Brown's misleading budget surplus

brown3.jpgJust because you have a few dollars in your pocket doesn't mean you're not obligated to pay the mortgage, the car loan, the college loan, the credit card bill, or the $3,000 that your Uncle Charlie loaned you to cover the cost of that trip to the Super Bowl. Same thing with the California budget. Old debts still count, as do years of cost-cutting. So forgive me for not getting too excited about the governor's budget proposal that wipes out years of operating deficits and includes a modest surplus. "We achieved the position we're in because of tough cuts," he said at a news conference, "and then the people voted for taxes." But the state's fiscal situation, while improved because of a brighter economy, remains pretty beaten up. From the Legislative Analyst's Office:

The state has reduced spending in recent years in most areas, including health and social services programs, schools, universities and community colleges, the courts, and state administration. The state has also generally not provided COLAs or inflation adjustments for most of these programs. A key decision to consider for possible budget surpluses will be to what extent to use them to restore some of these cuts. Another option for the use of potential surpluses would be investment in the state's infrastructure. Our forecast, for example, assumes no additional bond authorizations for infrastructure even though several programs, such as K-12 and higher education, have exhausted most of their existing bond authority. Our forecast also does not include bond payment costs related to the $11 billion water bond now scheduled for the November 2014 statewide ballot.

Brown offers his own cautionary notes (via Mercury News):

"The boom and bust in our state's budget over the last decade is something we should not repeat," the governor's budget summary concludes. "Instead, the state must live within its means, pay down debt, and build up a 'rainy day' fund -- all to ensure a stable government that earns the respect of the citizens that pay for it."

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Mark Lacter
Mark Lacter created the LA Biz Observed blog in 2006. He posted until the day before his death on Nov. 13, 2013.
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