When Senate leader John Burton rose on the floor of the Legislature's upper house last Sunday night to speak in favor of a the budget deal then pending, he noted that the Democrats he leads and the opposition Republicans had both achieved their top goals. The Democrats, Burton said, protected the poor and the infirm from deep cuts in programs on which they depend. The Republicans, meanwhile, prevented any new taxes beyond the tripling of the vehicle license fee already ordered by Gov. Gray Davis.

How did lawmakers manage to make a $38 billion shortfall go away without those cuts and taxes? They didn't.

Despite the hugs and the back-patting in the Legislature and Davis' claim that the state's leaders made significant progress in reducing the scope of California's fiscal meltdown, this budget is more a restructuring of debts than a real attempt to arrest the tailspin.

The $71 billion general fund spending plan could even make the problem worse, because it relies on several legally shaky elements while assuming billions of dollars in cuts and revenues that might never materialize. Even if all the wishful thinking comes true, it still leaves an $8 billion shortfall going into the next fiscal year -- and that's after accounting for spending restraint lawmakers couldn't stomach this year but have taken credit in advance for enacting a few months from now.

The state, in effect, has paid off its credit cards by pawning some valuables, getting a second mortgage on its house and obtaining the rest in a questionable deal with the loan shark down in the seedy part of town. But the government is still spending so much more than it's taking in that within a few months the credit card balances will be back again -- and the few remaining options for dealing with them will be that much more difficult to enact.

The budget does include a few interesting cuts. The Technology, Trade and Commerce Agency is due to be eliminated, as is the Office of Criminal Justice Planning. The Arts Council, long a sacred cow, has been shorn to a subsistence budget, and most or all of the general fund support has been stripped from the secretaries of Health and Human Services, Resources, Labor and Environmental Protection. But all the savings from these moves are more than offset by the increased spending buried elsewhere in the budget.

Davis and the Legislature have created the illusion of progress by exaggerating the size of the problem and the size of their solution while leaving the underlying structural deficit in the budget almost unchanged.

The budget deal rests on a fiction that Davis and lawmakers think Californians will believe if they just hear it repeated often enough: that spending is going down by $7 billion between the fiscal year that ended June 30 and the one that began July 1.

While that's true on paper, it's really the result of a bag of accounting tricks that would make an Enron executive blush. Even a layman can sense this intuitively by realizing that the budget raises the pay of state employees, expands eligibility for Medi-Cal and provides cost-of-living increases in grants to welfare recipients and the low-income aged and disabled.

The budget does include a few interesting cuts. The Technology, Trade and Commerce Agency is due to be eliminated, as is the Office of Criminal Justice Planning. The Arts Council, long a sacred cow, has been shorn to a subsistence budget, and most or all of the general fund support has been stripped from the secretaries of Health and Human Services, Resources, Labor and Environmental Protection. But all the savings from these moves are more than offset by the increased spending buried elsewhere in the budget.

The sleight-of-hand begins with the idea that the $4 billion increase in the car tax is actually a spending cut. The tax increase shows up as a spending reduction on the books because, by raising the tax and directing the money to city and county governments, Sacramento has relieved itself of the burden of sending the same amount of money to local government from the state general fund.

And that's probably the most defensible of the accounting maneuvers.

The state is also counting $930 million as a budget cut because it will delay for a few months paying bills in the Medi-Cal program. Another $1.1 billion that the public schools will tally as received next June won't actually be paid by the state until a week later, after the next fiscal year begins. That, too, is booked as a spending cut. The list goes on and on, but rest assured, state and local government combined will spend as much in the coming year as they did a year ago, if not more.

That is, if the courts allow it. The entire fiscal house of cards could come crashing down if one or more elements of the plan facing legal challenge are ruled impermissible.

The Legislature's lawyer has already opined that the car tax increase, accomplished without a vote of the Legislature, is almost certainly illegal. A bond the state plans to sell to pay its pension obligations has never been tested in court before and could be struck down. And a new push to sell bonds secured in part by revenue from a litigation settlement with tobacco companies could be halted because the state hopes to backstop the tobacco money by also using the general fund as collateral, a move that has never been tried before.

But the granddaddy of them all is an unprecedented bond the state hopes to sell to repay the $10.7 billion deficit accumulated through June 30. The state constitution prohibits the Legislature from borrowing more than $300,000 without a vote of the people. That provision has been set aside by lawmakers and the courts in the past, but only for short-term cash flow loans and the occasional bridge borrowing to get the treasury past a temporary rough patch. It's never been circumvented for a loan of this magnitude or duration.

The borrowing is not scheduled to go to market until late next spring. If a court strikes it down before that, the state would suddenly be short that much money, out of cash and with no way to pay its bills.

But even if all the borrowing passes legal muster, the state still hasn't made much progress reducing the size of its problem. At least $1 billion in cuts counted on for this year are probably not going to materialize, from $585 million in employee salary savings to $200 million in reductions from Medi-Cal eligibility reforms. On the revenue side, the budget also counts on $680 million in new money from Indian gaming operations and more than $100 million in new federal money for the prisons that is shaky at best. And it uses revenue projections from the legislative analyst that are more optimistic than the administration's own best guesses.

The bottom line is that by next May, the state will almost certainly be facing a new shortfall of at least $12 billion -- the same stubborn structural deficit that the governor and the Legislature have been ignoring since the dot-com crash in the spring of 2000.

For the governor, or anybody else, to say they're whittling away at the deficit is like saying you've run the first 20 miles of a marathon three times before collapsing each time, but you're confident you'll be able to finish the final six miles the next time you try. Davis and state legislators have once again dodged the truly difficult part of the job, and there is nothing in their history to suggest they are capable of completing the task.