How Do You Solve A Problem Like…
the state's budget deficit?
Voters head to the polls in 15 days, while many others are already voting by absentee. And yet, there is very little discussion about one of the biggest tasks any governor has to tackle upon taking the oath of office in January: California's chronically unbalanced budget.
Current estimates peg the imbalance for the 2007-08 fiscal year at around $4.5 billion. But a lot of things could impact that number. The economy is always a major factor in determining the amount of tax revenues that come in. But next year, other issues could also widen the gap. A federal judge's intervention in the state's prisons could cost as much as another $600 million; and if the state loses a court battle over its plan to sell bonds to pay pension obligations, that's another $900 million.
Getting specifics on the campaign trail about how to fix the state's problems isn't easy. This year, one major party candidate is offering details-- but perhaps not enough to fully answer the question-- while the other candidate pretty much refuses to address the question at all.
On this morning's edition of The California Report, we took a look at the budgeting plans of both Phil Angelides and Arnold Schwarzenegger. In particular, the goal was to examine what the spending priorities of either man might be if they win on November 7.
For Angelides, the task was trying to determine whether his proposals add up. The Democrat has advocated new spending that appears to total around $2.7 billion (using numbers provided by his campaign in some instances, and by the nonpartisan Legislative Analyst's Office in others). How he would pay for that is a little harder to calculate. Angelides offers up ideas that might get to the magic number of about $7.2 billion (adding his new spending to $4.5 billion for the currently projected deficit). But some long-time budget analysts wonder whether things like "$1 billion in government efficiencies" will ever happen, given Governor Schwarzenegger made those same promises, and failed to achieve them.
Plus, might some of the new tax revenues (from raising taxes on the most affluent) be automatically diverted directly into K-12 education, rather than some of his proposed programs? "The interaction between what he's proposing and the [voter approved] Proposition 98 guarantee has not been very clear," says Fred Silva of the Public Policy Institute of California and the New California Network.
On the other side, Governor Schwarzenegger seems to have made a point to avoid discussions of budget plans at all costs. When asked about the budget and a possible economic slowdown during the gubernatorial debate, he said: "This is not my style to talk about hypotheticals."
And in a recent campaign event, I asked him whether his aversion to tax increases and any new budget borrowing (given his promise to "tear up" the state's credit card) means that future deficits can only be erased by either a strong economy... or spending cuts.
But the governor, staying on the message of his event, never answered the question.
If the governor sticks to his campaign promises, Silva says, the "flexibility about dealing with a given fiscal problem obviously narrows."
And Silva sums up the two candidates this way.
"One says, 'I'm going to raise taxes so I don't have to reduce spending.' And the other says, 'I'm going to continue to try to keep the spending base flat and do the best I can without raising taxes.'"
You can hear this morning's story here.
