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California dreaming that its debt woes are over
Question of the Day
Have you heard? California’s cash troubles are over, and now it’s time to find ways to start spending all of this extra money.
At least that’s what you’ll hear if you read an article by Anthony York and Chris Meger in Wednesday’s Los Angeles Times.
The piece, titled “Through new budget, Brown maps out sweeping change in California,” begins this way:
“The days of catastrophic deficits behind him, Gov. Jerry Brown is set to propose a state budget Thursday that would shift the Capitol’s focus from fiscal triage to sweeping policy changes in education, criminal justice and healthcare.”
The same day, Gov. Brown declared an end to California’s fiscal crisis because he had proposed a balanced budget.
It’s safe to say the state’s dark days are over. If you believe in fairy tales, that is.
California’s deficit totals $28 billion. That’s about the size of the combined general budgets of Delaware, Idaho, Maine, Montana, Nebraska, New Hampshire, North Dakota, South Dakota, Vermont and Virginia. And that deficit is just part of the state’s total debt, which stands at $34 billion.
Gabriel Petek, who tracks California finances for Standard & Poor’s, said this debt is a major reason why the state is barely hanging onto an A- credit rating.
“Most states have rainy day funds, a positive balance of cash that they have put in a pot,” he said. “California has sort of the opposite of that, this $34 billion. It’s one of they key factors that goes into the bond rating, why this state has a lower bond rating than the others.”
This debt hole is a key factor in the financial health of the state, and yet the Times does not bother to even mention it — or the governor’s plan to reduce it — even once in the article.
While the Times acknowledges some of the governor’s strategies to save money, it is disdainful of those measures.
For example, the Times mentions that Mr. Brown wants California to spend responsibly — but not before hinting that such measures may be excessively prudent given the state’s newly acquired financial prowess:
“Although he is largely free of the financial crisis that has long gripped state government, Brown has made it clear that many of his proposals would reshape the way California spends the money it has rather than create costly new programs.”
Declaring the state “free of financial crisis” based on a proposed budget is like celebrating a junkie as “free” of addiction because he receives an offer to attend rehab.
After all, there is no guarantee the governor’s budget will be approved by the state Assembly. California’s legislature, the Times notes, is dominated by “emboldened” Democratic supermajorities — and many of its members “have already suggested they’ll push to restore many government services that were rolled back in recent years.”
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