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State's financial trauma just beginning

Discord over budgets will almost certainly worsen as economy slows and voters are asked to weigh in.

September 21, 2008|Evan Halper, Times Staff Writer

SACRAMENTO — After a year in which the policy agendas of the governor and legislative leaders were devoured by the state's colossal financial mess, the budget deal struck last week all but guarantees the same political misery next year.

The spending plan is expected to fall out of balance quickly. Come winter, emergency cuts will probably be needed. Proposals to invest in -- or merely maintain -- the state's roads, schools and healthcare facilities will be put on the shelf again. The discord may well spill over into a ballot fight as lawmakers and interest groups, frustrated with the inaction at the Capitol, take their goals to voters.


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And the bickering over who caused the mess will no doubt begin anew.

Senate President Pro Tem Don Perata (D-Oakland), now serving his final term in the Legislature, offered this prediction for the incoming class of legislators: "If they are not drinking hard liquor by now, they'll start."

In times of budget crisis, California governors and legislators are fond of counseling that when in a hole, one should stop digging. But they disregarded their own advice last week.

"It's the most irresponsible budget of the past half-century," said state Treasurer Bill Lockyer.

The spending plan that Gov. Arnold Schwarzenegger may sign as soon as Monday pushes much of the state's $15.2-billion deficit forward. It employs accounting gimmicks and creates billions of dollars in corporate tax breaks with no plan for covering them.

This is not the way the budget is done in many other states. But California can't seem to break the cycle.

"The system itself is not working," Schwarzenegger said at a news conference Friday.

The restraints on spending that Schwarzenegger won from the Legislature last week will take years to provide any relief to the state. Republicans say the measures will do nothing to control spending. Democrats say the constraints will further squeeze services without solving the state's long-term fiscal problems.

The latest deficit punt comes at a particularly inopportune time. Even if California were in the black, the state would face an extremely tough budget next year; work on that plan will begin in January.

The deteriorating economy, compounded by the global credit crisis, makes further sharp revenue declines likely. The state has 240,000 fewer people working than it did last summer.

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