Capitol and California - Dan Walters
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Dan Walters: Tough budget year soon may be seen as 'good old days'

Published: Wednesday, Oct. 7, 2009 - 12:00 am | Page 3A
Last Modified: Wednesday, Oct. 7, 2009 - 8:52 am

Golfers call it a "mulligan" or even more colloquially, a "mullie," but the rest of us would say it's a "do-over" when things don't go as well as hoped and we make a new stab at getting it right.

Capitol politicians and various interest groups are pursuing mulligans on many of the specific provisions of the state budget that legislators ultimately adopted in July and that Gov. Arnold Schwarzenegger later signed after slashing nearly a half-billion dollars in spending.

"This has been a very tough budget, probably the toughest since I have been in office here in Sacramento," the governor said as he signed the package of budget bills.

It's too tough for many, who have been suing, protesting and demanding reversals of its provisions. Some legislators claim that Schwarzenegger's line-item vetoes are illegal. And just last week, a federal lawsuit was filed over reductions in in-home services to the aged and disabled.

The drumbeat continued this week when Jack O'Connell, the state superintendent of schools, denounced elimination of funds for development of new instructional materials as "inexcusable" and said it would mean that students' instruction would quickly become out of date.

On the same day O'Connell issued his blast, some legislative leaders appeared on the Capitol steps to complain about elimination of funds to aid victims of domestic violence, including shelters. Such protests have become almost daily events in and around the Capitol. Some have borne fruit.

Responding to howls about shutting down state parks, Schwarzenegger announced a plan to keep some parks open some of the time, using savings from suspending vehicle purchases and other savings. And he agreed to a complex deal that restored funds for health insurance to thousands of children.

California, however, cannot print money. Even with the spending cuts raising such ire, the state remains, at best, precariously teetered on the brink of insolvency. A series of late-summer wildfires cut into the state's relatively tiny reserve, and revenues continue to run below the budget's forecasts. The state has borrowed billions of dollars to ease its cash flow crunch. But that money must be repaid by next June, so it means nothing in terms of the overall fiscal situation.

State agencies are starting to put together their preliminary 2010-11 budgets. Schwarzenegger's Department of Finance has predicted there will be a $7.4 billion gap between projected revenue and baseline spending - a figure that, if anything, is too optimistic. It could easily be $10 billion. Plus, after next year, the deficit will widen as the temporary spending cuts and deferrals and the temporary taxes expire - just as the next governor is inaugurated.

The current budget may be considered draconian by many around the Capitol, but these may soon be savored as the good old days unless the economy unexpectedly heads upward.


Call The Bee's Dan Walters, (916) 321-1195. Back columns, www.sacbee.com/walters.


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