This should be the year that marks a turning point for California, to judge by events. Lawmakers ran the state $38 billion into debt, Wall Street downgraded the state's credit rating to near junk bond status and the governor is under recall at least partly for overseeing this financial disaster.

If that isn't fiscal dysfunction, nothing qualifies. Yet California has faced similar problems before, without ever coming to grips with the basic need for reform.

It should not do so this year. A discussion about what services the public wants and how it should pay for them, about reform of the structure and processes of California government, is long overdue.

Unfortunately, the omens aren't good. Gov. Gray Davis vowed earlier that he would not accept a budget that did not address the basic problem -- that the state spends more than it takes in. Yet the budget he's expected to sign this weekend doesn't even balance, much less address the long-term problems.

So much for good intentions.The budget passed by the Legislature will leave the state with a $7.9 billion shortfall next year. And that's only after borrowing nearly $14 billion in various funds to spread the deficit out over several years, plus other shifts, deferrals and accounting gimmicks that mask the state's financial mess.

Davis said he would appoint a panel of financial experts to advise the state on how to reform its finances. That's been tried before, and whatever advice the experts come up with is ignored at the first sign of economic turnaround.

That shouldn't happen this year. Voters are angry, as the recall shows. The state's credit rating is taking a beating, which makes further borrowing both difficult and expensive. Wall Street greeted the state budget deal with disdain, noting that it pushed the state's problems off into the future instead of solving them.

But facing those problems will mean revisiting a host of touchy issues, including such sacred cows as the tax-limiting Proposition 13 and mandated school spending of Proposition 98. It will mean reforming a public finance system that's incomprehensible and unaccountable.

And it also means coming to some agreement on the contrary political impulses that now rule Sacramento. Democrats want government to provide more public services at more cost, while Republicans want less expensive and less expansive government. California has yet to find the equator between those two poles.

That tricky piece of navigation is necessary, though. Coming to a consensus on the role and expense of government, and how to pay for what voters want, would set California on the road to a better future.

Or the state can continue with the current government practice: avoid responsible decisions, mortgage the future and hope for a windfall.