California Budget Out Of Control
California on a union-led course to bankruptcy…
[Ray Haynes] 4/24/06

I have refrained from commenting on California’s budget because it is still uncertain exactly what is going to happen in this year’s budget debate. This, however, is what we know up to this point in time.

Last year, the Legislature approved, and the Governor signed, a budget that increased state spending by $11 billion.

The government employee unions complained that it wasn’t enough.

This year, the Governor proposed a budget that increased spending by an additional $7 billion.

The government employee unions are complaining that it is not enough.

The Governor’s budget spends $6 billion more than projected revenue.

The government employee unions complain that it isn’t enough.

In 1999, then-Governor Gray Davis proposed increasing spending by $9 billion. That was the largest spending increase in the history of the state of California, until 2000, when Gray Davis increased spending by $12 billion.

Last year’s spending increase was the second largest in California’s history. This year’s proposed increase is the same as the one in Davis’ first term. Unfortunately, Governor Schwarzenegger looks like he is making the same mistakes as Gray Davis. The only problem with his strategy is that if the budget collapses like it did during the Davis years, then the resulting budget deficit will be the Republican’s fault. In 1999-2001, Republicans could rightfully complain that the state’s budget woes were entirely Democrat’s fault. If Schwarzenegger’s plan is fully implemented, Republicans will lose that argument. Schwarzenegger’s spending plan is at least as bad as the spending plans proposed by Gray Davis, and, in my opinion, will lead to the same bad outcome if the economy should slow down (as it inevitably will).

The good news is that the Assembly Republicans have decided to say no to Schwarzenegger. Schwarzenegger said he wants to spend $7 billion more than the state receives in revenue. The Assembly Republicans said no, the state should only spend what it takes in.

Schwarzenegger said he wants to expand government as fast as Gray Davis. The Assembly Republicans said no, they want to slow down the growth of government.

The Schwarzenegger budget did not resolve the state’s debt issues, particularly the $15 billion debt that Gray Davis created. The Assembly Republicans said they want to make sure that debt is paid, before we spend another dime in new state programs.

The Schwarzenegger budget does not seek to resolve the growing government pension problem. The state’s Legislative Analyst Office recently reported that the state is facing a $40 to $70 billion problem because it has not funded state retiree health benefits adequately. According to the LAO, it will take $6 billion a year to adequately fund these former state employee benefits. Assembly Republicans say the state budget must resolve this impending crisis.

The good news is that when the state goes bankrupt, I won’t be in the Legislature. The bad news is that the state will go bankrupt if it continues to follow this course. But if the Governor listens to Assembly Republicans, he will avoid bankruptcy. The government employee unions will continue to complain. Who will the Governor listen to, Assembly Republicans or the unions? Only time will tell.-CRO-

Mr. Haynes is a California Assemblyman representing Riverside and Temecula and freuent contributor to CaliforniaRepublic.org.

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