For many decades, California maintained a strict dividing line – a lock box, if you will – between the state's general fund budget and special funds financed by single-purpose revenues.
A case in point was the state highway fund, into which gasoline taxes and other auto-related revenues flowed and out of which the state built and maintained its highways.
Jerry Brown, who was fond of political theorizing during his governorship three decades ago, once floated the notion of doing away with all special funds and dumping all of the state's revenues into one pot from which expenditures would be made.
Brown's suggestion never got beyond the talking stage at the time. But step by step, Brown's successors and the Legislature have eroded the lines that once separated general and special funds and moved closer to his one-big-budget concept.
Those changes have usually occurred during the state's frequent brushes with fiscal disaster. Governors and legislators, unwilling to raise taxes and/or make deep spending cuts, have raided special funds – even local government treasuries. Sometimes those fiscal forays have been in the form of loans and sometimes they've been outright grabs. They've even attempted to tap into public employee retirement trusts.
Erosion, however, has also occurred during those rare years when the state had surpluses, such as the Legislature's diverting some of a 2000 income tax windfall into highway construction – only to pull the money back a year later when the general fund budget faced a deficit.
Simultaneously, however, a voting public that's disenchanted with its political officeholders has been inclined to create more special funds, supposedly directing specified revenue sources to specific programs and services. A voter-approved boost in cigarette taxes a decade ago was focused on programs for children, for instance, and an income surtax on millionaires was dedicated to mental health services.
As the state's fiscal dilemma deepens, the tension between general and special funds grows. One of the measures on Tuesday's special election ballot would allow the state to tap into lottery profits, once restricted to schools, while two others would divert money from the aforementioned cigarette and income tax funds. Advocates for children's services and mental health programs are pushing back by opposing the latter two measures.
The lobby for boat owners, marinas and other elements of aquatic recreation is raising a stink, meanwhile, about raids on fuel taxes paid by boaters.
The Department of Water Resources wants to tap the special fund of boat fuel taxes for $7.5 million, and Gov. Arnold Schwarzenegger wants to wipe out the Department of Boating and Waterways, and fold it and its boat taxes into the Department of Parks and Recreation.
If Brown realizes his hopes of being elected governor again next year, he may find the concept he floated three decades ago has become a fact, for better or worse.
Call The Bee's Dan Walters, (916) 321-1195. Back columns, www.sacbee.com/walters.
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