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Jigsaw budget

The governor's revised budget plan is a clever -- perhaps too clever -- assortment of pieces.

May 15, 2008

A line separates innovative thinking and all-too-clever gimmickry, but that line is often difficult to see, especially when an idea nuzzles as close to it as does Gov. Arnold Schwarzenegger's revised budget plan. The governor has either developed an ingenious way to make some quick cash and bail the state out of an enormous and potentially destructive budget shortfall, or he is frantically moving around the shells in the same game that got California into this mess in the first place. The plan as it exists today is a provocative conversation starter, but it must be modified to move it unmistakably to the responsible side of the line.

The good news includes Schwarzenegger's decision to drop plans to close state parks and release thousands of prisoners early. Education fares relatively well, getting its full portion under complex funding formulas adopted by voters in the 1980s.

But here's where the creativity -- or gimmickry -- comes in. School funding is hitched like never before to the state lottery. Future gambling revenue would be sold to investors in exchange for cash up front; about a third of that money would help close this year's budget gap, and the rest would form the basis of an automated reserve that would parcel out money to the state in good times and suck it out of the budget in bad. The lottery would be "modernized" -- code for luring more gambling dollars out of more Californians. Voters would have to approve; if they don't, they would be slapped with a temporary sales tax increase that has a disproportionate effect on the poor.

The plan may have some worthy pieces, but not the way they currently are arranged. A tax, which should be Californians' communal investment in the state's future, becomes a punishment for rejecting an expansion of gambling, an activity that (like the tax) tends to empty the pockets of those who can least afford it. The nanny state becomes the vice-pushing uncle. Meanwhile, the poor suffer a second time: Human services are slashed, and Medi-Cal payments drop below even the shocking levels Schwarzenegger proposed in January, driving more doctors from the state and increasing the misery of people most in need of assistance -- and most likely to drag the budget further down because of medical problems not taken care of early.

California faces a huge shortfall, and painful cuts are unavoidable. Schwarzenegger's plan, while purporting to focus on the long term, could undermine the state's future by off-loading current costs, in the form of unmet needs, on coming generations. The governor has put some interesting ideas in play. But some reassembly is required.

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