Friday, May 4, 2012
The Bare Bones Era - 2012: Cult gurus and delusional constituencies
It is May 2012. Theoretically the Legislature must adopt a balanced budget by June 15. So where are we in this process?
In January the greatly-admired California guru, Governor Jerry "Moonbeam" Brown, offered a budget that was based on wildly inflated revenue projections for the remainder of fiscal year 2011-12 and the new fiscal year 2012-13. It didn't matter as he will offer a revised budget this month, except....
Governor Moonbeam is selling a tax initiative measure that might do certain things if those projections were correct. Teachers and other unions have withdrawn their own proposals based on political promises made, promises made that could have only been kept in the best of circumstances.
Right now polls show that a majority would approve Moonbeam's initiative. But no one has really challenged his numbers and the public is delusional enough to believe that extra taxes on the rich for five years will solve all of California's State Budget problems.
If Moonbeam's measure passes, using his January revenue projections for the rest of this fiscal year and next fiscal year, it appears that by the end of June 2013 the cumulative revenue shortage will range between $8.8 billion and $25.9 billion. Yes, the shortage could be less than the $8.8 billion if wealthy Californians earn a lot more taxable income in the next 15 months than they did in the last 15 months. It's possible. But it would have to be a lot more.
If the Legislature decides to use his revenue projections and his measure passes and the wealthy don't make a lot more, then at best only $8 billion will have to be cut from schools, welfare, and public safety.
Moonbeam is the guru for one cult - California's Democratic Party. The other cult - California's Republican Party - is without a single guru, but instead is led by California Republican Party Chairman Tom Del Beccaro, Senate Republican leader Bob Huff and Assembly Republican leader Connie Conway who are on a statewide campaign tour opposing Moonbeam's tax measure.
In the midst of all this is California Forward, an organization that has started submitting signatures on an initiative that would "reform" California's budget process by first requiring a two year budget. The fact that in January 2012 the Governor couldn't accurately project revenues through June 2012 says all you need to know about the measure. Nicolas Berggruen, a billionaire investor and California Forward's guru, has pledged to spend $20 million to "reform" California government.
And, of course, there is Molly Munger's measure backed by the California PTA described here as"the one tax increase measure now circulating specifically aimed at improving California's economic future by educating California's children for a 21st Century economy."
It has no chance with the voters, according to all the pundits who laud Munger's initiative, one of whom said it "makes more public policy sense than Brown's. It just makes less sense politically." It makes less sense politically because even though it funds schools while moving control of the funds to the local school boards, it does so by providing fairly reliable revenue in the form of taxes on the working upper-middle class (as well as the rich), the only place reliable revenue can come from. Good lord, who'd want to actually pay for educating our kids?
In the meantime, there is absolutely no chance anything significant will happen with the State Budget before the June 5 primary.
Perhaps the Legislature can adopt a budget by the fictional June 15 deadline, 10 days after the primary. They'll adopt something they call "balanced." Like last year, it will be based on wildly inflated revenue projections including the assumption Moonbeam's measure will pass. It will not force further budget reductions which would affect teachers, nurses, and other public employee union members nor programs for the disabled or senior citizens. Instead, "triggers" will be built in to cut those programs if Moonbeam's initiative measure fails to pass (note, the triggers will not deal with the fact that revenue will be significantly short if the measure does pass).
We'll have to deal with all that after December 21, 2012, after the Mayan Calendar "ends", when some cults (other than the two main political parties in California) believe the world will end....