Hardly a Transparent Budget

Jerry Brown is being applauded for bringing honesty to the California budget process. True compared to his predecessor his blunt talk is refreshing. (He abstains from using the word “fantastic” in every sentence). Also he hasn’t minced words in describing the scope of the problem. But let’s deconstruct whether he has been entirely honest in his handling of the budget as well as the plan itself.

First to the extent he was saying “we had no idea it was this bad” the reality is yes he did. Everyone did. For years fiscal conservatives have warned about the impending disaster both in terms of overspending and the extraordinary level of debt being racked up by state much of it consisting accounting maneuvers for the purpose of kicking the budget can down the road.

Second during the campaign he pointedly said that “everything is on the table.” But that’s not quite true either. His budget plan lacks any real reforms. Where is the pension reform? What will be done to blunt the power of the unions? What about more efficient ways to deliver public services? For example why does California continue to spend twice the national average to incarcerate one prisoner for a year? The real answer to this is that he has refrained from putting anything “on the table” likely to anger the unions — the very interests that financed his campaign. (Sure the unions will cry crocodile tears over the cuts but there is nothing here that threatens their power).

The extent of union influence on the budget will be addressed in a future column but for now what about the actual budget plan itself? Is it as Brown contends comprised of equal parts spending cuts and tax increases?

The short answer is no. Brown is simply wrong in saying that the plan consists of half cuts and half taxes about $12 billion each to solve $24 billion of the shortfall.

Let’s deal with the $12 billion in tax increases first. Here even the Sacramento Bee said that the governor relied on “accounting magic” to get to this figure. His plan actually counts on $14 billion in tax solutions (not $12 billion) including about $11 billion in higher sales income and vehicle taxes. But his plan curiously cancels out $2 billion in money that goes to schools due to the tax hikes. The $2 billion doesn’t affect the state’s shortfall but that doesn’t mean it isn’t a $2 billion tax hike.

On the spending side it gets a bit more tricky. What Brown is calling “cuts” are really fund transfers — taking special funds to reduce the state’s general fund burden. This includes taking over $800 million in mental health funds $1 billion in early childhood development reserves (the “First Five” program) $1.7 billion in redevelopment funds and $1 billion in a fuel-tax swap that involves local transportation funds.

Bottom line? Even in the best light this budget plan has almost twice as much in tax increases ($14 billion) than it does in spending reductions ($8 billion). And that doesn’t even bring into the equation the long standing issue of what constitutes a “cut” in government parlance. That too is a subject for a future column.

Governor Brown has a style that Californians appreciate. But his reservoir of goodwill in this honeymoon period will evaporate quickly unless he becomes brutally honest as to how he plans to bring California back from the brink of financial ruin.

Jon Coupal is president of the Howard Jarvis Taxpayers Association — California’s largest grass-roots taxpayer organization dedicated to the protection of Proposition 13 and the advancement of taxpayers’ rights.