Financial planner Scott Hanson, who writes a column for The Sacramento Bee, received an inquiry from a reader who said he was facing bankruptcy due to a mountain of credit card debt and was wondering whether he should enter a "debt consolidation program."

Hanson's reply, in part: "Most people in your situation need a budget and spending program before a debt consolidation plan. Why? Because most people who are over their heads in debt got that way because they spent more money than they made. They confused their wants with their needs and purchased too many things on credit cards.


"I've seen countless situations where people have consolidated their debt into a manageable monthly payment and used their lower payment as an excuse to spend more. The reasons behind their spending didn't change. Two or three years later, their personal debt was far worse then before their debt was consolidated."

It was the sort of back-to-basics advice that any responsible financial counselor would give. It's what the World Bank tells Third World nations whose finances are in disarray. It's the medicine that corporate "turnaround" specialists dispense to companies drifting into bankruptcy.

The first step toward financial health is to stop doing what got you into trouble in the first place. Just borrowing more money to "consolidate" debts tends to lead to more irresponsible spending from those who have already "confused their wants with their needs and purchased too many things on credit cards."

Is Gov. Gray Davis listening? Are Senate President Pro Tem John Burton, Senate Republican leader Jim Brulte, Assembly Speaker Herb Wesson or Assembly Republican leader Dave Cox?

Burton and Brulte have agreed on a no-new-taxes compromise that would end the state's budget stalemate. The impending deal, however, does not embrace the basic principles of financial responsibility that Hanson and others espouse. It's still another get-out-of-town budget, the third in as many years, that would depend on more multibillion-dollar debt consolidation loans, borrow more money to cover current expenses, stretch out repayment of debt -- and leave the state still spending much more than it takes in.

California is in a pickle because its leaders squandered a one-time windfall of tax revenues three years ago by cutting taxes and boosting annual spending billions of dollars beyond dependable revenues, then covering the resulting deficits with bookkeeping gimmicks and loans. It is analogous to a family that received an unexpected inheritance from a distant relative, started spending as if it would have a rich uncle die every year thereafter, then maxxed out its credit cards to support its artificially inflated lifestyle.

Getting a new budget in place is important, especially to the individuals and agencies that draw support from the treasury. But enacting the right kind of budget is more important.

Three political factors are driving the Burton-Brulte deal: Republicans' immoveable opposition to new taxes beyond the $4 billion boost in vehicle license fees that the Davis administration did on its own, pressure on Democrats from those dependent on Sacramento, and Davis' worries that a prolonged budget stalemate would make his recall from office more likely. Democrats can either cave in to the Republicans, enacting a budget without additional new taxes and some more spending cuts, or see the stalemate continue for weeks. The latter would hurt Democratic constituent groups, such as public employee unions and the poor, and erode Davis' position even further.

Faced with those choices, most Democrats -- especially in the Senate -- are crumbling, leading to the Burton-Brulte compromise. But, as noted previously, the plan will do little, if anything, to close the $8 billion to $10 billion "structural deficit" in the state's finances that will reappear next year.

The most telling commentary comes from the two men who worked out the budget deal. Brulte described it as "as good as it gets," while Burton said it was "the best we could do." Politically, that may be true. But it only underscores the Capitol's chronic dysfunction and implies that California may continue its irresponsible ways until bankers cut up its credit cards.