Hard as it is to imagine, the prognosis for the state budget is
only getting worse.
Hard as it is to imagine, the prognosis for the state budget is only getting worse.
By Gov. Gray Davis’ estimates, which may be inflated but probably not by much, the state faces a $35 billion deficit over the next 15 months. But so far, the Legislature has passed only $8 billion worth of cuts over two years.
To his credit, Davis has called for further cuts, but his fellow Democrats in the Legislature won’t play along. They’d rather make up the difference through additional tax hikes, beyond the increases Davis has already called for on income, sales and tobacco taxes.
That includes tripling the car tax, which would net $4 billion for the state treasury. To that end, Democrats have already cooked up a scheme for jacking up the vehicle license fee that wouldn’t require the two-thirds legislative approval that’s constitutionally required for tax hikes.
But state Republican leaders and anti-tax activists have threatened to challenge any VLF hike in court, meaning that a key component of the revenue stream Democrats are counting on to balance the budget may never materialize.
It gets worse.
Democrats are also planning to cover the deficit by selling some $2 billion worth of bonds against future revenues to be repaid through the tobacco industry’s settlement of a lawsuit brought by California and 45 other states. Yet those funds are now also in jeopardy.
A judge in Illinois recently ordered Philip Morris to set aside $12 billion for possible payment in a civil case. That has the tobacco giant worrying about whether it can afford to make its next payment to the states, and Wall Street skittish about the credibility of tobacco bonds. …
It doesn’t much help that the Legislature has dawdled on making cuts to this year’s budget. The more time that goes on, the more money spent that could have been saved – and the more money that will need to come out of next year’s budget or the taxpayers’ pockets. …
For too long, the state’s leaders have acted as though some sort of miraculous solution would magically appear, and they would be spared the tough job of reining in a government they allowed to grow out of control for the past five years.
It’s time to get real.
It’s time for Sacramento to take a tough look at what programs, departments, personnel and bureaucratic perks just aren’t necessary, especially in a time of financial crisis.
