"These are the type that Ahhhnold smokes."
Posted on 06/03/2007 9:08:31 AM PDT by NormsRevenge
SACRAMENTO – State spending under Gov. Arnold Schwarzenegger has been growing faster than it did under former Gov. Gray Davis, who was ousted in a historic recall election driven mainly by a huge budget gap.
The new state budget proposed by Schwarzenegger would spend $103.8 billion in the general fund, which pays for most programs – an increase of more than 30 percent since he took office, about the same as the boost under Davis.
But it took Davis five years to raise spending by about one-third. Schwarzenegger, who was elected in the fall 2003 recall, has done the same thing in four.
General fund spending grew at an average annual rate of 6.26 percent under Davis and has increased to a rate of 6.9 percent under Schwarzenegger, according to the governor's Department of Finance.
When he unveiled a revised budget proposal last month for the new fiscal year beginning July 1, Schwarzenegger said the $16.5 billion deficit he inherited four years ago had been trimmed to $1.4 billion.
“We did it by growing our economy and exercising spending restraint,” the governor said. “Our spending growth (in the proposed budget), for instance, is 1.5 percent over the current budget year, which is certainly a very conservative increase.”
Democrats, with majorities in both houses, are confident that they can reach a budget agreement with the Republican governor – despite his proposals for what Democrats say are a $640 million decrease in welfare and a $1.3 billion cut in transit funds.
“I think we are close, and I expect us to have a budget before July 1,” said Sen. Denise Ducheny, D-San Diego, chairwoman of a joint budget committee that began work on a final version of the budget Friday. “It's not going to be the most beautiful budget. It's going to be something a lot of us wish looked different.”
One of the questions is whether Schwarzenegger, who proclaimed a new era of “post-partisan” politics after a string of legislative successes last year, will have a problem with Republican legislators who want a “conservative decrease” in the budget.
“We would like to see the operating budget balanced,” said Assemblyman Roger Niello, R-Fair Oaks. “We would like to see a healthy reserve – we are going to need it – and any budget that doesn't make progress on the structural deficit is irresponsible.”
Niello became the budget point man for his caucus after Assembly Republicans changed leaders last fall, switching to Mike Villines of Clovis from George Plescia of San Diego, who they felt had not done enough to oppose spending increases.
At least six Republican votes in the 80-member Assembly and two Republican votes in the 40-member Senate are needed for the two-thirds vote required to approve a budget.
Niello said general fund spending in the governor's plan is about $1.5 billion higher than the projected revenue next year, with the gap closed by funds from previous years and other sources. He said the gap in Democratic versions of the budget is roughly $2.5 billion.
Instead of continuing to narrow the chronic structural deficit, Niello said, the governor's proposal could cause a gap of $6.7 billion to reopen in the following year, fiscal 2008-09.
“I think we have some work to do,” said Senate Minority Leader Dick Ackerman, R-Tustin. “One of our basic things is to make sure we don't spend more than we take in – at least bring it closer than they are now. I think they are getting farther away.”
Davis, a Democrat, got into severe budget trouble when a temporary surge in tax revenue from a high-tech boom, about $12 billion, was spent on ongoing programs and tax cuts – producing a huge budget gap when revenue returned to normal.
When Schwarzenegger took office in fall 2003, he inherited a budget signed by Davis that was based on an unprecedented, $10.7 billion deficit bond that faced a court challenge because voters had not approved it.
If the bond could not be issued, the state would not be able to pay off a $14 billion, short-term loan the following June, a failure that many thought would trigger a financial crisis.
Schwarzenegger negotiated a deal with legislators that led to voter approval in March 2004 of a $15 billion deficit bond, Proposition 57, but his proposal for a tight spending limit was watered down to a plan for an optional reserve, Proposition 58.
The governor's first finance director, Donna Arduin, proposed about $3 billion in spending cuts that were not made. The governor's sweeping audit of state government to find wasteful spending that could be cut, the California Performance Review, yielded little or nothing.
Schwarzenegger included a tight spending limit, Proposition 76, in his four “Year of Reform” initiatives, which voters rejected during a special election in November 2005.
Despite the setbacks, Schwarzenegger's liberal critics point out that the budget would now be balanced if he had not repealed a $4 billion increase in the car tax or vehicle license fee. He made good on that campaign pledge his first day in office.
The governor suggested a new revenue source as he unveiled his budget plan last month: leasing the California Lottery to a private operator. The state could receive billions of dollars, enough to pay off the deficit bonds early and close the budget's structural deficit.
The governor also referred to a basic budget problem. The state tax structure, with half the revenue coming from the income tax, produces a revenue stream that soars in good times and slows during economic downturns.
“California's budget still lives on the razor's edge,” Schwarzenegger said. “When there is an economic slowdown, we usually have three choices: We increase taxes, or we make deep cuts, or both.”
In a statement issued after the governor unveiled his revised spending plan last month, Senate President Pro Tempore Don Perata, D-Oakland, said a lottery lease is a “bake sale” that only provides a temporary revenue solution.
“What is being begged here is the need for us to sit down and change the way California funds programs and captures revenues,” Perata said. “I think the governor needs to take this on, or he's not going to want to serve the last three years of his term.”
In the past, advocates of reform have sought to shift more of the state's revenue to more stable sources: sales, property and corporation taxes. But any tax change could produce winners and losers, creating political problems.
Assembly Budget Committee Chairman John Laird, D-Santa Cruz, said he has been advocating tax reform as he talks to groups and appears on panels.
“I think it would have to be a revenue-neutral thing that took our revenue system that was designed in the 1930s, and tweaked in the 1960s, and moved it into this century,” Laird said.
6.26%: Annual average spending increase under former Gov. Gray Davis.
6.9%: Annual average spending increase under Gov. Arnold Schwarzenegger.
$16.5 billion: Structural budget deficit inherited by Schwarzenegger in 2003.
$1.4 billion: Structural deficit in Schwarzenegger's new budget.
SOURCE: California Department of Finance
Don’t blame me, I voted for McClintock.
Me too. We’ll never get what we want.
Is he also completely ignoring the wishes of both the country and the people who helped get him elected while destroying it?
Does the rule of law mean anything to Schwarzenegger? It doesn’t to GWB.
No. But neither will the liberals who are running this state. The next economic downturn is going to set off a tsunami of unmet obligations.
Right now the various liberal constituencies are united behind spending every cent that taxes generate and then some. They won't be united when they are competing for a shrinking revenue stream. They will be cutting each others throats.
That’s something to look forward to.
"These are the type that Ahhhnold smokes."
Of course, the $16 billion was exposed by Dan Walters as totally bogus, cooked up by Arnie&Co when they took office. The fraud continues.
Show me just what Mohammed brought that was new, and there you will find things only evil and inhuman, such as his command to spread by the sword the faith he preached." -Manuel II Paleologus
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