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GEORGE SKELTON / CAPITOL JOURNAL

Whatever it takes, pass a budget

September 04, 2008|GEORGE SKELTON

SACRAMENTO — The Legislature and the governor may have reached the point where the most responsible thing they can do is to be irresponsible.

Acting responsibly may be beyond their grasp. They may be incapable of passing a state budget that honestly balances the books, one that includes a combination of spending cuts and tax increases.

Now 66 days into the fiscal year without passing a spending plan -- a record -- it's perhaps time for the Legislature to produce another irresponsible budget that relies on borrowing and accounting gimmicks, one that digs the state deeper into its hole.

Yes, I'm serious.

Gov. Arnold Schwarzenegger recently told me he'd veto such a "get out of town" budget. "I am very adamant about not creating more debt." That was commendable. But for many, the situation is becoming more dire by the day.

Hundreds of small business vendors who sell to the state aren't being paid. Many are struggling to keep their doors open. Same with nursing homes, community clinics, care centers for the disabled. . . . Also being stiffed are community colleges and some K-12 school programs.

In an economy short on cash, the state has held back $4.3 billion so far during the budget gridlock. And it's only going to get worse. If there's no budget in September, an additional $7.6 billion will be withheld, most of it from private enterprise.

Republicans are pushing for an emergency appropriation to pay Sacramento's victims. But, by law, the governor must request it. And he refuses, believing that would take the heat off the Legislature to compromise.

"The legislators are arguing and fighting, and I say to them, 'Get out of your ideological corners,' " Schwarzenegger told reporters Wednesday at a photo-op with local officials in Placerville, a Sierra foothill town represented by two GOP lawmakers he obviously was trying to pressure.

One later responded caustically in a prepared statement. "It is disappointing to see him travel from city to city to criticize members of the Legislature," said Sen. Dave Cox (R-Fair Oaks). "It is long past time to stay in the state Capitol, roll up our sleeves and do the nitty-gritty work of negotiating a budget."

Time also is of the essence if Sacramento is to avoid tossing bundles of money down a Wall Street rat hole.

The state normally borrows short term in September to even out cash flow. But if there's no budget, that borrowing could cost an additional $200 million to $500 million in interest. The politicians may have only another week or two to enact a spending plan and escape the lenders' gouge.

Credit Schwarzenegger and Senate President Pro Tem Don Perata (D-Oakland) for fighting the valiant fight and insisting that the state kick its addiction to borrowing.

They recently resisted behind-the-scenes efforts by Republicans in both houses and Assembly Democrats to devise a no-tax budget that relied on widespread borrowing, dipping into various state money jars, including local government and transportation accounts. That borrowed money would have to be repaid within three years at steep interest rates.

But the only practical way to avoid such borrowing and fill a $15.2-billion deficit hole is to raise taxes.

Schwarzenegger has proposed a temporary one-cent sales tax increase to raise roughly $4 billion. Senate Democrats have agreed. Assembly Democrats earlier proposed $6.7 billion in tax hikes on the wealthiest income earners (couples above $321,000) and on corporations.

But Republicans won't talk taxes -- at least not enough of them to pass a budget when an inane two-thirds majority vote is required. That means at least two Republicans in the Senate and six in the Assembly. The Senate seems doable; the Assembly practically impossible.

"Democrats have to realize we're not going to raise taxes," Assembly Republican Leader Mike Villines of Clovis told me. "Once they realize that, then we can negotiate a fair budget -- not a perfect budget."

Democrats already have given significantly on program cuts, although not enough for Republicans.

Assembly Democrats have agreed to pare schools $2.2 billion below what they normally would receive. Senate Democrats have signed off on the governor's $3.3-billion reduction.

Democrats have agreed to cancel state cost-of-living adjustments for welfare families and the impoverished aged, blind and disabled.

Everybody wants to raid public transit money.

Republicans advocate selling future lottery profits to an investor for $2 billion. "That's legally questionable" without voter approval, notes Assembly Budget Committee Chairman John Laird (D-Santa Cruz).

Schwarzenegger and Democrats -- but not Republicans -- seem within striking distance of a compromise on budget reforms aimed at preventing future deficits.

What's the answer for a budget deal? I asked Laird. "I don't know. We [Democrats] have proposed to do a little of everything. Republicans don't buy it."

This is an abysmal impasse, the worst I've seen.

One major problem is Republican lawmakers feel they owe nothing to Schwarzenegger. They view him as unreliable politically and philosophically. So the governor can't deliver any GOP votes. Hasn't so far, anyway.

Maybe they'll all surprise us and act responsibly. But it needs to be soon. Even an irresponsible budget is better than none as fall approaches.

Call it a season and wait until next year. The team's bound to get better.

--

george.skelton@latimes.com

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