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Assemblyman Donald P. Wagner

A Coming Fiscal Crisis?

California’s budget situation is rosy for the first time in my more than three years in the legislature. I’d like to say “You’re welcome.” But I can’t for two reasons:

First, while my Republican colleagues and I have been fiscally responsible in our legislative priorities, it is you, not me or Gov. Brown or anyone else in Sacramento, who is fiscally responsible for the surplus. You paid the additional income, sales, and capital gains taxes that gave us the healthy budget we enjoy today. You are responsible for the surplus, not the politicians.

Second, it won’t last. That is not me talking, that’s the governor’s own warning in the budget he put out last week. There is just no sense in any legislator taking credit for a temporary improvement in the state’s fiscal health unless . . .  well, I’ll come back to that in a moment.

There are several things to like about the governor’s proposed 2014-15 budget. Most importantly, it admits that the surplus will be short-lived. It comes from – to use the governor’s words – a “windfall” in capital gains receipts and “temporary” tax increases. The governor appropriately urged “fiscal restraint” given the nature of this surplus. I fear, though, that this urging will fall on deaf ears, leading to the next budget crisis, as there has been very little done by Sacramento over the last few years to fix our underlying structural problems and to set us on a more sustainable path. In fact, immediately after the governor went public with his spending plan, numerous Democratic legislators put out press releases demanding even more spending.

As to that spending, I appreciate the governor seeming to make good on the promise in his Proposition 30 tax increase campaign that the new tax revenue will protect education. I am also very glad to see over $100 million in additional spending for our courts. The judiciary has been strangled over the last few years, which causes real pain to real people as they seek justice. The governor’s new budgetary relief for the courts is a start towards rebuilding our judicial system.

Finally, I applaud the governor’s plan to build up our rainy day fund and to reduce long term debt, apparently by about $11 billion in this fiscal year. However, while that seems like a lot in debt repayment, the budget makes clear that this $11 billion is only a small percentage of our total debt. Thus, I would like to see a larger percentage of the budget go to both the rainy day fund and to pay down the debts run up in prior years,

So there are things to like and signs of trouble in the new budget. Which returns us to the question of whether legislators, or the governor for that matter, should take any credit for the good news. The answer, since all of that new money came from you and not us, is no unless . . . unless we now enact sound legislation to protect the surplus and grow the economy. Only then would Sacramento politicians actually contribute to healthy economic times.

Unfortunately, Sacramento’s track record is not good. Past surpluses have been squandered with a rash of new and unsustainable spending. That mistake got us into the recurring crises of the last several years.

The way to avoid the mistake is to enact responsible legislation creating jobs to grow our economy rather than to unleash a rash of new spending. Sadly, though, as mentioned, we have numerous calls already from the legislature for new and greater spending. We must avoid the temptation to such spending. That will lead to a certain return to the bad times.

Assembly Member Wagner represents the central Orange County communities of Anaheim, Irvine, Lake Forest, Orange, Tustin, Villa Park and surrounding areas.