The state budget crisis that was more or less resolved last week sparked the renewal of an old semantic argument over the meaning of "spending cut," and while this column is not likely to end the argument, it may shed some light on it.
It began with the Schwarzenegger administration's assertion that the state had a $42 billion budget deficit – the difference between revenue and projected spending – during the remainder of the 2008-09 fiscal year and all of the 2009-10 year.
While many in the Capitol and in journalism accepted that figure, The Bee and some others opted for $40 billion, because the additional $2 billion represented the desire for a $2 billion emergency reserve.
The $40 billion represented the difference between projected revenues and the totality of currently authorized spending, adjusted for projected caseload (such as more prison inmates or welfare recipients) and in some cases inflation, especially if automatic cost of living adjustments are built into law.
The "spending cuts" that the administration or legislators proposed and journalistic accounts reflected represented reductions in those amounts, even if the lower number was still higher than the current level of spending. Thus, for example, if Program X has a $10 million appropriation now and would automatically go to $12 million in 2009-10, reducing it to $11 million is considered a "spending cut."
The definition sends some folks up the wall. Chris Reed, an editorial writer and blogger for the San Diego Union-Tribune, rails about it constantly, especially about newspapers' use of that definition. By his definition, the $11 million would be a $1 million increase, not a $1 million reduction.
"This myth is behind the $42 billion deficit figure we see all the time," Reed wrote recently. "That's based on the bureaucratic assumption that spending just has to go from $103 billion this year to $111 billion next year. Why should this assumption be the bedrock of all newspaper stories about the budget?"
Reed's criticism, often echoed by radio talkers and some politicians, would be legit if the state had a zero-based budgeting system. But in fact, provisions of law or, in some cases, the state constitution, dictate much of the spending, such as welfare grant levels, aid to schools or who is locked up in prison.
The governor and legislators cannot arbitrarily change those numbers; they must change the law to reduce them. So using $111 billion as the basis for closing the 2009-10 gap was not a "bureaucratic assumption."
Overall, then, the $40 billion deficit was closed with $15.8 billion in spending cuts, $12.5 billion in new taxes, $7.9 billion in federal "stimulus" aid, and the remainder in loans and deferrals, if everything works as planned. General fund spending would be $94.2 billion this year and $92.2 billion in 2009-10.
This is not some conspiracy to fool the public; it's a reflection of the reality of state budgets – unless you prefer to ignore the law.
Call The Bee's Dan Walters, (916) 321-1195. Back columns, www.sacbee.com/walters.
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