CA: Analyst: Budget proposal goes in 'wrong direction'

San Diego Union - Tribune ^ | 1/13/06 | Ed Mendel

[NormsRevenge]

SACRAMENTO – Gov. Arnold Schwarzenegger's proposed $125.6 billion state budget moves in the "wrong direction" by using a temporary surge in tax revenue to expand programs rather than pay down debt, Legislative Analyst Liz Hill said yesterday.

The nonpartisan analyst said the governor's budget would widen a deficit the state has been struggling with for six years, producing a budget gap of $5 billion to $6 billion next year.

"Our concern is that we are expanding spending at a time when we have a significant state budget problem," Hill said. "We would urge using more of the unanticipated revenues to pay down past borrowing. We think also the Legislature should consider increasing the state reserve."

Hill said the governor's proposal to spend $97.9 billion in the general fund, which pays for most programs – an increase of $7.6 billion, or 8.4 percent, from the current budget – is an increase of more than twice the amount required by law.

For example, the governor's proposal to increase funding for schools and community colleges to $54.2 billion, up $4.3 billion, or 8.7 percent, is well above the $2.2 billion increase required by Proposition 98, which set a floor for annual school funding.

The governor also proposes repaying a $920 million loan from transportation funds a year early. To help balance previous budgets, the state took several billion dollars from transportation funds.

Hill said the governor's proposal "ratchets up ongoing spending by about $2 billion," which means the annual spending needed to meet the requirements of law will increase by that amount.

As he unveiled his budget proposal Tuesday, the governor noted that one of his four "Year of Reform" initiatives rejected by voters in November, Proposition 76, would have curbed much of the "auto pilot" spending that has made it difficult to balance the budget.

The string of budget deficits began under former Gov. Gray Davis when a windfall of tax revenue from the high-tech boom was used to expand programs and cut taxes, producing a large budget gap when revenue returned to normal levels.

Schwarzenegger, running for re-election this year, emphasized during his budget presentation that the $16 billion deficit he inherited when he took office three years ago has been reduced to $4.7 billion in his proposed budget.

He said his plan to deal with future deficits is "not to increase taxes and not to create the revenues that way, but to stimulate the economy so the economy does well, so we bring in extra revenues to our treasury."

Hill's report also looked at the governor's plan to spend $222 billion on roads and other public works during the next decade. The analyst liked the long-term view, multiple funding sources and a broad scope that includes flood control and the trucking of business goods.

Among the questions Hill raised were projections of federal, local and private funds and the need for limiting bond payments to no more than 6 percent of the general fund. The governor's plan would ask voters to approve $68 billion worth of bonds during several elections.

[NormsRevenge]

Hill said the governor's proposal to spend $97.9 billion in the general fund, which pays for most programs – an increase of $7.6 billion, or 8.4 percent, from the current budget – is an increase of more than twice the amount required by law.

---

Must be an election year.

[RightOnTheLeftCoast]

Excellent analysis by this Hill person. I hope Ahhhnold the RINO is listening.

[goldstategop]

Yep. And voters love new spending. No one ever seems to ask for budget cuts, unless of course, its the fellow behind the other tree who is unlucky enough to be affected.

(Denny Crane: "I Don't Want To Socialize With A Pinko Liberal Democrat Commie. Say What You Like About Republicans. We Stick To Our Convictions. Even When We Know We're Dead Wrong.")