Dan Walters: Governor's claims on budget are undermined by his own data

Sacramento Bee ^ | 2/28/6 | Dan Walters

[SmithL]

After Arnold Schwarzenegger appeared on "Meet the Press" on Sunday, his re-election campaign quickly dispatched an e-mail to reporters, quoting his claim to have sharply reduced spending and brought the budget much closer to balance.

Characterizing his $222 billion infrastructure improvement plan as "investing in the future" but "not spending," Schwarzenegger added, "Spending we have reduced. Remember what I said. We have cut down the structural deficit by 75 percent. It was expected to be $16.5 billion. We're now at $4.7 billion. That is great progress ... no matter what anyone says."

Schwarzenegger thus exposed to a national audience a bit of political propaganda that he and his aides have been peddling in California, including a Friday night speech to the state Republican Party convention - that he's been very tight on spending and thus is coming close to erasing the state's chronic budget deficit.

Were it true, it would mean that Schwarzenegger was fulfilling the promise he made to voters when he was elected in 2003 to clean up the state's fiscal mess, which had led to the recall of predecessor Gray Davis. And - more important to him - it would support his contention that the state can easily afford to repay the $68 billion in infrastructure bonds that he wants to float.

Unfortunately for him and the state, however, data that the administration uses to support its claim of looming solvency undermine the contention.

One has to go back a couple of years to put the claim in context. Schwarzenegger's first budget director, Donna Arduin, stunned Sacramento when she declared that the state had run up $25 billion in debt from three years of deficit spending, and projected that left unchecked, the cumulative deficit would reach $62 billion by June 30, 2007, including a $16.6 billion gap

[SmithL]

Your tax dollars at work.

[calcowgirl]

"...We have cut down the structural deficit by 75 percent. It was expected to be $16.5 billion. We're now at $4.7 billion. That is great progress . . . no matter what anyone says."

Schwarzenegger thus exposed to a national audience a bit of political propaganda that he and his aides have been peddling in California...

Were it true, it would mean that Schwarzenegger was fulfilling the promise he made...

Unfortunately for him and the state, however, data that the administration uses to support its claim of looming solvency undermine the contention.

More "truth twisting," as usual.

[goldstategop]

Yeah so they know its not gonna last forever. As far as California's dunderhead voters are concerned, its tiiiime tooooo paaaarrrrrrrrttty!

(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.")

[calcowgirl]

One has to go back a couple of years to put the claim in context. Donna Arduin stunned Sacramento when she declared that the state had run up $25 billion in debt from three years of deficit spending, and projected that left unchecked, the cumulative deficit would reach $62 billion by June 30, 2007, including a $16.6 billion gap during the 2006-07 fiscal year.

The latter is the number that the administration has been citing of late.... She assumed that during 2006-07, state general fund spending would reach $99.8 billion but revenues would be just $83.2 billion, leaving a $16.6 billion shortfall.

Here's the way the numbers work out mentioned in the article. Revenues have increased, largely due to temporary income. And spending is only $2 billion less than the bloated forecast Arduin and Co. developed for the 2006-07 Budget year:

                   Arduin     Gov Budget  Legislature
                   ------     ----------  -----------
Revenue            $83.2       $92.0        $93.0
Spending            99.8        97.9         97.9
                   -----       -----        -----
Shortfall/deficit  (16.6)       (5.9)        (4.9)

These are the numbers Arnold quotes--what a classic sham job. Understate projected revenues and overstate spending obligations (Arduin did her job well--and then split town). It lowers the bar of expectation, making the leader's job easier and allows for a future performance to articifically appear positive. In fact, general fund spending has increased 37% under Arnold. I guess he doesn't want to tout that fact.

[calcowgirl]

. All of these numbers mean one thing: Lower-than-expected deficits have almost nothing to do with Schwarzenegger's holding down spending. They have almost everything to do with the surprising vigor of the economy, which has pumped many extra billions of dollars into state coffers. The nonpartisan legislative budget office pegs the windfall of unanticipated revenues at $11.5 billion over three years.

How much infrastructure could we have purchased with $11 billion (without borrowing) had Arnold just reeled in spending?

[Czar]

"More "truth twisting," as usual."

Far too kind.

Outright lying. Same thing as when the Rats claim that a reduction in the rate of increase is a "cut" in the underlying line item.

Arnold has just about hit bottom. Even McClintock won't be able to put lipstick on this pig.

[goldstategop]

Why not it aside for a rainy day fund? California needs a financial cushion. But then again, these people have already forgotten what happened five years ago. Amazing.

(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.")

[Amerigomag]

You get it! Spread the word.

Let's ring up our resident, CRP operatives and get their spin.

[calcowgirl]

Budgeting isn't rocket science, nor are California's budget problems. All it takes is the will of the politicos to do it and be honest enough about the numbers. Unfortunately, they have deferred to the Andrew Fastow method of accounting and bookkeeping. They have been building a house of cards--and we all know what happens to those, eventually. To avoid them coming crashing down, they will try to push that inevitable outcome further into the future through a $222 plan that will borrow and bring in foreign investors to try to 'leverage' the state.

A deficit that's lowered, but not eliminated, only by a windfall of revenues leaves the state very vulnerable to even a mild downturn in the economy. "These revenues will not last forever," Legislative Analyst Elizabeth Hill reminded us last week.

[calcowgirl]

The sham surrounding the numbers the administration has been quoting has been obvious for quite some time. While I'm glad that it is being exposed, I have to wonder why they chose not to expose it earlier. The most obvious questions never get asked and the most obvious lies go get a pass. Just 3 months ago, we heard "Pass Prop 76 or I will have to raise taxes." And then we find out that they have an $11 Billion revenue windfall. Elephant, what elephant? The absurdity is stunning. Loyal Republicans need to look around at who they have invited to the party. Why do I get the impression that some people would invite a pedophile to dinner with their 5 year old son?

[Amerigomag]

While I'm glad that it is being exposed, I have to wonder why they chose not to expose it earlier.

The obvious they is the MSM represented by the McClatchy Syndicate.

The answer is easy. It wasn't in their best interests 2 years ago while the gang was madly increasing social spending and the CDP hadn't yet chosen a gubernatorial candidate.

Today things are different, principally because the CDP can't field a credible candidate. Today, with conservatives allied against the policies of the CRP candidate, the MSM is going to pound the Austrian regarding his shams in support of his liberal agenda in a fashion that doesn't highlight his core philosophy.

Note that McClatchy did not attack the increased spending per se, just the ploys used to obscure the truth by both sides.

[calcowgirl]

This is why liberal Republicans are so destructive to the party. The leftward MSM won't expose the sham because it advances their ultimate agenda and the conservative new-media won't expose it because they are silenced into supporting the (R) Candidate on the "he can win" (illogical) logic.

Why not make the merger formal and just declare California a one-party system (that of socialists and corruption).

[Elyse]

Lower-than-expected deficits have almost nothing to do with Schwarzenegger's holding down spending. They have almost everything to do with the surprising vigor of the economy, which has pumped many extra billions of dollars into state coffers. The nonpartisan legislative budget office pegs the windfall of unanticipated revenues at $11.5 billion over three years.

I know next to nothing about the California budget issue, but if I'm interpreting this right then I'm a little confused. Haven't the Democrats been painting a dismal picture of the economy? How could there possibly be 'surprising vigor' in the California economy?

I hope that the disallusioned CA Republicans will at least throw this back in the Democrat's face. In effect, in order for them to make Arnold look bad, they have to make Bush look good.

[calcowgirl]

How could there possibly be 'surprising vigor' in the California economy?

Read up! It is eye opening. Here are some resources:
href="http://www.freerepublic.com/focus/keyword?k=calbudget
href="http://www.lao.ca.gov/analysis.aspx?year=2006&chap=0&toc=0

The short answer to you question is that revenues are not "surging," but are temporary and we are indeed hanging on a thread. A downturn in the real estate market, or other, and we are in a serious spot. The LAO points out that many of the revenues are temporary, resulting from a tax amnesty plan and other non-recurring revenue sources. It was also reported that California ended the 2004-05 fiscal year with a surplus of over $9 Billion. Instead of using it to pay down debt or to improve infrastructure, or set it aside while eliminating the structural deficit in the budget process, much of it has been used to fund new social programs and other new recurring expenditure levels. By the end of the budget year, that $9 Billion was projected to dwindle to only $613 million.

I hope that the disallusioned CA Republicans will at least throw this back in the Democrat's face. In effect, in order for them to make Arnold look bad, they have to make Bush look good.

High spending and/or irresponsible borrowing, whether promoted by Democrats or Republicans, is commonly denounced by conservatives on these threads.

[calcowgirl]

FYI, here is the current outlook according to Sacramento Bee journalist Dan Weintraub's blog, based on the Governor's January Budget proposal:

Finance Director Michael Genest got back to me and said he misspoke when he said the operating deficit would be $5.5 billion in 2007-08. He now says it would be bigger. And he's provided the chart that shows the projection for the annual operating deficits for several years going forward. The numbers:

2005-06 $2.6 billion
2006-07 $6.4 billion
2007-08 $6.6 billion
2008-09 $9.7 billion
2009-10 $8.6 billion

And this in good economic times. Wow.

[SierraWasp]

He was doin his dangest to do exactly that, this morning on KSFO with Melanie Morgan and Mark Williams who was visiting from KFBK in Sacramento.

Melanie really let him have it right between those wild eyes and Mark added the punctuation!!! Tom kept hollerin... Stop, stop, stop, WAIT!!! Then he would admit he couldn't support everything the Gov was doin but tried so desperately to say we should all support him anyways!!! Geeze Tom... Put a sock in it!!!

[calcowgirl]

That would have been painful to listen to.

[Elyse]

Thanks for the info. As I said, I know next to nothing about the CA budget issue, I was only basing my comments on the article.

[SierraWasp]

Now THAT chart really tells the true story and puts the LIE to all the crappola they're "tamping" us down with!!!

For all you "pragmatists" that read this reply... We're not turning to the Dems because we're critical of the Repubs... We're simply demanding the Repubs act like the winners they're supposed to act like especially after they've won. We're also demanding they make their actions follow all their bold rhetoric!!! (in fact we're not turning to the Dems at all!)