|Office of the Chancellor / Public Affairs||
Thursday, May 13, 2004
Modesto Bee 5-13-04
Editorial: Budget needs a reality check
Gov. Schwarzenegger today will release a revised budget plan that he vows will include no tax increases. Instead, the governor has said, he will "cut, cut, cut."
We remain skeptical that he can make this work. There are real budget cuts and phony cuts. Here are some possible "cuts" that aren't even skin deep:
Transportation. There are 400 transportation projects throughout the state that are being delayed because the money to pay for them is being shifted elsewhere. Unless the governor eliminates these often vital projects, a "cut" to this budget does not eliminate any actual spending. It defers spending, and makes the projects more expensive in the long run.
Higher education. If his "cuts" turn away students qualified to enter the University of California or California State University systems, these "savings" are again "costs" deferred into the future.
Health care. If "cuts" produce longer waiting times to see a doctor and more children without health insurance, the result will be less preventive care and greater use of high-cost emergency rooms for routine care.
Local government and public schools.
If they get less money in exchange for the promise of more in the future, these aren't cuts.
As for new revenues? The state "credit card" seems to be the governor's favored tool. The $15 billion "refinancing" California voters approved in March includes $3 billion in funds beyond existing debts. This money could go to build roads or other long-term capital projects, the kind of projects for which California typically has used borrowed funds. If the governor spends this long-term debt in a single year's budget, it's like refinancing the house to make mortgage payments.
An uptick in the economy is producing more tax dollars. That's welcome news. But there is no realistic expectation that California will grow itself out of its structural budget problem. It will take long-term changes on both the expense and revenue sides of the books.
Real cuts, not just short-term deferrals and fund transfers. Real revenues,
not just money from refinancing the state's enormous debt.
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