Dan Walters: Old California budget issues remain despite new taxes

12/17/2012 12:00 AM

02/26/2013 8:19 PM

Sometime before Christmas, Gov. Jerry Brown will close the books on a proposed 2013-14 budget.

A few weeks after that, Brown will deliver that budget to the Legislature and we'll learn whether voter approval of Proposition 30, Brown's sales and income tax increase, will make a big difference in the state's finances.

Supposedly it would, because, the Capitol assumes, it will generate about $6 billion in extra revenue for 2013-14.

However, much of that money must go to schools under the state constitution's school finance requirement, Brown has said he wants to spend much of it to reduce the "wall of debt" that the state has erected in recent years and, finally, other revenue is coming in under projections and overall state spending is running over budget.

As a recent report from the Legislature's budget analyst notes, the state is on track to end the current fiscal year with a nearly $2 billion deficit, even though the current budget assumes $8.5 billion in revenue from Proposition 30.

While Proposition 30 will ease the state's chronic fiscal woes, therefore, a big gap will remain between what the state is likely to receive in revenue next year and what it would take to restore spending to pre- recessionary levels – perhaps $30 billion.

The analyst, Mac Taylor, cautions that the state still faces constrained circumstances, must continue to keep a tight lid on spending and will see surpluses later in the decade only if spending is kept in check and the state's economy recovers – two uncertain caveats.

Brown no doubt will present a budget that's tight on the spending side. Having persuaded voters that passage of Proposition 30 would end a half-decade of deficit spending, he has no choice but to prescribe continued austerity. One example of that attitude surfaced recently in a memo circulated to the state's judges saying that Brown intends to slash court spending by another $200 million next year.

The question, really, is whether Democratic legislative leaders are also willing to keep the lid on spending. Not only do they have the usual pressures from the usual stakeholders – educators, health and welfare advocates, unions, etc. – but the passage of Proposition 30 implied that they could see some recent spending cuts restored.

Despite those cuts, all recent budgets – including Brown's first two – have ended in the red, thereby adding more bricks to that wall of debt.

When push comes to shove, will Democratic leaders tell their political allies that even more austerity is needed to reduce debt and balance the budget, or will they cave in to the pressure to restore spending?

The numbers may change, but the political equation remains the same. There are always more demands than there is the money to meet them.

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