CA: Negotiators near final budget deal

The reduction in the "General Government" numbers is the money Schwarzenegger proposes taking away from local governments in the deal he cut with them in May and which he now apparently can't make good on.

Remember Schwarzenegger promised local governments that if they voluntarily surrendered some of the monies legally owed them in the 2004/2005 and 2005/2006 he'd protect them from further raids by the Legislature after 2006 except now he says he can't get the Legislature to cooperate.

Ahhh... that makes sense now. I was familiar with the concept but hadn't looked at how the accounting worked before. I also didn't realize that it was an $8 billion swing in the comparison!

I just pulled the detailed numbers from the four annual separate reports at lao.ca.gov that included the "enacted" numbers. They all match up with your values except 03/04. As you noted, they are very close.

For a meaningful comparison to this year, wouldn't you theoretically reduce the 03/04 number by the amount of the bond funds that were challenged in court and never sold (being instead replaced by the larger 15 billion prop 57 bonds)? Or, at least, strip both numbers of the bond values for comparison purposes? It just seems like some sort of double accounting.

Below are the "enacted" numbers extracted from the 4 reports at the following link:
http://www.lao.ca.gov/main.aspx?type=2&PubTypeID=15

California Budget 2000/01 - 2003/04
Enacted

                      Enacted        Enacted       Enacted       Enacted
Fund Type             2000-01        2001-02       2002-03       2003-04
-------------------   -------       --------       -------      --------

General Fund          $78,816        $78,763       $76,722      $ 71,137
Special funds         $15,560        $21,335       $19,354      $ 22,314
Budget totals         $94,376       $100,098       $96,076      $ 93,451
Selected bond funds   $ 5,048       $  3,181       $ 2,812      $  7,469
-------------------   -------       --------       -------      --------
Totals                $99,424       $103,279       $98,888      $100,919

As a follow up to my past post, I offer the following.

By stripping out the shenanigans from the bond issuance and stealing from the local governments, you get a truer idea of what is happening to pure spending. Excluding those distortions, that spending is increasing 12%, a more fair characterization, IMO. Am I missing something? (and yes, my past career did include budgeting, of a non-governmental variety, lol).

Category                       2003/04       2004/05         Change    %Change
------------------------    ----------     ----------    ----------    -------

Total General Funds         77,623,701     77,577,696       -46,005      -0.1%
Total Special Funds         19,432,330     22,240,915     2,808,585      14.5%
------------------------    ----------     ----------    ----------    -------
Combined                    97,056,031     99,818,611     2,762,580       2.8%

Less Gen Govt Line Item      5,947,337     -1,754,500    -7,701,837    -129.5%
------------------------    ----------     ----------    ----------    -------
Combined Gen/Spec Funds     91,108,694    101,573,111    10,464,417      11.5%
(excl Gen Govt)

*For sources of above numbers, see Post #19

No. Stay out of the minutia and intrigue of the accounting system and the smoke and the mirrors provided by the actors. Count the gate revenue. Keep your eye on the ball, the spending, regardless of source since it's taxpayer money whether federal funds or bond revenue.

Only things certain can be compared. Initial enacted budgets and actual spending are things certain in equivalent temporal frames. We won't be able to compare actual spending from 2003/2004 to 2004/2005 until early 2006 so the only comparison available when the budget is passed are the initial enacted budgets.

This means that the $100.9B number you've collated for 2003/2004 can't be used because the number was derived in a later time frame. You should use the smaller $99.1B enacted number if your comparing apples to apples.

The name of the game is significance. Schwarzenegger left the perception with the voter that he would make significant cuts in state spending at a time when the press was talking about a 40% increase in state spending over the few preceeeding years when revenue had increased by only about half that percentage in the same time frame. From that mindset a 10% reduction in spending would be significant to the average voter. If Schwarzenegger actually approves spending in excess of the $99.1B his goose is cooked.

If Schwarzenegger approves increased spending there is no way to spin it. His supporters can attribute nobel intentions or claim factors outside his control but they can't make the budget number smaller and they can't refute his signature.

Is that your signature on the contract sir?

Is that your signature on the contract sir?

LOL!

I followed everything you said, except I am unfamiliar with the term "gate revenue".

The only thing that still irks me about comparing in the manner you suggest is that one can, in effect, take credit for an $8 billion "reduction" in spending just by stealing from the counties/cities... while at the same time, those counties/cities simply replace that revenue with new taxes/fees (more taxpayer expense).

Add it ALL up, the taxpayers pay more.

"gate revenue" = the revenue collected at the front "gate", eg. taxes and fees. As opposed to "supplemental" revenue such as federal grants and borrowed money. As opposed to smoke and mirrors such as deferred payments and changes in accounting practices.

You are now getting an inkling just how bad the state financial condition is and why the largest state in the union with the largest economy was reduced to a junk bond rating.

You can also begin to appreciate how out of their depth Schwarzenegger supporters are when they define his financial policies as conservative. I've also found that most won't take the time to do the hours of research to understand the situation. They never once ask themselves; "What do I really know about the state's finances beside what I read in a newspaper article?".

Thanks for taking the time to do a little more exploration this evening.

"gate revenue" = the revenue collected at the front "gate", eg. taxes and fees

Ahhh, gotcha. In my simplistic world, I'd probably call that a "primary source" (vs. secondary).

Thanks for taking the time to do a little more exploration this evening.

As you know, I first explored the financial status last summer trying to learn about the bonds. I was horrified and worried then, and am even more so now.

I haven't kept track (or tried to add them up), but all of the deferrals and promises for future increases are looming out there, as well. As I recall, the first bond payments were also deferred, with no payments required in '04/05. That means that the $103+ number Arnold is now working with is artificially low as we move into the next few years.

There's a big dark cloud out there, and it is moving our way!
Arnold is gambling with the future, counting on Sunshine.
I fear the storm will overtake us.

Thanks once again for the learning experience! Much appreciated.

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