Governor Schwarzenegger. How did our $3.5 billion deficit grow to $17 billion in two years?

Not the same Arnold!

Cautious fiscal conservatives look at the glass both half empty, as pessimists, and half full, as optimists. However, for the purpose of budgeting you must always plan for a worst case scenario.

The Cutting Edge a talk show was the only independent media to cover the Arnold Express when two huge green busses rolled into Tri-City Park in Placentia on July 26, 2006. Printed on the side of the bus it read: “protecting the California dream.” I wonder what we should label the California dream today.

After being introduced by Anaheim Mayor Curt Pringle the Governor, standing among 200 Republicans in his white short sleeve shirt, boasted about his achievements since the Recall of Governor Davis. Workers Comp reform, reversal of the massive VLF fees and reduction of our structural debt. Arnold boasted of having reduced Governor Davis’s $15.5 billion dollar deficit to $3.5 billion in the past two and a half years since taking office. You can view this 38 minute coverage by going to our Archives on the home page and scrolling down until you find “the Arnold Express 2006. ”

Here we are two years later. What went wrong? Revenues are up? So is the deficit.

Fast forward to a press relase that I just received which reads in part:
“The Governor’s 2008-09 budget proposal is a responsible plan that solves the state’s long-term budget problem, fully funds education, keeps our parks open and keeps prisoners behind bars – without tax increases.

However, the state is facing an extremely tough budget year. California’s economy is the most diverse in the nation and that diversity has kept it strong. But with the subprime mortgage crisis and the stalled national economy revenues have flattened out.

This downturn highlights the fact that California’s budget system is in dire need of reform. Fluctuating tax revenue and auto-pilot spending, which dictates approximately 90 percent of state expenditures, have created more than a decade of unpredictable and unstable budget cycles which benefit no one.

Despite Governor Schwarzenegger’s efforts to increase rainy day funds to historic levels, slowing the growth in spending on new ongoing programs, and championing budget reform measures, California still faces a $17 billion budget gap in the 2008-2009 budget year.

California needs budget reform to make this budget work now and to fix the systemic problems that are so damaging. The good news is that this roller-coaster revenue problem has a simple solution: If we save money during the above-average years we will have enough money for the below-average years.

This is where the California Lottery comes in. Under the Governor’s budget plan California will modernize its underperforming Lottery. The state will then use the $15 billion in revenue that will generate over the next three years to establish a rainy day fund to be used in tough budget years like this one.

This plan will require voter approval at the ballot in November.”

Gilbert comments. “Auto pilot spending.” Doesn’t that include all the billion dollar Bond Measures that were approved? Someone, PLEASE, cut up our legislator’s credit cards. It’s great. Long after you are termed out of office our grandkids will be stuck paying off those debts.

Sell the lottery. Another attempt to put a Band-Aid on the self inflicted wound called our current deficit.

Looking forward to reader reaction to the governor’s press release as well as his comments at Tri City Park exactly two years ago.

About Larry Gilbert