The immovable object and the unstoppable force need to get ready: California’s annual budget woes are heating up. The Bronze Golden State is facing a $19 billion deficit, and Governor Schwarzenegger has proposed a new budget that has no chance to pass the legislature.
The Governator’s budget includes $12.4 billion in spending cuts, including the ending of California’s primary welfare program (CalWorks). There is also $3.3 billion in borrowing from other programs, and a hoped for $3.2 billion in federal aid. Democrats have already criticized the budget. Senate President Darrell Steinberg stated, “We will not pass a budget that eliminates CalWorks. We will not be party to devastating families. That’s not what any of us came to Sacramento to do.”
The problem is that the Democrats’ solution is to raise taxes, a complete non-starter for Republicans. California already has the 48th worst business climate; Democrats are trying for number one.
What California should do is cut taxes and regulations (which would encourage businesses to be in the Golden State and would lead to increased tax revenues). Salaries and benefits to government workers (especially pensions) need to be realigned towards reality. That’s going to happen, sooner or later, as California cannot afford the current costs of labor.
What’s likely to happen is nothing. There’s almost no chance of a good budget passing anytime soon. This is very likely to be a long, long summer (and fall) in the budget battles in Sacramento.
Tags: 2010CalBudget