Monday, May 17, 2010

California's Woes

George Skelton has an interesting column in the Los Angeles Times this morning. His thesis seems to be that Governor Schwarzenegger's first moves after winning the recall election pretty much dictated how the rest of his stay in office would evolve. By cutting the vehicle license tax and borrowing $15 billion right at the start of his first term, he ensured that there would be budget problems down the road. The state has had to pour more money into local governments which had already banked the vehicle license tax and the state is still paying $1.2 billion a year for that loan, even though the money was spent years ago.

But Mr. Skelton also notes that the now lame-duck governor shouldn't shoulder all the blame for the sick-unto-death state of the state. His laundry list pretty much captures what ails California:

In Sacramento, Democratic legislators have been too cozy with public employee unions. Republicans have been too rigidly anti-tax.

Legislators of both parties are handicapped by term limits.

The two-thirds vote requirement passing budgets and raising taxes creates gridlock and pork payoffs.

The boom-or-bust tax structure is broken and needs an overhaul.

Roughly 70% of the hemorrhaging general fund flows to local governments and schools. Sacramento hasn't stopped bailing them out since Proposition 13 slashed their property tax revenue 32 years ago.

The bottom line is a projected $19.1-billion state deficit for the fiscal year starting July 1, with no politically acceptable means of filling the hole in sight.

I think Mr. Skelton's list is pretty complete. I am, therefore, amazed that there are any candidates running for governor this election cycle. Who in their right mind could possibly want to inherit the problems that the next governor will surely have to face?

The two main Republicans running have zero experience in government (Meg Whitman) or very little experience in government (Steve Poizner, the Insurance Commissioner). Both tout their highly successful business careers as evidence of their fitness for public office. Both promise to run the state as they would a business, as if governments and businesses were identical entities with identical tasks and goals. We've seen how that worked out for Governor Schwarzenegger.

The only Democrat running for the job is a former governor (who did, on balance, a pretty good job for the state his first time around): Jerry Brown, currently the state's Attorney General. He's been able to sit quietly while the GOP candidates slug it out in the primary campaign, but at some point after the primary he is going to have to come out with some specific proposals of his own to end the serious trouble the state is in.

In six weeks the state's fiscal year ends pretty much the way it started: red ink everywhere with almost no hope that a budget will actually be in place before the end of the summer. All sides in the debate have staked out untenable positions. The governor wants to end welfare (something even the Republicans in the legislature are hesitant about). The Democrats won't touch the issue of public employee pensions. The Republicans won't even consider a tax hike. Meanwhile, state unemployment is still in double digits, which means tax revenues are down, so there isn't even any wiggle room for the state.

So what will happen? At this point my crystal ball suggests we are in for more bleeding as everybody decides to once again kick the can down the road in the hopes that the economy will finally turn around.

Helluva way to run a state.

Labels: , ,


Post a Comment

<< Home