- Special to The Washington Times - Saturday, January 12, 2013

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.”

The Times article ends with a drunken boast, crowing that “Brown has a new $1 billion to spend” this year. 

Even if the governor’s proposed budget passes, there is no guarantee it will balance. California, according to Mr. Brown, has a measly $851 million surplus — a number that is dwarfed by the size of the state’s fiscal problems.

For example, a federal court ruled in May 2011 that conditions in California’s prisons amounted to cruel and unusual punishment. The state believes it has solved this problem and is betting the courts will agree.

And California’s budget relies so heavily on income taxes that a recession could wipe out the cash the state is counting on.

“Basically, this budget is balanced by a $50 billion tax increase,” said Bob Huff, a rare Republican in the California Senate. “And Californians have yet to see any real, long-term plan to bring back jobs and help our struggling families.”

Worse, most of these taxes are levied on the state’s wealthiest residents. Many of them live off risky stock market investments rather than stable salaries, Mr. Petek said, which leaves their incomes vulnerable to dramatic swings.

For so many Californians who benefit from government largess, budget weakness is no big deal. That’s why they keep voting Democrats into the legislature — where their supermajorities give them power to override the governor’s meager budget contstraints.

That advantage also gives Democrats the power to place new initiatives on the ballot without obtaining signatures first.

Armed with control of the purse strings, they could likely convince the public to vote for whatever initiatives their hearts desire. After all, California already swayed voters to raise their own taxes by passing Proposition 30. The state funded an ad campaign that pitched the ballot measure as a way to solve problems in education — which, in reality, it hasn’t done.

As Sen. Huff points out, the budget “only seems to include $2.7 billion in new funding for K-12 schools and community colleges” — less than half of the $6 billion in education dollars the state promised the ballot measure would generate this year. 

Regardless, voters probably don’t need much convincing to vote for new programs. They’re simply drunk on spending.

Newspapers, politicians and the public can pretend that this $34 billion debt hole does not exist — but it still does. Brushing off concerns about the the debt won’t diminish it any more than an alcoholic insisting “I’m fine!” will make him better.

A governor and a newspaper downplaying California’s debt problem perpetuates the false sense of financial security already pulsing through the state. Their denial makes it clear California will be back in rehab soon.

Katherine Timpf is a Robert Novak fellow with the Phillips Foundation and a digital editor at Times247.

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