Thursday, May 15, 2008

Gambling With Our Future

California's Governor Schwartzenegger has just issued a revised budget plan for the state, one that isn't sitting well with anyone, even the Republicans. He's backed off his plans for early release of thousands of prisoners, closing state parks, and slashing education funding. What's his plan? He's going to ask the voters to privatize the state lottery and use the funds to cut the debt and build a rainy day fund. If they refuse, he'll raise the state sales tax. Oh, and he's going to increase the cuts to Medi-Cal and other programs that assist the poor.

Obviously the element that is drawing the most ink is the lottery plan. Originally establish by an initiative, the lottery can't be tampered with except by another vote by the people. Giving the people a choice between losing future profits (all of which are supposed to go to school funding) and facing a sales tax increase now must seem like a slam dunk to the Governator.

An article in the Sacramento Bee summarizes the new budget plan:

Now he wants voters to expand the California Lottery and borrow against future profits to help plug a $15.2 billion hole in the state budget. He proposed Wednesday giving them a choice that critics considered more of a veiled threat: approve his lottery plan in November or face a one-cent sales tax increase. ...

Besides using the lottery money, Schwarzenegger would close the deficit by cutting most programs by up to 10 percent as he proposed in January – with notable exceptions. He backed off deep cuts to schools, abandoned plans to release some nonviolent prisoners early and discarded a proposal to close some state parks. But he proposed deeper cuts to health and social service programs.

The Los Angeles Times has an editorial today which sees the proposal as just another gamble:'s where the creativity -- or gimmickry -- comes in. School funding is hitched like never before to the state lottery. Future gambling revenue would be sold to investors in exchange for cash up front; about a third of that money would help close this year's budget gap, and the rest would form the basis of an automated reserve that would parcel out money to the state in good times and suck it out of the budget in bad. The lottery would be "modernized" -- code for luring more gambling dollars out of more Californians. Voters would have to approve; if they don't, they would be slapped with a temporary sales tax increase that has a disproportionate effect on the poor.

The plan may have some worthy pieces, but not the way they currently are arranged. A tax, which should be Californians' communal investment in the state's future, becomes a punishment for rejecting an expansion of gambling, an activity that (like the tax) tends to empty the pockets of those who can least afford it. The nanny state becomes the vice-pushing uncle. Meanwhile, the poor suffer a second time: Human services are slashed, and Medi-Cal payments drop below even the shocking levels Schwarzenegger proposed in January, driving more doctors from the state and increasing the misery of people most in need of assistance -- and most likely to drag the budget further down because of medical problems not taken care of early.

Closing the loopholes which benefit the luxury boat-buying wealthy and big businesses is off the table, as far as this governor and his buddies in the state legislature is concerned. That would be raising taxes. Increasing the sales tax (already the highest in the nation), which affects the poor disproportionately, is somehow OK, and would happen only if the voters were foolish enough to refuse to go along with selling out the future.

And about the slash in social services? Hey, the budget has to be balanced somehow.

I am not optimistic.

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