California's Three-Card Monte Budget

You may have read that California finally passed a budget last week (with some cuts and no new taxes) and that Governor Schwarzenegger has signed it. So everything is cool,now, right? No more of that bad old 26 billion dollar budget deficit. Well not quite. This budget is nothing more than shifting numbers around and robbing Peter to pay Paul.

It's a complicated arrangement, but what California has done is really little more than smoke and mirrors. First, they are taking billions away from local governments, who are screaming bloody murder. In addition, other expenditures are pushed over from June 30 to July 1 (new fiscal year). There are also cuts to the prison system, which are expected to result in about 27,000 prisoners getting early releases. When the Republicans objected to that idea, the Democrats cut a deal with them so that the voting looked like a Democrat plan rather than Republican; thus, the Republicans got cover from their base. Governor Schwarzenegger (aka Katzenjammer) has assurred the public that there is no reason to be alarmed. Safety and security is the number one priority. Therefore, these parolees will be fitted with ankle bracelets and instructed to stay inside their homes after dark-or some such nonsense.

Keep in mind that this is the state that has been issuing IOUs since July 1 for their debts. This is the state that is talking about legalizing marijuana so they can tax it and make more money.

Anyway, here are the cuts:

$6 billion from K-12 schools and community colleges over two years
$3 billion from the University of California and California State University systems
$1.3 billion from Medi-Cal, the state's healthcare program for the poor
$1.2 billion from the state prison system

Critics say that this budget deal just pushes the can down the road and delays the day of reckoning. A few months from now, we will be billions more in the deficit. Actually, we still are now, but thanks to a few accounting tricks, it doesn't look that way.