GOVERNOR: CALL THE LEGISLATORS BACK TO SACRAMENTO
Governor Arnold Schwarzenegger should use his powers to call an immeidate, emergency session of the state legislature to deal with the fact that we have no state budget. It is pretty outrageous that we have 120 legislators that are paid a full-time wage and yet, without a deal worked out on the state’s annual spending plan, and the constitutional deadline for passing a budget now over a month behind us, our legislators are not even in the Capitol? That is outrageous. FR readers should call their Senator and Assemblymembers, and urge them to go back to Sacramento, and to each individually call for the legislature to return to session.
BILL LEONARD ON THE BUDGET
I was emailing with State Board of Equalization Member Bill Leonard, an acknowledged expert on state finances and the budget — he shared these sobering thoughts with me (and said I could pass them along to you):
I talked with folks at the Treasurer’s office today and the bonds outstanding where the state has some liability are even greater than the regularly published numbers. Everybody has forgotten the energy bonds that Davis did which is supposed to be paid back by electric company charges on their customers but the debt’s in the state’s name. That is over and above the Schwarzenegger bonds that are essentially using long term debt to pay state employee salaries.
The other way of looking at the budget is to use the Governor’s own budget. There are so many variables in a budget trying to predict expenditures based on caseload (students, welfare, and prisoners) while also trying to predict the tax returns through June of 2008 that it is a tough job. So the numbers are always wrong and being off by 5% is not unheard of. (5% is now over $5 billion).
From the Governor’s May Revise which I do not believe was changed much by the Nunez-Villines deal: Budget year revenue will (might) be $101,253,000,000 and budget year expenditures are appropriated to be $103,765,000,000. We are spending more than $2 billion than we will have under our own plan before the year starts. Obviously do not try this at home. It is only the carry over reserves that allow the claim of a balanced budget and the reserves are based on the sale of the bonds not prior year revenue.
Given the error rate a $2 billion planned deficit could easily be 5% off and mean either a $3 billion surplus (really good year) to a $7 billion deficit (really bad year). Do you feel lucky?
Using the LAO’s lists of risks to the state and one could say that Tom is being moderate. The LAO thinks the reserve amount is overly optimistic. Also go to the end of this report and page up to Additional Risks. Gloomy is now the optimist.
MCCLINTOCK ON THE BUDGET
State Senator Tom McClintock has really outlined our budget challenges over on his Citizens for the California Republican website. Check out his latest budget post complete with imbedded YouTube videos of some key moments on the Senate Floor.
With permission, I have grabbed one and placed it below. It is important because every FR reader should understand, as the lack of a budget starts to have impacts on some important state services, that Republicans in the Senate tried to pass a measure to allow for funding these programs while the budget is delayed. Democrats wouldn’t even bring it to a vote, because they are more interested in creating "pressure" for passing their fat, bloated budget then making sure payments are made while a significant conversation takes place about reforming some of the ways Calfornia tax dollars are spent. Here is Senator Jeff Denham trying to get his motion considered…
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