Leg Analyst: Guv's Math Ok, Solutions... So-So

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Legislative Analyst Mac Taylor's new quick look at Governor Schwarzenegger's budget says the calculations seem reasonable, but that there are some better ideas out there for solving the $40 billion shortfall.

The nonpartisan budget guru (relied on by those of us in the press corps as the annual budget battle equivalent of Switzerland) says that Schwarzenegger's plan is a little too reliant on borrowing and a little too vague on how to achieve some of the projected savings.

First, the borrowing. The LAO says about $1 of every $5 of the governor's deficit solutions is achieved through borrowing. That includes about $5 billion in costly revenue anticipation warrants (RAWs) that would be sold to Wall Street investors, and about an equal amount (in the short term) of borrowing against future revenues from the California Lottery. Those two big requests from the financial markets are on top of what the LAO says is another $13.3 billion needed from lenders/investors to make the books balance.

Taylor's analysis (read it here) also points out that the governor hasn't defined some of the ways he proposes to save money, like a $334 million savings in money spent on services for the developmentally disabled. "The budget provides no specifics as to how these savings would be achieved," the report states.

So what does the Leg Analyst suggest? First and foremost, the report calls for swift action to set the date of the anticipated special election; you'll remember that last September's budget deal included two items to be approved by voters, but no date was formally set. The conventional wisdom is that the election would be held on June 3 of this year... but the Legislature has yet to set the date. The LAO recommends more items be placed on that ballot to save money, including one Schwarzenegger vetoed in September's budget deal -- a call to voters to amend the guv's 2002 initiative on after-school programs, Proposition 49. The LAO says voters should also be asked for approval to borrow against gas tax revenues to speed up needed transporation projects.

Today's overview probably isn't big news, but it does seem to point out just how much work remains to be done. As such, the report is probably a good starting place for the Big Five meeting scheduled for this afternoon between the governor and legislative leaders.

Not that they've asked for my advice.

[update 12:50 p.m. -- Taylor highlighted two other things worth noting in his Q&A with Capitol reporters this morning. First, his office believes there could be serious legal issues with the Schwarzenegger plan to use those RAWs to help solve the budget deficit. Taylor says that appears to be taking what's traditionally been a cash flow device (RAWs are almost like a bridge loan), and making it a budgetary device... which might run afoul of 2004's Proposition 58, the balanced budget amendment championed by the guv.

And second, the LAO is recommending legislators call the all-budget-all-the-time special election for late April, rather than wait for June. That's certainly going to get tongues wagging among county registars, the people who actually conduct elections. State law traditionally sets the deadline for calling an election at 131 days in advance. The LAO suggestion would shrink that to probably less than 100 days. It should be noted that legislative staffers believe they could make the decision as late as 80 days before election day.]

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About John Myers

John Myers is senior editor of KQED's new multimedia California Politics & Government Desk.  He has covered California politics for most of the past two decades -- serving previously as Sacramento bureau chief for KQED News and, most recently, as political editor for KXTV News10 (ABC) in Sacramento. He moderated the only gubernatorial debate of 2014, and was named one of the nation's top statehouse reporters by The Washington Post. Follow him on Twitter @johnmyers.

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