Short Term and Long Term Budget Problems

The California state government has a problem, one that has existed for a number of years now. The state has a structural budget deficit that leads us to spend more than we take in. This problem really has its roots in the elimination of the car tax. Nothing was created to take its place. Now the deficit size depends on the relative strength of the state's economy and we need that revenue to pay the bills. That is a long term problem and one that the legislature has failed to address. Either there will need to be major program cuts, not a few million here or there, or tax increases. Despite Arnold's promises to solve this problem he has been MIA and the legislature has shown no signs of wanting to address it in a comprehensive way.

The result is that every year the legislature has to cludge together a budget that generally leaves an operating deficit. Here is Walters today:

With a stalemate in the Senate, Democrats are demanding that Republicans reveal the specific spending cuts they want to reduce the operating deficit to zero -- and that's not unreasonable. But by the same token, the governor and Democrats who want the current version enacted should be telling us how, in heaven's name, they would balance the budget without more spending cuts. If they want new taxes, they should say so.

This should be the day of fiscal reckoning. It's time for everyone to put up or shut up -- and if it takes a prolonged stalemate to get there, so be it. Doing it correctly is more important than being timely.

California's budget crisis, unlike its wines, will not get better with age.

What Walters is advocating is actually addressing the long term problem, as a way to resolve this year's impasse. That does not seem likely to happen, especially because of Arnold's detachment on the issue. Both sides are too dug in and ideological differences are very difficult to bridge. Somebody will cave, it is a matter of who and when.

That is not to say that actually finding a long term solution to our budget problems isn't important. It is, but the relatively small difference between the two sides increases the chances of finding common ground this year. Interests groups will now ratchet up the pressure on a small number of targets in the Senate, the seat of the current impasse. Arnold will sweet talk them.

And then we will start this whole mess over again in a year. Maybe then Arnold will actually be in town and expend some political capitol on finding a solution. Perhaps new Republican leadership will change their tone back to a more productive and less antagonistic one. One can always dream.