From today’s Wall Street Journal Political Diary E-mail…

California’s Never-ending Crisis

When California’s legislature ended its weeks-long budget stalemate last February by passing a series of massive tax increases, legislators also put on the May 19 statewide ballot six initiatives to extend the tax increases into the future and make minor fixes in the way the budget is handled.

What they didn’t count on is the public’s anger over the tax increases and legislators’ failure to address California’s underlying problems. The six initiatives now face rough sledding in the polls. All but one are trailing badly — and the one that isn’t would limit legislative salaries if a budget isn’t passed.

Governor Arnold Schwarzenegger, who supports all six measures, suffered a stinging rebuke four years ago when a set of measures he promoted to reform the state’s dysfunctional politics and budget-making were defeated at the polls. Fearing another total shutout, he is now cranking up the rhetoric against critics. While telling reporters he hates "scare tactics," he proceeded to warn last week that thousands of teachers and firefighters would lose their jobs if the propositions fail. "It will be devastating," he insisted.

But the real devastation is that even with the tax increases passed in February, Sacramento faces another $8 billion deficit in the next fiscal year, according to the state’s nonpartisan Legislative Analyst’s Office. And that’s assuming the ballot measures pass, extending the recent tax hikes. If not, the deficit could swell to $14 billion. But legislators have no Plan B for true budget reform to deal with the shortfall.

Supporters of the governor blame the voters for wanting it both ways — they want government services but don’t want to pay for them. But the larger truth is that the Golden State is now basically controlled by public employee unions who systematically block any reform of the state’s government. Governor Schwarzenegger was elected in 2003 to tackle exactly that problem, and his failure only ended up exacerbating the long-term budget disaster he inherited. After May 19, the choices facing California may be even more painful and unpalatable than ever.

— John Fund

This entry was posted on Monday, May 11th, 2009 at 12:00 am and is filed under Blog Posts.