Friday, April 25, 2008
The golden calf state
California's strange flirtation with Hollywood took another step backward yesterday when the state's orally fixated governor, reputed actor Arnold Schwarzenegger, warned that its budget deficit for next year would surpass $10 billion. If true, California will be more than $17 billion in deficit for this fiscal year, which ends June 30, and next year. Schwarzenegger has already proposed 10 percent budget cuts in all departments, billions in additional borrowing and the closure of parks across the state. "Every time we look at our revenues, they're short," Schwarzenegger said. "So it just shows to you this is why we have such an extraordinary budget deficit and this is why we had to make all kinds of cuts across the board." The budget shortfalls are blamed on the weakening national economy and the imploding housing market, which has severely impacted state revenues. Schwarzenegger's remarks came after the nonpartisan Legislative Analyst's Office said revenue forecasts had to be "significantly reduced." But how will borrowing another $3.3 billion by selling bonds, as Schwarzenegger has proposed, help the state? Those bonds have to be paid off, with interest. All the borrowing does is allow the governor to pretend that the budget is balanced while postponing the reckoning until later years. Schwarzenegger came to office on promises to change the way the state does business, which most people assumed meant breaking the annual partisan deadlock that handcuffed the budget process year after year. Instead, the state got a leader who likes to smoke expensive cigars with legislative leaders but doesn't really know what he is doing. California is either going to have to raise taxes, instead of borrowng, to pay for everything or make the kind of budget cuts that will cause many members of the current government to be voted out of office.