CAPITOL JOURNAL - The state's money woes will trump its big plans

California's state government is i-n d-e-b-t and the hole is getting deeper.

We should change the name of this state to "Denial."

Unless the politicians and voters are willing to raise taxes, forget all these grandiose new government programs Sacramento has been yakking about concerning healthcare and education.

In fact, forget them anyway for now. Tax increases will be needed just to pay for what the governor, the Legislature and the voters already have saddled on the state.

Nonpartisan Legislative Analyst Elizabeth G. Hill confirmed Wednesday what previously had been leaked by the Schwarzenegger administration: The red ink is spreading fast.

Balancing the state budget for the next fiscal year -- honestly balancing it -- will require nearly $10 billion in tax hikes and/or spending cuts, Hill reported in her annual California Fiscal Outlook. Put simply, she projects a 4.6% rise in revenue but a 7% increase in general fund expenditures of $111 billion.

Blame mostly the sluggish economy, particularly the housing slump that has resulted in lower property taxes and, therefore, an increased burden on the state to fund schools. That's how Proposition 98 works.

It's starting to look like a reprise of the Gray Davis era.

The former Democratic governor spoke to the Sacramento Press Club on Wednesday and offered some advice for Capitol politicians: Enact a spending limit that requires them to set aside money in good times to spend in bad times. Until that is done, he said, "governors yet unborn" will face the same deficit dilemma that tormented him -- contributing to his recall -- and continues to plague Gov. Arnold Schwarzenegger.

"Nobody has repealed the business cycle," he said, stressing the inevitability of booms and busts.

But ponder what's happening currently in Sacramento: Think-tankers, interest groups and politicians are proceeding blissfully with the merry notion that 2008 -- as Schwarzenegger promised last spring -- will be "the year of education reform."

The governor proclaimed this after a blue-ribbon report -- written by academicians, funded by foundations and requested by Sacramento -- asserted that public schools would need at least 40% more money, roughly $23 billion, to boost student achievements to acceptable levels.