Rescue California

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Choosing gimmicks over leadership

May 21, 2003

Big surprise. Another crisis has unfolded on Gov. Gray Davis' watch, and instead of leading, he once again punted the ball down the field. His latest "solution" to a budget deficit projected to be as high as $38 billion is to cobble together a May budget revision, released last week, that avoids the hard decisions, and leaves others to work things out.

The governor's revision includes the worst of all worlds - $8 billion in four different tax increases, nearly $20 billion in total borrowing to plug a deficit hole, and a continued structural deficit of about $8 billion, with no serious structural reforms planned to assure that this sort of problem doesn't happen again. The governor's plan even increases spending $2.2 billion from his January budget.

It's typical Gray Davis-style - wait until a looming crisis, then react with a plan that splits the difference, with a strong emphasis on placating political supporters by protecting their programs. No wonder the once-floundering campaign to recall the governor is gaining new life.

It's not just ardent foes of the governor who are wondering what the heck he has in mind. Nonpartisan Legislative Analyst Elizabeth Hill, who estimates the budget deficit at $29 billion rather than the governor's figure, told Sacramento media on Monday that the governor's plan is far short of the mark. Ms. Hill said the budget is "precariously" based on tax increases and borrowing and does not cut enough from the state budget.

Ms. Hill argued that without structural reforms - the governor pointed to the need for them, but included few specifics in his budget - problems will continue. "The magnitude is really such that we need to get our fiscal house in order," she said, according to published reports. She cast doubt on some of the governor's revenue projections, questioning, for instance, his expectations of $680 million from Indian gaming.

Meanwhile, Controller Steve Westly told reporters that the state is running out of credit opportunities as the budget deadline approaches in June. That means a government shutdown of some sort, which could propel yet another problem into a crisis.

The Senate Republicans, in their exhaustive analysis of the governor's budget revision, found another significant problem: The proposal would allow a simple majority vote of the Legislature to, in essence, authorize new bonds to repay the deficit. They fear that "the 'temporary' tax increase would evolve into an ongoing $2.4 billion line of credit, thereby allowing the administration's 'spending binge" to continue."

More gimmicks, fewer tough choices. But, as Ms. Hill said, the deficit is so large that it cannot be fixed by economic growth. As she said, no easy choices, only tough ones. Unfortunately, the state is led by a man who doesn't have the temperament for the tough ones.