01/13/2011 by Tyche Hendricks

What’s the big deal about the budget? 3Qs for Peter Schrag

Originally posted on KQED. Reposted with permission from the author.

The big news of the day is brand-new Governor Jerry Brown's proposed budget for California.

Citing a $25.4 billion deficit over the next year and a half, the guv wants the legislature to slash spending by $12.5 billion, put a measure on the ballot to extend taxes worth $12 billion, and find almost $2 billion in efficiencies (he's factored in $1 billion to sock away in a rainy day fund). Brown today vowed an end to the "budget gimmicks and tricks that pushed us deep into debt" and proposed a major shift of money and authority to the local level.

A lot of ink, air time and political drama gets spent on the state budget, this year and every year. We caught up with long-time California-watcher Peter Schrag (the former editorial page editor for the Sacramento Bee and author of many books, including California: America's High-Stakes Experiment) to figure out why the budget is such a big deal.

Governing California: Why is the state budget so important?

Peter Schrag: The budget is a basic policy document. It sets priorities for the state, more so than anything else. In California it's confounded by initiatives, because they do a lot of so-called "ballot box budgeting," intitiatives that set up programs and don’t provide the funding for them. But the budget is the basic document. If Brown cuts $500 million out of higher education, it means tuition goes up or classes get cut. It's the same with schools, prisons, and so on. One of the reasons we fight about it so much is is because it's crucial and sets the priorities.

Governing California: Brown says he wants to do away with the "smoke and mirrors." What does that really mean and can he succeed?

Peter Schrag: It's what Jerry called "delay and denial," kicking the can down the road. Here are a couple of classic examples: We’re supposed to get so much money from the tobacco suit settlement each year, but we’ve fiscalized it and borrowed against it, so we got all the money up front and now we’re paying it off. That’s borrowing from the future. Arnold wanted to sell the state buildings and then rent them back. The long term cost of that is much greater than what you gain. Back in 2004 we sold $15 billion worth of bonds to pay off the deficit and now we have to pay off the bonds. Arnold did that in all kinds of ways. I think Jerry is determined to stop that. In this budget, it looks like that’s real. Of course that could all change once the legislature gets it. Then we'll see how tough Jerry will be in resisting.

Governing California: How does this budget compare to others you've seen over the years?

Peter Schrag: It's a real austerity budget. But he’s also asking for more taxes. The voters refused to extend these taxes in May 2009. He’s going to try again and I think it’s possible. The key thing is, can he get the votes of the legislature to put it on the ballot? That means getting the votes of a few Republicans. (As to the voters,) I think people are more aware of the risk of not getting the revenues than they were.

Jerry's splitting the difference. He's trying to get a little more than that half in cuts and a little less than half in extended revenue. It's exactly what (former Gov.) Pete Wilson worked out with (then Assembly Speaker) Willie Brown in 1992. They had a $14 billion hole, and Wilson split the difference with Willie: $7 billion in taxes and $7 billion in cuts. Jerry kept saying today, "This is the world we live in. If anybody out there has got a better idea, tell me." It’s awfully easy to snipe at this. It’s awfully hard to think of good alternatives.

For more on the state budget, tune into KQED Public Radio's Forum Tuesday morning at 9.a.m. with Scott Shafer and guests.

Tyche Hendricks is the editor of Governing California, a project of The California Report, where she's responsible for on air and on-line coverage of state governance.

Categories: Selected Blog Posts, State Budget

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