Posted on 05/15/2007 9:52:19 AM PDT by NormsRevenge
Gov. Schwarzenegger came to office in 2003 promising to "blow up the boxes" and offering a vaguely supply-side agenda. On Monday, he announced his annual May revision of his fiscal year 2007-08 budget, and nary a blown-up box could be seen. Rather, the governor has decided to keep most of the bloated state budget's boxes intact, and thus mollify the moderate middle of the electorate.
The governor is anticipating that next year's General Fund -- funded by income, corporate and sales taxes ---- will be $103.8 billion, up slightly from earlier estimates. This year's General Fund was about $102 billion, so the governor has proposed a year-over-year increase of about 1.6 percent.
That's not good news to those who believe, as we do, that our state budget is bloated already. But in Sacramento, which spends our money like the proverbial drunken sailor, that qualifies as something akin to thrift.
Similarly, we're not surprised that the governor is no longer hewing to his overly optimistic prediction in January to eliminate the state's structural deficit. This persistent disparity between what the state collects vs. what it spends will persist, but Schwarzenegger estimates it will be cut to $1.4 billion in next year's budget. We'll see how this still-rosy prediction pans out; Schwarzenegger's previous budgets had called for significant increases in the state's structural deficit this year and next, and it's still expected to top $5 billion by 2009. The future, it seems, remains an attractive place to push the state's debt.
At first glance, the revised budget appears to contain no new income tax increases or borrowing. Of course, the need for borrowing diminished after we authorized the state to incur $42.55 billion in debt in one fateful day last November ---- with the Nov. 7 approval of all five of the infrastructure bonds on the ballot.
An April surge of personal income tax revenues pushed state revenues up $200 million for the current fiscal year, a 6 percent rise over last year. We're pleased to see $2 billion set aside for reserves in the governor's revision, too.
We'll have a better sense of Schwarzenegger's latest budget once the nonpartisan Legislative Analyst Office weighs in later today. But this budget, like so many in years past, has both the dominant Democrats and the minority Republicans angling for a late-spring Sacramento scrum. Last year's unusually punctual final budget may not have a similarly on-time successor.
The state's staggering debt load isn't the only shadow looming over the coming budget battle. Just last week the state controller announced that California has an unfunded retiree health liability of $47 billion. If it decided to start funding the benefit, the state would have to find a couple of billion dollars each year. More promising is the governor's proposal to sell EdFund, the state's nonprofit student loan guarantee agency, for $1.6 billion.
But don't look to the governor's budget for the bill for his health care reform package. Though the governor's team still prays for a medical-insurance miracle that pays for itself, in reality, any of the many options under consideration in the Capitol could tack billions onto the state budget.
Also missing from the governor's budget revision is a Social Security cost of living increase for the aged, blind and disabled, and he proposes cutting off welfare payments to children whose parents fail to comply with work requirements. Democrats in Sacramento have vowed to block these fiscally conservative cuts, and if the recent past is any guide, they should be successful. Instead, expect to see state lawmakers agree that yet more borrowing ---- not taxes, except if you consider taxing the next generation a "tax" ---- is the answer. It's spring in Sacramento, where borrowing springs eternal.
Gov. Schwarzenegger is surely no hero of the laissez-faire right. Neither is he the social-safety-net-slashing ogre portrayed by the left. Instead, the governor seems to have gone native in Sacramento, rearranging boxes instead of exploding them.
Hey Arnold - instead of letting your infrastrucure go to pot, why don’t you fire all the lesbian diversity coordinators, and task forces in charge of mythical weather fluctuations? What’s that, you’re CLUELESS?
Arnold does not have a clue what America is about.
Regards
"Show me just what Mohammed brought that was new, and there you will find things only evil and inhuman, such as his command to spread by the sword the faith he preached." - Manuel II Palelologus
Changes in Revenues and Expenditures Since January. The administration’s estimates for major tax revenues are down $243 million combined over the current and budget years since January. Stronger-than-expected 2006-07 revenue growth is more than offset by weakness in 2007-08. General Fund costs are higher for Proposition 98 and prisons. The administration has also provided a more realistic estimate of gambling revenues and delayed the sale of pension obligation bonds.
New Budget Solutions. These factors led to the administration putting forward over $2 billion in new budget solutions. The administration proposes to sell EdFund, capture tobacco securitization revenues now rather than over time, expand a redirection of public transit funds for General Fund purposes, and eliminate a scheduled increase for Supplemental Security Income/State Supplementary Program (SSI/SSP) recipients.
...
Reserve Likely Overstated by $1.7 Billion. The May Revision makes a number of optimistic assumptions about its proposals—such as the legality of its public transit proposal, its estimates of gambling and property tax revenues, and assumed savings from midyear reductions. In total, we estimate that the Governor’s reserve is likely overstated by $1.7 billion, and the May Revision would leave only a $529 million reserve. This reduced reserve would be subject to additional risks and cost pressures.
Out-Year Problem Has Worsened. We estimate that, under the Governor’s proposals, state expenditures would exceed revenues by more than $3 billion in 2007-08. This shortfall would grow to more than $5 billion in 2008-09 due to a number of one-time solutions contained within the May Revision.
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Thanks, I was just checking it out..
Key May Revision Solution: Governor Proposes Sale of EdFund
... As part of the May Revision, the Governor proposes to sell EdFund to a private buyer for an estimated $1 billion. The CSAC would no longer have responsibility for overseeing the federal loan program, and instead would concentrate on the state grant programs that it currently administers. ... The Governor’s proposal would trade potential ongoing revenue from EdFund for a one-time payment to the state. The Legislature will have to consider whether the sales price is worth foregoing this potential revenue stream. ...
Leasing the Lottery to a Private Operator
The administration is requesting authorization to lease operating rights for the California Lottery to a private concessionaire for a multidecade period—perhaps for 40 years. In exchange, the state would receive a one-time payment—perhaps totaling in the tens of billions of dollars—and/or annual payments from the private entity. The May Revision scores no revenues from the proposal in 2007-08, but suggests the proposal could produce benefits for the state in future fiscal years. The proposal is a general framework rather than a detailed implementation plan. ...
the only difference in this clown and the last clown is the party affiliation...
what ever happened to all the RINOld Fan Club members???
I guess they went back to the DU after the election.
Yet the Austrian has done so much more to justify recall.
Bring on the petitions...
Tom has turned into quite a Mediocre Moderate and has been one of the biggest Schwartzenegger Swooners with the number one ranked talk show in the Crapitol! (Sacramenna, CA)
Then, of course, he had to have Schwartzy's boy on next and seemed to get quite impatient with the spinning by said "boy!" (at least I was hoping he was getting impatient with it)
This is not about partisans. This is about an absence of conservative, fiscal management of the State of California.
It not matters which party dominates the state legislature. As long as an uber-liberal like the Austrian keeps submitting wild spending increases and refuses to veto spending increases, cuts in state government spending are unlikely.
Don't blame the legislature. Look to the Austrian as the primary cause of California's current financial dilemma.
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