looking at today is much worse than it’s ever been before,” Brown said, “and our opportunities to fix it are very limited.”
FUN WITH NUMBERS: The final turnout figures are in on last month’s election, and Secretary of State Debra Bowen reports that voting was at its highest level for any gubernatorial election since 1994. With high-profile races for both governor and the U.S. Senate, and with Democrats spending millions to increase the Latino vote, the 10.3 million Californians who cast ballots represented 59.6 percent of those registered, almost half of whom voted by mail. The good citizens of Santa Barbara exceeded the statewide average, as 67.7 percent of the 198,457 registered to vote did so, with 57.6 percent of those who voted casting mail-in ballots.