On Wednesday, Gov. Gray Davis will submit to the Legislature his revised spending plan, which almost certainly will rely on heavy borrowing and another half-cent increase in the sales tax to help bail California out of its budget crisis.

What has been aptly characterized as the “financial equivalent of a high-wire act” has no chance of working unless Davis and legislators make major structural reforms required to prevent another fiscal crisis. Otherwise, Wall Street bankers are going to be wary of doing any more business with a state whose bond rating has already been downgraded three times during the last two years.

California’s bonded indebtedness, combined with its chronic inability to enact fundamental fiscal reforms, already has caused skittishness among investors. What’s more, the state will borrow $25 billion through next year in short-term loans to cover operating expenses, long-term general obligation bonds approved by the voters, plus other borrowing.

Little wonder the bond companies want the state to create a separate revenue stream, not subject to the school funding guarantee, to repay the $10 billion in borrowing that GOP lawmakers have proposed be used to help reduce the deficit.

Treasurer Phil Angelides, who has to sell California bonds to Wall Street, is understandably leery of incurring even more long-term indebtedness. Already accumulated debt is costing the state $2.6 billion this year in interest payments.

Angelides is right when he says that rolling over the deficit should be a last resort after Davis and the Legislature have taken some tough decisions to reduce the budget deficit. These should include deep spending cuts and some equally distributed tax increases. There must be a revamping of the state’s volatile tax structure to stop the cycle of boom-or-bust budgets.

California, moreover, must have a constitutional limit to restrain runaway spending in flush times. And there must be a sweeping realignment between Sacramento and local governments. County and city governments should have a stable revenue source and more freedom to provide public services.

Unless Davis and the Legislature take seriously the need to make major structural changes, they don’t deserve to be taken seriously by Wall Street or by voters.