One of the more convoluted pieces of the state budget package enacted last month was a provision that nearly $3 billion in health and welfare spending cuts and new income taxes would be eliminated if the state was in line for at least $10 billion in federal aid.
The money didn't have to be in hand for the provision to be triggered. Rather, Gov. Schwarzenegger's budget director, Mike Genest, and state Treasurer Bill Lockyer would have to agree by April 1 that the feds would "make available" that amount by June 30, 2010.
The proviso was inserted to make the package more palatable to liberals opposed to spending cuts as well as to anti-tax conservatives. But its drafting was hasty and imprecise. And the $10 billion figure was plucked out of the air at the last moment to garner one much-needed vote in the Senate.
What does "make available" mean? No one really knows, and having two officials interpret it, one a Republican and the other a Democrat, is a recipe for gridlock.
Apparently, Schwarzenegger originally wanted just Genest to make the call, but as a sop to Democrats, Lockyer was included. Ordinarily, Controller John Chiang would have been part of any fiscal panel, but that would have given Democrats a 2-1 majority, and Chiang had irritated the governor by stubbornly resisting some of his budget moves.
Genest rather quickly declared that his bean counters could find no more than $8 billion in federal aid, falling well short of the trigger amount.
The Legislature's budget analyst, Mac Taylor, confirmed that number but added that depending on how certain provisions of the federal legislation are interpreted and implemented, it might be possible to hit $10 billion. The liberal California Budget Project chimed in with its analysis, saying the state easily could meet the $10 billion threshold.
All of that put the heat on Lockyer. If he agreed with Genest and Taylor that the federal aid would fall short, the game was over. If he disagreed, it's a tie. Nobody knows what would happen then.
The administration appears to contend that a tie means the spending cuts and the taxes would be imposed. But if it holds to that posture, some kind of court battle is almost inevitable.
M eanwhile, there is another factor in the gamesmanship. It's becoming evident that the billions of dollars in new taxes and spending cuts enacted last month probably will fall well short of closing the $40 billion budget deficit projected for the remainder of this fiscal year and all of the next. The economy is continuing to deteriorate and tax revenues are falling behind projections.
Were the trigger to be pulled, it would widen the likely deficit even more, which may be one reason why the administration is reluctant to embrace the $10 billion figure. And that doesn't take into account what happens if a half-dozen budget-related ballot measures are rejected by voters May 19.
The never-ending political dance over the state budget deficit thus continues.
THE SACRAMENTO BEE
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