Posted on 05/17/2004 7:52:18 PM PDT by NormsRevenge
SACRAMENTO - Although he has criticized past budgets that did little to cut the state's spending imbalance, Gov. Arnold Schwarzenegger's own proposal for next year relies too much on loans, accounting gimmicks and one-time solutions, according to a nonpartisan analysis released Monday.
By withdrawing a number of big spending cuts he proposed in January, the governor has missed an opportunity to attack the state's spending problem and instead would once again push the tough choices into the future, said Legislative Analyst Elizabeth Hill.
"The bottom line is that we've lost a number of ongoing solutions from the January plan, plus we have pushed out some obligations into future years," said Hill, whose office is charged with advising the Legislature on fiscal issues. "In our view the May revision misses an opportunity to make further progress on addressing the state's long-term structural imbalance."
H.D. Palmer, spokesman for the administration's finance department, said Schwarzenegger's budget doesn't include several plans that will generate large amounts of future savings. They include an ongoing review of the state bureaucracy to reduce waste and duplication, a plan to overhaul the state's public health program for the poor and expected savings from the recently adopted reform of the workers' compensation system.
Schwarzenegger's $103 billion budget, released last week, imposes about $5.4 billion in spending cuts and savings but uses other means to bridge the rest of the 2004-2005 spending gap estimated in January by Hill at $17 billion.
She notes the governor's plan is helped by about $2.6 billion in unexpected tax income this year and next as well as receipts from a successful tax amnesty program.
But the budget borrows $6.5 billion, including $2.7 billion from the sale of Proposition 57 bonds approved by voters in March. He also diverts another $1 billion from transportation money as a one-time loan and another $1 billion from the sale of bonds to pay the state's pension obligation.
Schwarzenegger's budget also includes some accounting gimmicks, such as $1 billion in savings from adjusting how past tax revenues are recorded and $143 million saved by delaying when checks are sent to some public health providers.
There are also deferrals, Hill notes, including $2 billion in money owed to schools and $1.3 billion the state will have to pay cities and counties beginning in two years.
"We are concerned about the amount of borrowing and pushing the problem into the future," Hill said.
With the borrowing, extra tax income and other one-time fixes, Schwarzenegger's plan will balance next year, Hill said. But a new shortfall, estimated at about $6 billion, will start building in 2005-06, only slightly better than the $8 billion deficit Hill predicted the state would face this year before the recall of Gov. Gray Davis and election of Schwarzenegger as governor.
Unless the state either cuts spending or raises taxes, Hill projected the state's persistent spending imbalance would keep generating billions of dollars in red ink through 2008-2009.
Palmer said no one should think Schwarzenegger considers his job finished. "This is not a governor who will wait for problems to come to him. This is a governor that goes out aggressively with issues and deals with them."
Democrats, who control both houses of the Legislature, were relieved that Schwarzenegger withdrew his cuts aimed at health care.
The governor had wanted to cut about $900 million from the state's $11 billion share of Medi-Cal, the state's version of the federal Medicaid program. And he also proposed an enrollment cap for the Healthy Families program, a health insurance plan for the working poor.
Although Assembly Speaker Fabian Nunez, D-Los Angeles, criticized Schwarzenegger's plan to take about $1 billion from welfare programs, he was careful Monday not to criticize the governor's plan too much.
"While we have yet to see the specifics of some of the governor's major agreements, we will be working full-time to examine these proposals," Nunez said in a statement. "It's a difficult budget to balance and we will work very hard to minimize the impact on future years."
On the Net:
Legislative Analyst's Office
Governor's Department of Finance
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So.... the budget is smaller than last year's budget by $5.4 billion, right?
By withdrawing a number of big spending cuts he proposed in January, the governor has missed an opportunity to attack the state's spending problem and instead would once again push the tough choices into the future
Meet the new boss. Same as the old boss.
A vote for McClintock may not have been a vote for Bustamante, but a vote for Schwarzenegger was a vote for a continuation of Davis's policies.
Pushing obligations into future years, unexpected tax income, tax amnesty program, pension borrowing, one-time loans, Proposition 57 bonds borrowing, accounting gimmicks, delay in payments to health providers,
Betting on the come... gambling with the State's future.
Balanced budget? Spending Cuts? Smaller Government? Fiscal conservative? Not.
So.... the budget is smaller than last year's budget by $5.4 billion, right?
NO!
That caught my eye, too. This budget proposal is $103 Billion, according to last Friday's Union Tribune. Last year's budget was $99 Billion when passed by the legislature. Gray Davis didn't make any significant changes. (IIRC, he used his line-item veto power to correct some minor calculation errors.)
Perhaps the spending "cuts" are reductions from a projection of increased spending?
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