The revised budget, two of them actually, from Governor Schwarzenegger suggests a grim pathway out of another multi-billion dollar budget hole.
The question now: will the hole be almost another 50% deeper come Wednesday, after the voters weigh in? For that answer, we'll have to wait.
In order not to repeat a lot of what's being written elsewhere about the proposal(s), let's leave it at the following few tidbits:
* Some perspective: In January 2008, the governor's budget team estimated 2008-09 revenues (that's the year we're still in, which feels like it's gone on forever) at $102.9 billion; the Legislative Analyst's Office was slightly more conservative with $102.3 billion. This afternoon, the administration said the year will actually come in at $85.9 billion. That's $16.4 billion less than the original forecast, and a similar amount below actual 2007-08 revenues.
* In Schwarzenegger's optimistic (a funny word in this context) 'Plan A' scenario laid out today, more than 41 cents of every dollar in deficit solutions is borrowing... a $6 billion revenue anticipation warrant (RAW). These are some of the most expensive loans to the state. When I asked the governor today about the fiscal prudence of a RAW versus some kind of tax increase, he said the following: "To look for new revenues is out of the question. We have to solve this problem this way, which is through some borrowing. These are drastic times and it takes drastic measures to solve those problems."
* Even though he said that, there are new revenues in the proposal(s). Small ones to the state, but perhaps not to those who pay. Case in point: higher fees for the residents of the state's five veterans homes. Total generated for the state: $2.8 million. There are also new fees being proposed at some state parks.
* Proposals to sell off stuff always get headlines, but aren't so easy to make happen in a short amount of time. And putting a dollar value on them can be risky. Case in point: the governor's plan a while back to sell EdFund, the state's student loan guarantee fund. It was projected to bring in $1 billion, but still hasn't been sold (and was last valued at 50% of its original estimate). I mention that because in this proposal, the governor suggests $1 billion for selling off part of the State Compensation Insurance Fund. Maybe it's an easier deal than EdFund (and others in the past), but...
* Another one that would seem hard to give a dollar value until you start doing it... is fraud detection. The revised budget pencils in $47.9 million for rooting out fraud in Medi-Cal (saying it'll actually save almost twice that in years to come), and $15.8 million of fraud in the In-Home Supportive Services (IHSS) program. No one would quibble with the goal; one wonders, though, whether the savings estimates are reasonable or high.
There's much more to examine in this proposal. But perhaps Capitol denizens should take a breath or two, and see what the voters do on Tuesday. Until then, we won't know the exact size of the hole... and what options are really going to be in the mix.
So now, we wait...