As California's state budget fracas begins to heat up, it's getting awfully hard to sort through the numbers, data, and pitches that are being presented to prove particular points.
So let's take a moment to get our bearings. (Note: especially for me, as I was on a brief vacation last week.)
First, an examination of the problem... or, rather, what is thought to be the problem. Using macro data from the Department of Finance posted online last Friday, state government is projected to overspend its means (not living within them, to paraphrase Governor Schwarzenegger) by $6.2 billion in the fiscal year ending on June 30. That includes the use of surplus cash from 2007-08; without that surplus, and the state only taking in $86 billion while spending $94.5 billion, the deficit would be worse.
Schwarzenegger is proposing to reduce current year spending by $3.1 billion, thus cutting the actual year-end "deficit" in half.
(Trivia: how can the state end the year with a deficit, you say? Ah, perhaps you should re-read the state constitution... which requires only the enactment of a balanced budget.)
In the budget year beginning July 1, the state is now projected to spend $101 billion... while taking in $88.8 billion. That's an overspending problem of a little more than $12 billion.
The governor's plan: reduce spending by $17.5 billion, to a total of $83.5 billion, and boost revenues by $3.4 billion, to $92.2 billion (that includes things like his plan for accelerated tax payments, sale of part of the state's workers comp system, and more).
If all of that happened, the state would -- according to the summary charts -- have a surplus of $5.6 billion as of July 1, 2010.
Notice the use of the word "surplus" and avoidance of the word "reserve." That's because the word "reserve" is quickly becoming politically loaded. Earlier this week, Senate President pro Tem Darrell Steinberg called for a smaller "reserve" in order to avoid some of the governor's social services cuts; Schwarzenegger later called such a notion "hallucinatory."
Who's right? It probably depends on what strategy you think is best for addressing the crisis at hand.
If you want to do as much as you can now... even if the spending cuts are devastating... then perhaps you see Schwarzenegger's larger surplus as the correct strategy. If you think the immediate crisis should be resolved frist, and that the budget mess is so volatile that it should be revisited in a few months once things become more clear... then you're likely to support the Democratic viewpoint of trimming spending to current projections of revenue and not much further.
The argument isn't just one of semantics, but probably a sign that the 2009 budget debate seems to now be focused on how many bad solutions need to be enacted now... and how many can wait.
Bottom line: the actual deficit projected through next June by the governor's finance team now appears to be about $20 billion. The extra $4.5 billion... which includes concerns of the Legislative Analyst's Office about the economy, and which some news outlets continue to lump into the deficit... is actually not part of the red ink. Not yet, at least.