Dan Walters of the Sacramento Bee (my hometown paper), provides an important clarification to the question of what is a budget cut and why the answer should be born in mind when talking about California’s (or any state’s) budget:
“This myth is behind the $42 billion deficit figure we see all the time,” Reed wrote recently. “That’s based on the bureaucratic assumption that spending just has to go from $103 billion this year to $111 billion next year. Why should this assumption be the bedrock of all newspaper stories about the budget?”
Reed’s criticism, often echoed by radio talkers and some politicians, would be legit if the state had a zero-based budgeting system. But in fact, provisions of law or, in some cases, the state constitution, dictate much of the spending, such as welfare grant levels, aid to schools or who is locked up in prison.
The governor and legislators cannot arbitrarily change those numbers; they must change the law to reduce them. So using $111 billion as the basis for closing the 2009-10 gap was not a “bureaucratic assumption.”
Walters is right: exigent circumstances, such as spending levels mandated by statute, the state constitution, or court order, can require increases in spending. And it’s true that the budget cuts the rate of increase. So, yes, it’s a real cut — of a sort.
But Walters’ analysis avoids the larger question of the overall growth of California’s budget. An increase from $103 to $111 billion is still an increase. It has to be paid for by either raising taxes and fees (a dumb thing to do in a serious recession), or by borrowing. Given California’s trashed credit rating, any borrowing is going to be more expensive because the interest lenders (bond buyers) will expect will be much higher. And money has to be raised for that interest, too, on top of the budget items funded by the borrowed money.
See the vicious cycle forming?
Whether through legislators creating infinite commitments based on finite revenues, voters thoughtlessly authorizing more borrowing to pay for useless feel-good initiatives (fetal stem-cell research and bullet trains come to mind), or court mandates, California simply spends irresponsibly and is heading for a French grave. If cuts are within the discretion of the legislature, they need to make serious cuts. If state law mandates unsupportable increases, the law must change. We don’t just need cosmetic decreases in the rate of increase, we need a genuine austerity budget that doesn’t punish the people for Sacramento’s profligacy.
Businesses and residents are already fleeing the high taxes here. If things keep on the way they have been in recent years, who will be left ?
(hat tip: Flap via Twitter)