Return of the Son of the California Budget Crisis

OMG. A few weeks after the state finally passed a "balanced" budget, the estimate now is that there is actually a huge deficit. Wow. Did not see that coming:

California faces a $25.4 billion budget deficit over the next 20 months - nearly double what some leading lawmakers predicted a week ago - and a solution to this newest crisis is expected to be far more difficult than in years past, the nonpartisan Legislative Analyst's Office said Wednesday.

Declining revenue and lawmakers' past reliance on one-time budget fixes have contributed to the recurring deficit, Mac Taylor, the legislative analyst, said.

California, Taylor said, has a basic choice: Solve the problem now or pass it to future Californians.

Schwarzenegger has already called a "special session" of the Legislature to deal with the emergency. These special sessions are starting to feel like the Special Olympics of representative government. It's not like a solution ever emerges from one of these things.

This time, things will be more difficult for law makers because voters just passed a couple propositions that closed off a couple budgetary tricks (the popular "smoke and mirrors") that previous budgets relied heavily on to balance. The state can no longer take money from counties and municipalities. The state also cannot raise fees and regulatory charges (which are taxes by any other name) without a 2/3rd vote. Some temporary educations tax increases are also ending this year, too - not for long I'll bet.

Oh, and the budget assumes receipt of $6 billion from the feds, which no one actually thinks will be forthcoming. So actually the deficit is much worse, but if any Californians discuss this at Thanksgiving, we're all going to pretend the deficit is $25 billion instead of $31 billion.

Voters did eliminate the 2/3rd supermajority for raises taxes, which you would think would make things easier for an all Democrat legislature and an incoming Democrat governor to solve their problems through tax hikes. But, ha ha, Jerry Brown just spent the last six months campaigning on a promise to not raise taxes without voter approval, which in this state means by some sort of popular referendum. Yes, people actually believed this (and were deeply offended by Meg Whitman's treatment of her illegal alien maid). We'll monitor the reaction when Governor Brown puts on his best professorial face to explain why he is breaking his most prominent campaign promise so that the state can continue paying unsustainable public employee pensions and salaries.

I am not happy that California voted so firmly to the left this time around, but I can at least take some grim satisfaction in seeing Democrats try to solve a fiscal and governance problem created by progressive policies, rather than watching the flailings of a Republican trying to save "Pat Brown's legacy."

UPDATE: Victor Davis Hanson notes that California already has the highest taxes, highest paid public employees, and highest illegal immigrant population...yet no one in public life is willing to discuss whether any of these factors lie behind the state's recurring emergencies. And, without that discussion, it's hard to see how we will get out of this mess.

So we do not have much wiggle room left, especially when we vote for more of the sources of the problem and you in the other 49 states do not like loaning us $40 million a day just for our quite generous unemployment insurance in a very high-unemployment state. There are only so many gimmicks left. Either our Governor-elect and veteran liberal Jerry Brown will have to do a Nixon to China, or the Republican House will have to let us go broke and cut off the cash. Either way, it should be an interesting ride — perhaps a panic of 1893, Great Depression, 1970s stagflation, and 1992 state meltdown all in one surreal experience.

Actually, I think Argentina - with its persistent fiscal crises, deeply ingrained leftist politics, a demographic mix of

a large rural population lorded over by a couple big cities, and a popular culture that prizes the glib and the glamorous,

not to mention plenty of opportunities to walk along the Appalachian Trail - is the closest analogue, except

California won't ever experience hyper-inflation (by itself) or a military junta. We can still try to default

on our debts...