Schrag: Legislative Analyst--Governor’s California Budget Proposal Isn’t Serious

[courtesy of California Progress Report]

By Peter Schrag

You don't have to read between the lines of Legislative Analyst Elizabeth Hill's "Alternate Budget" to understand its basic message: The governor couldn't have been serious in his own budget proposals.

The governor's plan, she said, "reflects little effort to prioritize and determine which state programs provide essential services or are most critical to California's future. In doing so, the administration has shifted much of the responsibility for crafting a workable budget to the Legislature."

The fiercely nonpartisan LAO is supposed to analyze, question, suggest. An alternate budget that includes revenues increases is unprecedented. It says: If you can't do it, let us show you how. If the Legislature were controlled by the current crop of Republicans, she'd probably be looking for a job.

Predictably, much of the attention went to Hill's tax heresies. She actually proposed increasing revenues, largely by closing some $2.65 billion in what she regards as unproductive or unjustified tax loopholes.

She studiously avoided any mention of restoring the cut that Gov. Arnold Schwarzenegger made in 2003 in the VLF, the vehicle license fee, which is now costing the state some $6 billion a year. If it were restored, or if it had never been cut, most of the deficit would disappear in two or three years, or would never have existed in the first place.

Nor does she touch the thorny issue of broadening the sales tax. Because of the major shift from goods to services in the state's economy, the tax as a share of personal income is now about 30 percent lower than it was in the early 1960s and far less than it would be if major services were covered, as many people have proposed.

The conventional argument is that if the state had more money, it would spend it and we'd still have a deficit. But much of that spending is within the governor's control. What isn't – particularly the Proposition 98 school funding formula – was imposed by the voters themselves, and they've refused to change it. (In addition, Schwarzenegger himself helped lock in hundreds of millions more in spending with his 2002 pre-school initiative and with the deals he made on gasoline sales tax revenues).