Easy fixes got us into this budget mess
California's fiscal crisis is the result of a volatile revenue system, not out-of-control spending.
Next year's state budget, with no changes to current programs or revenues, will be $10 billion in the red, and similar shortfalls are projected for the following years.
Some elected officials responded to this news earlier this month with time-worn bromides. Others painted themselves into a political corner by taking hard-line positions on certain cuts or new taxes a full eight months before next year's budget votes.
But the chronic boom-and-bust budget cycle is rooted in a simple problem: Californians generally believe in government and want it adequately funded -- so much so that they repeatedly have voted for laws or constitutional amendments that lock in guaranteed spending for, say, education or transportation. At the same time, the state's revenue system is antiquated and volatile. It is heavily reliant on income taxes, for instance, and so the pains of an economic downturn have a magnified effect on state revenue.
The short-term solutions that get us through on a year-to-year basis all have been tried -- and tried. It's time for bipartisan hard work to bring California's long-term spending demands into balance with long-term revenues. It won't be easy, but the easy paths have been taken, and they've left the state awash in red ink.
When the state budget has taken a turn for the worse in the past, some legislators resisted common-sense solutions to increase revenue alongside prudent cuts. Instead, they called for only massive cuts to schools, healthcare programs, transportation, local governments and environmental programs. The public won't stand for such massive cuts. (Witness the governor's 20-point tumble in the polls when he proposed fiddling with education funding in 2005.) Yet the same public also does not support major increases in taxes.
So the pattern has been that Republicans agree to cuts proposed by Democrats but then leverage the requirement for a two-thirds vote on the budget to block any proposal that would increase revenue. And we end up with bad quick-fixes. The perfect example is the $15-billion bond issued in 2004 to cover the last major budget shortfall. Repayment on that debt now costs the budget $3 billion a year, a stark reminder of the price we pay for putting off the structural overhaul the budget system needs.
To start, Democrats and Republicans will have to take a hard look at the facts of the state budget -- facts that belie the oft-repeated accusation that we have a "spending problem" in Sacramento.
