Notes from LA

Heavy borrowing, no new taxes, and no budget reform. See you next year — same time, same place.

California lawmakers are set to approve a new budget for the largest state in the US Monday night, allowing Governor Arnold Schwarzenegger to end the longest budget impasse in California history.

The 77-day impasse was prompted by a record 15 billion dollar shortfall in state finances. The Democratic majority in the legislature wanted to raise taxes and avoid drastic cuts but were stymied by the Republicans. The budget needs a two-thirds vote to pass.

The compromise proposal increases spending for education and healthcare, while borrowing huge sums against the state lottery. It d relies heavily on manoeuvres that would push the state’s financial problems into the future at a time when economists have little hope that revenue is on the rebound.

* Measure R proponents breathe a sigh of relief.
** Assemblyman Chuck DeVore says the compromise budget does include budget reform provisions, but nothing the Democrat-controlled Legislature can’t throw out down the road.

Once upon a time, it was acceptable to point fingers. But five years on, Governor Arnold Schwarzenegger continues to blame the incompetence of prior governments for California’s current budget mess, despite the fact that revenues are up 40% while borrowing and spending have shattered all records.

The only difference today is that he’s finally getting called on it. Reporters and columnists are asking pointed questions, to which he responds with jokes, or by changing the subject—hoping we’ll forget that he once promised to blow up the boxes, cut spending, reduce bureaucracy and waste.

Schwarzenegger is incapable of admitting wrongdoing, so rather than finally do something honorable—like, perhaps, fight back against lurid propagandist Senator Don Perata—he’s back on the corner, like a dope dealer, pushing another quick fix. This time, a one-percent increase in California’s sales tax, delivered in cynical Arnold wrapping paper: “compromise,” “temporary.”

After weeks of stalemate, the momentum appears to be on his side, and it comes at the worst possible time for the MTA bosses and County Supervisors, who are pushing a half-percent LA County sales tax increase to build several mass transit projects, most notably the Wilshire subway. If Arnold gets his wish, LA County voters will be asked in November to approve what would amount to a 1.5% sales tax hike—to 9.75%.

Printing the ballots would be fiscally irresponsible.

Even staunch tax opponents can see the contrast, in this confluence of events, between the MTA sales tax and the Arnold sales tax. One would build permanent infrastructure. The other would buy one politician an easy ride through the end of his term.