Wednesday, April 18, 2012

California Holds Itself Hostage

Democrats dodge responsibility and threaten voters.
The most basic problem is that the governor plans to introduce a budget premised on the idea that voters in November will approve a midyear increase in income taxes on the wealthy and sales taxes, with “trigger cuts” hammering public schools if they are rejected. This screwball brinkmanship bodes terribly for schools if it fails and sets a horrible precedent if it succeeds. Only in Sacramento could a budget strategy that evokes a legendary National Lampoon cover – “buy this magazine or we’ll kill the dog” – be seen as inspired.

Meanwhile, most outside experts believe the governor exaggerates the revenue the tax hikes would generate. The Legislative Analyst’s Office says Brown’s expectations of a huge capital gains windfall are $6.5 billion too high. 

And the 2012-13 fiscal year won’t even begin in balance. Instead, there’s likely to be a multibillion-dollar shortfall left over from the current fiscal year because of the inaccuracy of Brown’s revenue estimates and assumptions from the last budget fight. State reductions in human services and health programs funded partly with federal dollars or governed by federal rules have been the target of court challenges and second-guessing by the Obama administration. A state Finance Department spokesman estimates this has wiped out nearly $2 billion in budget savings since last summer. Guess what: More such maneuvers are contemplated in the 2012-13 budget.


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