Hopes that the state budget crisis might soon be over could be premature. Political realities in the Assembly could delay a budget agreement for weeks more, threatening a shutdown of more state services and programs and further damaging California's imperiled financial standing.

For starters, Assembly Speaker Herb Wesson, D-Los Angeles, doesn't have much clout with his colleagues. Democratic lawmakers are certain to bristle at the additional cuts contained in this package, while their GOP counterparts are still fuming over the steep increase in vehicle license fees. Factor in last week's public feuding over the Democratic caucus' not-so-clandestine discussion about delaying a budget, and it's anyone's guess what will happen.

Assuming the Assembly eventually approves this measure – as the Senate was expected to do last night – and sends it to Gov. Gray Davis, does it dig California out of a $38 billion hole? No. Next year, the state is still looking at a $7.9 billion deficit. Meanwhile, the cost of borrowing money continues to soar in the wake of Standard & Poor's further downgrade of the state's lousy credit rating. These downgrades loom especially large when the Legislature is looking to finance $10.7 billion of the state's shortfall through the sale of bonds.

The political ploy at the heart of the budget plan is the so-called tax swap, needed to satisfy Wall Street's demand for specific revenues dedicated to paying off the bonds. It consists of the state skimming a half-cent of the sales tax currently going to local governments and dedicating that money for the bond payments. The Legislature would then take an equivalent amount in property taxes, used mostly to finance education, and give that money to cities and counties. The money from the schools would then be made up from the general fund.

Local governments are justifiably suspicious of Sacramento's credibility in this fiscal shell game.

State Finance Chief Steve Peace sees the swap as an opening for a fiscal realignment between the state and local governments, one of the structural reforms needed to help prevent a future meltdown. Would that this were the case. But if the past is any guide, lawmakers will take the easy way out by deferring actions on those very reforms, including a constitutional spending cap and revamping the volatile income tax structure, in hopes that improved economic times are on the horizon. This is precisely the kind of delusional thinking that helped drive the state's deficit into the stratosphere.

Senate Minority Leader Jim Brulte, R-Rancho Cucamonga, cautioned during a recent press conference against characterizing this spending plan as "a get-out-alive budget." Nevertheless, the Senate plan balances this year's books through a series of accounting maneuvers, deferred spending and borrowing, which pushes much of the fiscal problem into next year.

The overarching question remains: Will the legislative leadership keep pressing for the structural reforms that could free California from these wild fiscal roller-coaster rides? Or will the leadership pass, thereby putting 34 million Californians at risk of yet another crash?