When governors and legislators face seemingly big budget deficits, they often turn to gimmicks to balance income and outgo on paper.
The most creative have been what cynics call “rosy scenarios.”
California politicians conjure up some new source of revenue, swear it is legitimate and then use the projected windfall to close their gap.
Former Gov. Arnold Schwarzenegger was an early advocate of rosy scenarios, such as assuming that the state could get as much as $1 billion from new gambling compacts with Indian tribes, or it could seize a half-billion dollars from punitive judgments in lawsuits.
Later, he counted revenue from peddling the state’s workers’ compensation insurance business and state buildings. His rosiest scenario occurred last year when his initial budget assumed the federal government would give the state as much as $7 billion in extra cash.
None materialized, but that doesn’t prevent politicians from dusting off another rosy scenario.
Gov. Jerry Brown and Democratic legislators, whose hopes of winning Republican support for tax extensions vanished, ginned up a new budget Monday, just days before the 2011-12 fiscal year begins.
Brown vetoed one Democratic budget, saying it was so gimmicky that Wall Street bankers would not give the state billions of dollars in short-term operating loans. And Controller John Chiang followed that by decreeing that since a balanced budget wasn’t enacted by the constitutional deadline of June 15, he’d cut off legislators’ salaries and expense payments, as a new state law requires.
Brown and Democrats went back to the budgetary drawing board, and a new rosy scenario emerged — that above-expectation tax revenue this year means the state will collect an extra $4 billion.
The extra money — coupled with one-time cuts and deferrals — would get the state through the year, they say, without the wholesale slashing Brown predicted if the tax extensions were blocked.
Brown et al. insist that it’s legit, of course. They’re including what Brown called “severe trigger cuts” that would go into effect automatically should revenue fall short, probably to satisfy bankers from whom they’ll be seeking billions in short-term loans.
So is this rosy scenario any more realistic than those of the dishonorable past, or is it just another gimmick to buy time — a plan that would allow lawmakers to be paid?
Even if the projected revenue appears, Democrats said, they’ll still have a structural deficit and plan to seek new taxes via initiative in 2012.
Dan Walters’ Sacramento Bee columns on state politics are syndicated by the Scripps Howard News Service.