Door #3

Hey, look! CA's Big Five have reached yet another tentative budget deal! State Leaders Have A Tentative Plan to Fix the Budget

Gov. Arnold Schwarzenegger and legislative leaders reached a tentative budget compromise Monday to plug a $26.3 billion deficit by making hefty cuts in education, health and welfare services, and taking billions of dollars from county governments.

There's a lot about this deal that's better than what they came up with last winter. For one thing, this deal, and its approval, are pure products of representative government. Voters will not be asked to vote in another "special" election. There is no attempt by the representatives to fob off to the voters their responsibility to vote on these things. Best of all, the outline of the deal provides for deep spending cuts, and no new taxes, just the sort of thing the "tyrrannical" minority GOP has been asking for throughout. Mwa ha ha!

Of course, it's not a perfect deal. for one thing, the state will "borrow" and then repay billions of dollars from county governments, based on what mechanism I have no idea. The journalists covering this story are no help. And, although taxes will not go up, the withholdings from our paychecks will increase (as will our subsequent refunds). Sounds like a lot of money shuffling around, rather than a glidepath to good governance.

The compromise would avoid raising new taxes, but would add more money to the state's depleted coffers by taking billions of tax dollars that local governments receive each year - money that the state would repay in future years. The plan also includes Schwarzenegger's ideas to collect taxes earlier and increase the state income tax withholding in worker paychecks. This move would allow the state to collect more income taxes earlier but could result in higher refunds.

Still, they managed to make some symbolically important cuts, such as eliminating the Integrated Waste Management Board, which had devolved into a glorified sinecure for legislators who were termed out of office, or lost their seats:

The agreement would also eliminate the Integrated Waste Management Board and combine its functions with the Department of Conservation. Together they would create a new department under the state Resources Agency. The plan would eliminate the waste board's six-member panel, which is made up of political appointees who each earn $132,179 a year.

Former lawmakers have often been given the lucrative appointment, including former state Sen. Carole Migden of San Francisco, currently a member of the board. She and her fellow members would be out of their jobs at the end of this year

You won't be able to get rid of Carole Migden that easily! She will rise again!

Incredibly, the deal also provides for drilling off the coast of Santa Barbara. While this is not quite a third rail issue, it is one that is a flashpoint for CA Greens and wealthy NIMBY's who don't like the idea of drilling off the coast, and who are masters at generating a media frenzy. Expect hysterics over this one.

The deal also includes Schwarzenegger's earlier proposal that would allow offshore oil drilling near Vandenberg Air Force Base, about 6 miles from the Santa Barbara County shoreline, generating about $100 million a year in new royalties for the state.

This is cosmetic stuff, however. The big expenses are education, state payrolls, and the CA's overly generous welfare prorams. If there is one thing that voters have made clear this year, it's that they want the government to continue spending $$ on education. The deal works withing the present budget system for education spending, especially the dictates of Prop. 98. While there are significant cuts this year, that money will also be repaid starting in 2012, the projected date of the next CA budget crisis:

Legislators agreed to limit spending on education without suspending Proposition 98, a voter-approved constitutional rule that spells out minimum spending for K-12 schools and community colleges. Sources told The Chronicle that the governor and legislative leaders also agreed on a scheme to pay $9.5 billion to public schools beginning in 2012 to make up for education cuts in the current budget.

CA's welfare state will also face "deep" (and for now, unstated) cuts.

Schwarzenegger's initial proposal to eliminate health and welfare programs outright was rebuffed by Democrats, but those programs - In Home Support Services, CalWorks and Healthy Families - face deep cuts as well.

Is the crisis over? No. While the spending cuts are great news, CA's government will remain a leviathan. There has been no effort to reduce state payrolls and no effort to reform the public employee pension fund. There is no indication that the regulatory and tax climate that has made CA so hostile to business will be rolled back any time soon. There is no indication that the initiative process will be reformed. Worst of all, the budget relies on the sort of goofball accounting gimmicks - paying state employees on the last day of the fiscal year for wages that would have normally been earned on the first day of the following year, for example - that allow the gov't to claim to have balanced budget, when it really has done no such thing.

For now, however, the immediate drama appears to be over. CA remains a Big Government outpost with a center-left orientation. This means the crises will continue to unfold in the middle and long term. Oh, joy. There's only one way to change this, and that is to change the people sitting in the Legislature, but that is a tall order. For most people here, a lazy kind of liberalism is their default position. 2010 should be an opportunity to bring in some new blood, but in the absence of a crisis atmosphere like we had this year, that might be tough to pull off. Still, we must try.