Non-official Fiscal Crisis

Right now the revenue projections for the state are not very good. They are showing about a $10 billion deficit. That does not mean that it is time for the governor to declare a "fiscal crisis" under Prop. 58, as the Republicans are calling for. SacBee:

Top Republican lawmakers on Tuesday called on Gov. Arnold Schwarzenegger to declare a "fiscal crisis" to deal with California's looming budget problem, but administration officials said such a move would be premature.

Sen. Bob Dutton, a Republican from Rancho Cucamonga who refused to vote for the current budget because it spent too much, said the governor should use a special authority voters assigned him during the last budget crisis to tackle a budget deficit forecast to be nearly $10 billion.

Under Proposition 58 passed in 2004, the governor could declare a fiscal emergency if he determines revenue is "substantially below" what was anticipated in the budget and summon the Legislature into special session.

This smacks of the Republicans wanting to push through a bunch of cuts, rather than deal with the deficit in a strategic and long-term way. This is time for a thoughtful substantive discussion, not rash decisions. Arnold is right to resist this call. There is time and the state needs more data before it moves forward.

The administration's Department of Finance cautioned that it was too soon to make such a call.

"When we have all our data and we have our decisions in front of us, that will be when we advise the governor," Finance Chief Deputy Director Vince Brown said during Tuesday's hearing.

The state Finance Department is waiting on additional economic and revenue indicators to help draft the 2008-09 budget. Those reports are expected Dec. 10. A month later the governor will release his proposed budget for the fiscal year beginning July 1, 2008.

The state of the state in January should be the next target date, where the governor will throw a marker down on how to deal with the deficit. He cannot borrow his way out of this one. The state is struggling to pay off the huge bonds from 2004 right now.