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Dan Walters: Governor's plan covers only his term

We've seen a lot of state budget proposals in the past year, and the only one that was enacted was laughably and obviously out of touch with reality.

The Schwarzenegger administration unveiled another one Wednesday, what it said was a comprehensive plan to close an estimated $40 billion deficit over the next 18 months with $17-plus billion in spending reductions, $14-plus billion in new taxes and nearly $10 billion in loans of one kind or another.

All in all, it's a commendable attempt to weather the state's fiscal crisis with minimal pain to those who depend on the state for sustenance, although those affected, particularly those in education won't see it that way.

While educators and others who would be affected would prefer that the state raise far more in taxes and make far fewer cuts, that's out of touch with political reality.

Republican legislators are refusing to vote for any new taxes, which is why Democrats are proposing a convoluted plan to avoid a two-thirds legislative vote with billions of dollars in levies on gasoline and calling them "fees," which would allow them to raise other taxes.

The Democrats' approach, however, would cover less than half the $40 billion gap between income and outgo, and they have nothing to offer beyond that.

Even were it to be adopted and survive lawsuits and a threatened referendum, Gov. Arnold Schwarzenegger and legislators would still face a monumental deficit.

That's the problem with doing piecemeal schemes; you shoot all your political bullets and still miss the target.

It's far better to deal with the whole picture, as Schwarzenegger and his budget advisers have more or less done with this new plan, which ordinarily would not have been unveiled until next week.

Clearly, the early release is meant, in part, to dramatize the fiscal crisis and put pressure on the Legislature to end its perpetual stalemate on taxes and spending cuts, even though budget director Mike Genest says, "It is reality. It is not a matter of political showmanship."

The major deficiencies of the new budget proposal are that it assumes that the deficit will be only $40 billion (plus the $2 billion reserve the governor wants to maintain) when the extent of this recession is still uncertain, and that it relies, in part, on loans and thus fails to completely realign spending with revenues.

The plan assumes that the recession will last at least a couple more years, with unemployment hitting 9.4 percent in 2010, which raises questions about the 2010-11 fiscal year when the proposed $4.7 billion in "revenue anticipation warrants," a form of deficit borrowing, would have to be repaid.

As commendable as it may be overall, therefore, the new budget proposal would be workable, at best, just through the remaining two years of Schwarzenegger's governorship. It could leave his successor with a big mess, especially if the economy is not recovering by then.

Dan Walters is a columnist for The Sacramento Bee.

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