California now has an official budget, albeit nearly three months late, after Gov. Arnold Schwarzenegger signed a revised proposal on Tuesday. But as with budgets of the past, it relies largely on gimmicks, shaky presumptions, rearrangements, gambles — and stiffing local governments.
The budget relies on revenue projections that presume California’s economic recovery will begin this year, and if you believe that one you probably thought a subprime mortgage sounded like a good idea two years ago.
However, the biggest tangible presumption on which the governor relies to make this budget even come close to working relates to the California Lottery. Instead of addressing the state’s long-term structural budget deficit, the 2008-2009 budget relies on borrowing $5 billion from lottery revenues. That’s ridiculous enough on its own, but it gets worse: Voters must approve the plan next year, most likely in June, just weeks before the state must adopt a new budget for the next fiscal year. And if voters don’t approve, and the state gets caught with its behind in the breeze? If that happens, massive midyear spending cuts and panicked emergency measures are inevitable.
The 2008-2009 budget also shifts hundreds of millions of dollars from local redevelopment agencies back to the state, which is only going to make things tougher for cities and counties trying to revive blighted areas.
On the plus side, it looks like the state will end up with a real rainy-day fund, though it’s not as robust as it probably should be.
I’ll leave further details to The Two Dans: