🚀 go-pugleaf

Aint unions grand?

Where is the money going to come from?

Billions and Billions.


Arnold Tried. Unions Lied. 



Structural deficit still haunts California 
By Dan Walters / The Bee's Capital bureau

http://www.fresnobee.com/columnists/walters/story/11478799p-12218486c.html

"When California voters rejected, by a 3-to-2 margin, Gov.
Schwarzenegger's budget- reform measure last week, it left the fiscal
status quo intact � and that means that the state's deficit-ridden
budget continues to gush red ink.

California is still obligated by either law or political mandate to
spend roughly 5% to 7% more than its revenue system can produce, even
during a prosperous economy. The deficits have mounted for five years
despite steadily improving revenues, covered by borrowing tens of
billions of dollars, because Democrats refuse major spending cuts and
Republicans refuse tax increases."

Soon after his return from an image-rebuilding sojourn to China,
Schwarzenegger will be making the major decisions that will go into
the proposed 2006-07 budget he'll deliver to the Legislature in
January. For the third time, he'll confront the structural deficit
that he's so far been unable to conquer.

The Legislature's independent budget office has estimated that the
state would need to spend $94 billion in 2005-06 to cover the
obligations of current law, but that revenues are forecast at about
$88 billion. Those numbers will change, because the state is
experiencing better-than-expected revenue growth this year.

Even a surge of revenues is a mixed blessing, because a law governing
school finance probably will require it to spend more as it receives
more.

The convoluted law was a touchstone for this year's ballot measure
battle. Schwarzenegger gained the California Teachers Association's
agreement for a one-year reduction in state aid shortly after winning
the governorship in 2003. He promised, in return, to boost spending
when revenues improved, but the promise was never engraved into law.
The governor subsequently approved a $3 billion increase in school
financing for 2004-05, but refused to give schools the other $3
billion educators said was due.

The clash fueled the subsequent war between Schwarzenegger and the CTA
over his measure, Proposition 76, which would have softened school
spending requirements markedly, while giving him new powers to reduce
overall spending to fit revenues. The CTA spent tens of millions of
dollars, even going deeply into debt itself, to denounce him and his
measure. It succeeded in both pulling down his once-immense popularity
and defeating his initiative.

In the aftermath, Schwarzenegger paid indirect homage to the CTA's
clout, promising to restore as much of the disputed money as possible.
And his less-adamant, post-election position on taxes implies that in
his weakened status, revenue increases may be his only way out.

When asked about taxes at his post-election news conference,
Schwarzenegger initially rejected that course. Later, however, he said
new taxes were "something to look at."

In the short term, Schwarzenegger and legislators might produce a
"balanced" budget next year by counting on improved state revenues and
then using the last $3 billion of a bond issue that voters approved
last year to cover budget gaps. But that wouldn't do anything about
the structural deficit that haunts California as a symbol of its
governmental dysfunction.