Blame all the players for the gimmicky budget

SACRAMENTO — Give Gov. Arnold Schwarzenegger some credit. The big guy flexed and the Democrats blinked.

Give Democrats credit. They realized that what the governor demanded last week wasn't worth fighting about.

Let him have it: a bigger, more secure "rainy-day" fund that won't have any impact for years and, besides, may be a good idea. Moreover, it still must be approved by the voters.

Give Republican leaders credit. They held firm and were prepared to deliver enough votes to override the Republican governor's threatened veto of the budget bill.

But Schwarzenegger made some smart moves -- saying he would veto hundreds of unrelated bills and stomping on the Achilles' heel of the Legislature's budget package: a separate "trailer" bill that accelerated income-tax withholding. Republicans would not override his veto of that.

The governor had the Legislature in check. Democrats caved on the rainy-day fund and dumped the withholding idea, which initially had come from the Schwarzenegger administration.

But enough of these positives.

Blame them all for another atrocious, short-sighted, gimmicky budget that set a record for procrastination. They wreaked havoc all across California among small business vendors, healthcare centers and nursing homes that couldn't be paid by the state until a budget was enacted.

The spending plan "gives gimmicks a bad name. I'd have to call it banana republic financing," asserted state Treasurer Bill Lockyer, a former attorney general and legislative leader.

Lockyer complained about "phony inflated estimates of revenue." But the Democrat was especially incensed about the "fiscal folly" of providing "a massive corporate boondoggle" for big business with permanent tax breaks after three years.

"I understand why Republicans would do that," he told me. "But I don't understand why Democrats would. Past tax cuts have contributed to the budget deficit. And they want to add more and have bigger deficits?. . . . If we have to pass tax cuts in order to enact a budget, there'll be no revenue left."

Sadly, it was the best they could do. The economy is tanking. Republicans refused to vote for a general tax increase. Democrats wouldn't cut any more education or healthcare programs. And there was the mountainous hurdle of a two-thirds majority vote requirement.