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How do you think Gov. Brown is handling the state's budget crisis?

California's budget problems linger while many other states shape up

Published: Saturday, May. 19, 2012 - 12:00 am | Page 1A

The pile-on was in full effect within hours of Gov. Jerry Brown's announcement this week that California's budget deficit had grown to $15.7 billion, with The Week giving its national audience a summary of the Golden State's financial affairs.

"California's financial apocalypse," the magazine offered. "A concise guide."

Fox News played the Red Hot Chili Peppers' "Californication," and host Greg Gutfeld proclaimed Brown captain of "the Titanic that is California, a state so broke it may ask Greece for a loan."

On Friday, the Democratic governor slapped back on national TV.

"This is not Europe," Brown told Charlie Rose on "CBS This Morning." "This is still the Wild West, and we're going to prove to the rest of this country and the world that we know how to do it."

For Brown – and California – it may be a tough sell.

Though no part of the country was immune from the effects of the recession, California's latest deficit projection comes as many other states begin to climb out of their own budget sloughs.

Fewer state budget deficits are being projected than in recent years, the National Conference of State Legislatures said in a report this month, with revenue in most states meeting or exceeding expectations.

"This is good news for state lawmakers who have closed more than $500 billion in budget gaps over the previous four fiscal years," the report said.

As budget officials elsewhere were describing their financial situations as "cautiously optimistic" or "stable," the Conference of State Legislatures said, California lawmakers "continue to cope with the state's multibillion (dollar) gap between projected revenues and anticipated expenditures."

On Friday, the nonpartisan Legislative Analyst's Office said California's deficit may be even larger than Brown's latest projection, perhaps higher than $17 billion. Though state revenue is growing, the amount is less than officials hoped.

Brown's revised deficit estimate, released Monday, already was 70 percent greater than he projected in January. In an interview taped Thursday, Rose asked him, "What happened?"

"Very simple," Brown said. "We're not fortunetellers. We don't have clairvoyance."

On the East Coast, pundits noticed.

The Wall Street Journal chided with the headline "California Ugly." Even with state tax collections ticking up nationally last year, the newspaper scolded, "California can't seem to keep up despite one of the highest tax rates in the land."

In a fall survey of states, the National Governors Association and National Association of State Budget Officers found the overall condition of states improving since the height of the recession. Even so, spending nationwide remains hampered by rising health care and education expenses, among other costs, the report said.

"When you're looking at the national picture and the states collectively, things are getting better," said Todd Haggerty, an analyst for the Conference of State Legislatures. "No one's proclaiming victory or saying everything's over. It's a ton of cautious optimism."

In California, Brown has tied his budget proposal to a November ballot initiative to raise taxes, hoping to forestall further cuts to education and social services. For some other governors, a tax increase has helped.

Andrew Cuomo, the Democratic governor of New York, reached a deficit-reducing tax deal late last year with state lawmakers, including a Republican-controlled Senate, and the Maryland legislature approved an income tax increase just this week.

But other states have managed deficits without raising taxes, including in New Jersey, where Republican Gov. Chris Christie gained national attention for his measures to contain costs.

Nationwide, states' reliance on higher taxes has diminished since 2009, Haggerty said, after temporary tax increases in some major states, including California, expired.

Brown told Rose on Friday that he is going to "campaign hard" for his tax measure. That he has to do so at all is evidence of the unusually tricky politics confronting Brown: The Democratic majority in the Legislature is resistant to spending cuts, while the Republican minority is large enough to block tax increases. California is one of just a handful of states that requires a supermajority of the Legislature to raise any taxes.

"The problems could be solved in California with a majority vote," said Jon Shure, director of state fiscal strategies at the liberal-leaning Center on Budget and Policy Priorities. "But in California, a majority vote's not good enough."

For a Democratic governor seeking tax increases, the outcome could be worse. In Minnesota, Gov. Mark Dayton tried unsuccessfully last year to persuade a Republican legislature to raise taxes. The state government shut down for three weeks before Dayton gave up.

Brown has said repeatedly that the state budget will be balanced with or without a tax increase. Either way, he told Rose, California is a "buoyant, dynamic society," not "some tired country of Europe."

Facebook, Brown said, was invented in California, not Texas, Arizona or New York. When Rose told him the social networking site was created in Cambridge, Mass., Brown hardly skipped a beat.

Maybe so, he said, but "they learned fast to get on a plane and get out to California, where all the other innovative people are."

© Copyright The Sacramento Bee. All rights reserved.

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