Dan Walters

By Dan Walters
Published: Saturday, Nov. 5, 2011 – 11:00 pm | Page 3A

California’s budget runs chronic deficits, public pension systems are chronically underfunded and the fund that pays benefits to a million-plus unemployed workers is running huge deficits and dependent on federal loans.

The common thread is that politicians have endemically spent more – often much more – than underlying revenues can support.

The archetypal example occurred in 2000 when the state reaped a huge, one-time windfall of income taxes as the high-tech industry’s boom cooled and its employees hastily cashed in stock options.

Then-Gov. Gray Davis declared, “I intend to resist the siren song of permanent spending whether it comes from the left or the right, and I will stand up to anyone who tries to convince the Legislature that they should spend most or all of this money on ongoing expenses.”

The pledge quickly turned to dust as he and the Legislature committed about two-thirds of the money to permanent spending and tax cuts, and the result a year later was a multibillion-dollar deficit.

It is, however, only one example of a spend-now, worry-later ethos.

A year earlier, Davis and the Legislature had enacted a huge, retroactive increase in state employees’ pension benefits on blithe assurances from the California Public Employees’ Retirement System that its high-flying investments could handle the cost without additional taxpayer funds. That’s proved to be false by billions of dollars a year.

And in 2001, Davis and lawmakers nearly doubled unemployment insurance benefits without raising payroll taxes.

At the time, the Unemployment Insurance Fund had a $6.5 billion surplus, but the benefit boost left it unable to cope with recession and it’s now more than $10 billion in the hole.

Democrat Davis’ profligacy was a major reason for his recall and the election of Republican Arnold Schwarzenegger, who pledged to end “crazy deficit spending.”

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