Yes, that was a puff of white smoke floating over the Capitol Thursday afternoon; nearly 100 days past the state constitutional deadline for enacting a state budget and after false starts and detours too numerous to list, Gov. Arnold Schwarzenegger and legislative leaders agreed on a spending and revenue package.
Unless there's another political hitch – and one can never discount that possibility – the deal will be ratified by the Legislature today and legislators can go wherever they go when they're not fouling up things in Sacramento, including an assemblyman who's scheduled to marry a television anchorwoman on Sunday.
Both legislative houses passed a hastily drafted budget package early Tuesday morning, only to face a veto threat from Schwarzenegger, and on Thursday he and legislative leaders had two brief meetings and agreed on a slightly tweaked version. But it's really no more than another get-out-of-town budget that will, more than likely, begin falling apart as soon as it's signed.
The new deal changes one major revenue source – increased income tax withholding for California's workers – that had raised hackles in the media and public, substituting tougher penalties on corporations that underreport taxes. And it tightens up access to a so-called "rainy day fund" aimed at smoothing out future income-outgo gaps, if that fund ever grows big enough to be useful.
Those are at best, however, marginal improvements in what still remains a stopgap budget filled with accounting gimmicks and questionable "spending cuts" and "revenues" – and still leaves the state's fiscal house in great disorder. It makes little, if any, headway on closing what those in the Capitol call the "structural deficit" – the chronic gap between revenues and spending that was plaguing the state even before its economy went into the tank.
Budget mavens are already talking about at least a $7 billion hole in the 2009-10 budget, even if the economy doesn't worsen, which is entirely possible.
The new scheme envisions that voters will approve, probably at a special election early next year, allowing the state to borrow against future lottery profits. In fact, early planning for next year has $5 billion of lottery-backed borrowing being used to close part of that $7 billion-and-counting deficit.
That uncertain lottery loans figure so prominently in the initial planning for the next budget is, unto itself, a strong indication that Schwarzenegger and legislators are still locked in a three-way duel over how to fix the endemic budget dilemma.
We Californians, and those we elect to state office, still cannot agree on what it is we want from government and how much we're willing to pay for it.
We reject both the heavy new taxes that the Legislature's liberal Democrats espouse and the scorched-earth spending cuts that Republicans advocate in public but are, in reality, unwilling to make.
Truly, the budget dilemma is merely symbolic of our larger civic dysfunction.
Call The Bee's Dan Walters, (916) 321-1195. Back columns, www.sacbee.com/walters.
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