In crisis, state leaders inspire no confidence

As depressing as the report on California's financial prospects from the Legislative Analyst's Office was, the partisan reaction to it from the governor and legislative leaders was even more so.

According to Mac Taylor, the Legislature's nonpartisan budget analyst, the state can expect shortfalls in the neighborhood of $20 billion during each of the next five years. In his report, Taylor said that all of the efforts to balance the state's budget have gone for naught and, although shy on specifics, he did offer a number of recommendations about what needs to be done.

Taylor's advice included closing tax exemptions, extending temporary taxes, such as the 1 percent vehicle license fee, and coming up with longer-lasting, more realistic budget cuts. He also suggested legislators consider asking voters to end some mandatory spending by overriding previous ballot initiatives and allowing for more budget flexibility.

Beyond these recommendations, there is little the governor or legislators can do other than cut more, increase taxes or borrow more.

Backed into a corner by such dire prospects, a reasonable person might expect the state's leaders to get serious and try to find common ground for solutions. That's not the way business is done in Sacramento.

The reaction to Taylor's report was swift and predictable.

Gov. Schwarzenegger and Republicans stomped their feet and vowed there would be no tax increases. Assemblyman Cameron Smyth of Santa Clarita spoke for them all when he declared, "This deficit will not be solved on the backs of California taxpayers."

The Democrats, not to be outdone in the sound-bite war, were just as quick to declare that higher taxes had to be considered as a way out of the state's budgetary mess.

State Sen. Darrell Steinberg, a Democrat from Sacramento, put the spin on it for his party by saying: "The numbers cry loudly for California to focus on rebuilding our tax base. We need to protect our schools and universities, so as we create high-wage jobs, we produce a work force able to fill them."

It all sounds so good, but what it really means is just more of the same. It's not about what's good for California or its citizens, and it's not about a willingness to negotiate and compromise for the greater good. It's just the same extreme partisan politics that has as much to do with the state's economic woes as the recession.

For the next seven-and-a-half months, we will watch the same stalemate unfold that engulfs the Legislature every year as it attempts to construct the annual budget.

The governor will propose a budget, the Democrats will craft a counterproposal that, of course, will include tax hikes, and the Republicans will stand fast, of course, refusing to consider any form of tax increases. And, because the Democrats have the majority but not the votes to increase taxes or pass a state budget, the state will languish until lawmakers are forced to do as little as possible to get to the next budget cycle.

As part of his report, Taylor reached an even more pessimistic conclusion. Taylor believes that in a year or two, when the rest of the country begins to experience economic recovery, the state's fiscal problems will still be huge and not easily overcome.

That would strike a mortal blow to what appears to be California's economic philosophy. It's also the answer to why state leaders can fiddle and dither and do nothing while it appears the state reels toward economic Armageddon.

In the past, when the overall economy did well, California did extremely well. So much so that state government was flush with cash. Problems that would bankrupt other states, such as unfunded spending mandates and a perpetual structural deficit, were easily accounted for and swept aside. When there were hiccups, the state was able to ride out the indigestion with little discomfort.

The current situation is no hiccup; it's more like a heart attack. Our problems have caught up with us, the hole we have dug for ourselves is way too deep and the confidence that the state's fortunes will flourish again with a rising economy is woefully misplaced.

Yet, it is precisely this belief -- that the only thing that needs to be done is to wait for an improving economy to cure our ills -- that guides our lawmakers.

That's what makes the legislative analyst's forecast doubly depressing: The economic prospects are woeful and the prospects of our legislative leaders doing anything about improving them are even worse.

Talk about a Great Depression.

Howry is editor of The Ventura County Star.