To the surprise of almost no one, state tax revenues have failed to meet the hopeful expectations of lawmakers when they approved a budget in June. As a result, the Legislative Analyst's Office projected last week that California now faces a $3.7 billion shortfall in the current budget year.

This shortfall was anticipated in the budget deal that Democrats and Gov. Jerry Brown crafted on their own. With no chance of new tax revenue because of Republican intransigence, Democrats based their spending plan on rosy projections, but wisely coupled it with a contingency plan of "trigger cuts" should revenues come in lower than expected.

That sad moment has now arrived. The state Department of Finance still needs to present its own forecast on revenues for the remainder of the year. Yet there is little doubt that, come December, California will face a multibillion-dollar shortfall that will need to be addressed with more spending reductions.

Within the Capitol, there is already talk of redoing the approved triggers.

Supporters of public education are balking at $1.36 billion in mid-year trigger cuts that K-12 schools would absorb. As schools lobbyist Kevin Gordon told The Bee, "There was a strong assertion when this budget was wrapped together that we would probably never see the triggers pulled."

Really? As we recall, state leaders were adamant this summer that the trigger cuts weren't some kind of fairy dust.

Sure, they hoped California could avoid the triggers. But they saw them as a necessity to calm Wall Street and other holders of California's debt. As State Treasurer Bill Lockyer noted in a September op-ed for The Bee, "The budget has a built-in mechanism – target trigger cuts – to ensure the books stay balanced should revenue fall below projections. That's one of the budget's most crucial fiscal management provisions."

We can understand why some might want to tinker with the triggers. Many school systems will have trouble absorbing further cuts, especially since lawmakers agreed to a deal with the California Teachers Association to spare teachers from midyear layoffs. That leaves schools with two messy choices: Shortening the school year by seven days or renegotiating pacts with teacher unions so they can institute furloughs.

But as bad as those choices are, it would be worse for lawmakers to back off the triggers, shift cuts to higher education, or resort to gimmicks such as further rosy revenue projections. If anything, Legislative Analyst Mac Taylor might have been optimistic with his projections. His analysis assumed the state would prevail in current litigation against it and expressed doubt that the debt crisis in Europe would "have a substantial effect on the U.S. economy."

Republicans, not surprisingly, are responding to the LAO findings with barely restrained glee. The LAO report, said Assemblyman Jim Nielsen, vice chair of the Assembly Budget Committee, "indicates, as predicted, that the budget passed by Democrats with only a majority vote was overly optimistic and based on shaky assumptions."

That may be true, but Republicans didn't help matters much by refusing to agree to higher taxes, even with the possibility of pension reform on the table. Passage of both would have helped California confront its long-term budget problems. Right now, we are just scraping by, year after gruesome year.

As for Democrats, they could help their cause by being as prudent with the public purse as they are persistent in seeking tax increases. Ten percent raises for Senate staffers – no matter how smart and hardworking they are – hardly fits into that category.

If they want voter support for any kind of tax hike, they need to take a page from the monkish Jerry Brown and start transforming the Capitol into a Sacramento version of a Tibetan monastery.

The Bee's past stands

"It is easy to make jokes about the $4 billion in extra revenues that Democrats hope will arrive, and it could well be optimistic. But it isn't as if Democrats don't have a backup plan. Should the revenue not materialize, they've laid out more cuts to universities, social services, public safety and other programs."

– June 29, 2011

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