Friday, July 17, 2009

CALIFORNIA’S BUDGET: AN EXPENSIVE NEEDLESS DELAY: Missing the deadline on a budget has cost California billions and undermined confidence in the state.

Editorial From the Los Angeles Times

July 17, 2009 -- Maybe you've seen the TV commercial. "Sacramento" is asking Gov. Arnold Schwarzenegger to sign a budget that "raises your taxes and spends money we do not have." Schwarzenegger is "standing firm." It's an act, and not a very good one.

The governor and legislative leaders are in what Californians can only hope are the final days of negotiations to close a $26-billion budget gap. Democrats went through their empty gesture a month ago, seeking to fill the hole with taxes on oil extraction and tobacco sales. But they knew those wouldn't fly -- and they didn't -- and there is currently no tax proposal being discussed in budget talks, regardless of Schwarzenegger's claims to the contrary.

What he's trying to do instead is to portray the three additional post-deadline weeks that the state budget has been out of balance as time well spent. That's debatable at best.

If those three weeks really helped the state crack down on supposed waste, fraud and abuse, we'll gladly take it, but we have several serious qualms. First, the savings from many of these reforms may, with luck, just offset the $1.5 billion to $3 billion the state lost by blowing its June 30 deadline, stopping cash payments to vendors and issuing IOUs with interest. So what was gained? The governor might answer that savings kick into future years as well, and that's great -- if there really are such savings to be had. County welfare officials have rejected Schwarzenegger's blithe assertion, for example,that many people in the state's welfare-to-work program aren't really looking for work and, without reforms, never will. CalWorks clients in Los Angeles County are lining up to grab the temporary and part-time jobs made available through the state program.

Are welfare programs chock-full of cheaters? We're left to rely on the word of the governor -- the same man who is raising special-interest money to run commercials pretending that he is in the midst of a fight over taxes.

Meanwhile, reforms in other areas, such as In-Home Supportive Services, were making their way through the Legislature. It is there, in public, where law and policy should be crafted, not in closed post-deadline budget sessions.

It would be merely annoying if the Kabuki, to use the governor's word for it, came during a typical budget disaster year. But this one isn't typical. This year, as its credibility erodes, California is nearing default, in which the state doesn't merely fail to pay its bills but shows no prospect of ever being able to do so. Then it would be too late for reform; no one would do business with California, and other states on the edge -- and finally all states -- could fall.

Schwarzenegger and the Legislature were on the verge of closing the budget gap and backing away from default at the end of June. Delay, ostensibly in the name of reform, deepened the problem and swept away much of the remaining confidence in California's ability to meet its obligations. It's hard to see that as worth the wait.

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