I watched the Democrat press conference on the Calcliptv Youtube channel
<object width="425" height="344"><param name="movie" value="http://www.youtube.com/v/2NS-MyE09p4&rel=0&color1=0xb1b1b1&color2=0xcfcfcf&feature=player_profilepage&fs=1"></param><param name="allowFullScreen" value="true"></param><param name="allowScriptAccess" value="always"></param><embed src="http://www.youtube.com/v/2NS-MyE09p4&rel=0&color1=0xb1b1b1&color2=0xcfcfcf&feature=player_profilepage&fs=1" type="application/x-shockwave-flash" allowfullscreen="true" allowScriptAccess="always" width="425" height="344"></embed></object>
and found several items of interest. It appears that everyone is accepting the Governor’s calculation that the current budget ending June 30th and that the next budget through June 30, 2010 is just shy of $25 billion out of balance. Normally there are fights over the various methods of estimating expenditures and revenues that reach this number. The fact this number is being accepted is an alert to me that it is probably worse than that by billions.
While there are some glimmers of economic recovery in parts of America, it is dimmer in California. And when the economy does recover, government revenues will lag. Companies will not pay taxes until they have a profit. Consumers will not go on buying sprees until they have paid off existing bills and made sure their jobs are secure. Income taxes and sales taxes will be slower to rebound than jobs, and the budget crisis will last even longer than the economic crisis.
The Democrat leaders announced that their solution falls a billion dollars below the Governor’s solution. So even though they agree on the magnitude of the problem, they are unable to come up with a real solution to it. They are committing themselves to a never-ending story of budget revisions monthly until their terms in the legislature end and they hand off the problem to someone else. This is not responsible work. People know there is a problem. People know there are cuts in government spending that have to be made. To adopt an incomplete plan and then come back in a few months to enact further cuts just keeps all those who benefit from government on edge not knowing if the cuts they are already enduring will be surpassed shortly with even bigger hits. It would be better to make those hard decisions now showing all that no one is immune from cuts and assuring folks that the solution matches the size of the problem.
They figured that the Budget Conference Committee had adopted 45% of the Governor’s cut proposals as is. Congratulations. They should adopt those en masse with no other riders this week and the Governor should sign them immediately. It will not solve the entire problem, but it will show the public, the bankers and the voters that state government can take some baby steps in the right direction when it has to.
The tax increases are silly. They are punitive when taxes should be fair. They will not bring in money fast enough since we need cash this month, and they will not work as tax increases because they will never bring in the revenue ascribed to them. I fully expect the Republicans to do the responsible thing and kill the tax increases, but even that is a waste of precious time. As both the Controller and the Treasurer have testified, the state cannot meet its obligations, nor does it have the credit to cover routine cash flow gaps, and that is just talking about this month. Without revising the budget, the problem grows. That is an outcome that is unacceptable.