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Magic Bullets Have Run Out

June 18, 2004

The temperature has edged over the 100-degree mark in Sacramento, which usually means that tempers inside the Capitol also are rising. But the mood is different this year as Gov. Arnold Schwarzenegger begins budget negotiations with Democratic and Republican leaders in the Senate and Assembly.

In fact, things are pretty much fantastic, Schwarzenegger said Tuesday as he prepared to meet with Assembly Speaker Fabian Nunez (D-Los Angeles), Senate President Pro Tem John Burton (D-San Francisco) and their GOP counterparts, Assemblyman Keith McCarthy of Bakersfield and Sen. Dick Ackerman of Irvine. He predicted that a budget would pass soon, saying "this is a miracle because when you look at the history of those budgets, they have dragged into September."

The miracle of timing unfortunately doesn't extend to the content.

Schwarzenegger grandly promised to "cut, cut, cut" state spending to erase the $15-billion budget shortfall. In fact, he resorted to a lot of borrowing and other fiscal gimmicks to come up with a technically balanced budget, much as lawmakers and then-Gov. Gray Davis had done in the previous two years. The proposed 2004-05 budget, even with its moderate cuts, still contains a structural deficit estimated at $7 billion that will have to be addressed next year.

Schwarzenegger's budget falls short of his sweeping campaign promises of last fall, as have his actions on campaign finance reform and open government. Governing is a slow, sticky process. Even Schwarzenegger, or at least his aides, spent two months in negotiations to even get near an agreement for casinos on Indian land to give the state a percentage of their profits.

The casino talks and the ceremonies following Ronald Reagan's death helped slow the budget process, but the governor has still been able to mobilize his perpetual optimism -- and power with voters -- to forge reasonable agreements with legislative leaders in an atmosphere of cooperation. There are differences to be ironed out on issues including healthcare, state aid to cities and funding for higher education but no serious indication that they will be barriers to agreement by the final deadline, June 30. That's progress toward removing one of the voter irritants that led to last year's recall election against Davis, and Schwarzenegger is organizing rallies if negotiations need a kick.

All of this is not the same as solving the budget problem.

Revenue shows no sign of catching up with outgo. Schwarzenegger is going to have to sacrifice some of his popularity with voters next year to stop the red ink. In the meantime, the Legislature should develop its own plan, including more sophisticated ways to save on government costs and to find modest increases in revenue. The magic bullets are all used up.

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