From reading newspaper accounts this morning, Governor Schwarzenegger is seriously looking at calling a special session of the state legislature to deal with the fact that the economic downturn that is taking place is created a much larger than expected negative impact on the current fiscal year state budget. It is not surprising that state government income would take a hit at the same time that the California economy does – the real question is how will Sacramento politicians deal with this issue.
If there is a special session to deal with what is essentially an out-of-balance state budget (remember, the one that was just passed?), we will be going right back into the polarized environment which delivered us such a late budget in the first place.
There will be two schools of thought – more cuts in government spending, or increasing “revenue” (i.e… taxes or borrowing). The former position is the correct prescription for California taxpayers, already suffering the effects of the economic downturn. The latter position will be that of the public employee unions and left-wing ideologues.
We already knew, with the adoption of the FY 08-09 budget that next year’s budget would start out with a multi-billion dollar deficit. The news that this year’s budget is so far in the red presents the legislature and Governor with an opportunity to deal with both problem budgets at once – by focusing on making cuts in state spending that aren’t “one time gimmicks” but are very real and substantive reductions in state government.
Governor Schwarzenegger, it’s time to dust off your California Performance Review recommendations, with the billions of dollars of proposed savings, and bring forth those ideas to the legislature. You also have an opportunity to take punitive tax increases off of the table, and to frame this mid-budget-year session as a time to make needed cuts.
Sacramento liberals, for whom growing government is analogous to a religious cause, will fight reductions with every fiber of their existence. When you throw at them the egregious amounts of increased state spending in recent years (over 40% in four years, to be more exact), they will attempt to side-step reality and flat out deny that state government has grown beyond a sustainable percentage of the economy.
The reality though is that, especially in an economic downturn, tax increases will only result in lower revenues for the state.
In tough times, everyone has to make do with less. This includes families, businesses, and, yes, even state government.
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