CA: Governor's proposal could lead to more 'autopilot' spending

San Diego Union -Tribune ^ | 1/13/05 | Ed Mendel

[NormsRevenge]

SACRAMENTO – The goal of the state budget plan proposed by Gov. Arnold Schwarzenegger this week is to control what he calls "autopilot" spending, which happens because current laws cause programs to grow faster than tax revenue.

But nonpartisan Legislative Analyst Liz Hill, issuing an overview of the proposed $111.7 billion budget, said yesterday that parts of the governor's plan would actually make big increases in "autopilot" spending.

Among other things, the governor wants to end the Legislature's ability to suspend the Proposition 98 school-funding guarantee and take Proposition 42 gasoline sales tax revenue from transportation.

Hill said the governor's plan could lock up more than half of the general fund that pays for most state programs, limiting lawmakers' flexibility when economic downturns reduce tax revenue.

"Some of the very important tools that are currently available when we have a downturn would no longer be available, and we would have more autopilot, cruise-control spending," she said.

When the governor proposed his budget Monday, he said that tax revenue in the new fiscal year beginning July 1 is expected to increase $5 billion, but built-in spending requirements in current law increase $10 billion.

"If we don't get control of the autopilot spending, there will be deficits as far as the eye can see, and we will risk every program for years to come," he said.

He asked the Legislature to put a constitutional amendment on the ballot requiring corrective action if spending exceeds revenue at several points during the fiscal year. If such a measure is approved by voters, lawmakers would first get a chance to correct the imbalance, either by cutting spending and/or raising taxes, with approval from the governor. If they balk, then across-the-board cuts would automatically rebalance the budget.

Schwarzenegger's proposals to prevent tampering with the school and transportation funding formulas would come after cuts he wants to make in those areas now to help balance the budget.

"He wants to put (Propositions) 98 and 42 in lock boxes after he gets done using them flexibly, so that no future governor or Legislature will have the opportunity to do what he's trying to do," said state Sen. Denise Ducheny, D-San Diego.

Similarly, a Schwarzenegger-backed measure approved by voters in November, Proposition 1A, allows the state to take $2.6 billion in property-tax revenue from local government over two years and then bans future raids.

Hill said Schwarzenegger has informal funding agreements with the public universities that also are "autopilot" spending. An initiative he sponsored three years ago, Proposition 49, has a formula for spending on after-school programs in the future.

A spokesman said the governor's proposal for the Proposition 98 school-funding guarantee eliminates a provision that cuts payments during economic downturns and ratchets up future obligations.

"What we are doing is taking out those provisions of Proposition 98 that are the true drivers of that kind of unsustainable spending," said H.D. Palmer, the spokesman for Schwarzenegger's Department of Finance.

Hill also said the proposed budget notes that revenue from a $1.2 billion bond financed by expanded Indian gaming will be delayed.

The bond issue is being held up by a lawsuit filed by horse tracks. Meanwhile, the estimate of state revenue from the new Indian gaming compacts, once expected to be $300 million this year, has been dropped to $16 million.

[goldstategop]

I have to agree with part of the criticism. What's the point of a one-time cut in spending and then place the spending obligation off the table for the State Legislature to manage? It seems to be you'll be right back where you started. The key to starving California's government beast is to institute BOTH a real spending cap AND eliminate various non-federally mandated spending obligations and allow the State Legislature to decide how best to allocate the state's share of the monies. If the public doesn't like the decisions made with regard to spending, it can vote their legislators out of office. Straitjacketing spending levels into the state Constitution is a bad idea.

[calcowgirl]

Good post. I agree!