Dan Walters

 

By Dan Walters
Published: Friday, Jun. 15, 2012 – 12:00 am | Page 3A

The Legislature’s Democratic leaders insist that their new state budget is balanced, honest and contains an adequate reserve.

“Our budget contains no additional borrowing or so-called gimmicks,” Senate President Pro Tem Darrell Steinberg said this week as details were unveiled.

Not.

It’s “balanced” only with some very shaky income and outgo assumptions, it’s “honest” only if one ignores dozens of bookkeeping tricks, fund shifts and other gimmicks, and its reserve is half of what Gov. Jerry Brown wants and a fraction of what it should be.

It is, in brief, a budget much like all recent budgets – quite likely to fall apart when its suppositions meet reality.

The biggest of the shaky assumptions, of course, is about $8 billion in new sales and income taxes that require voters’ approval in November. Polls indicate that passage is no better than a 50-50 bet, and even if they do pass, they are likely to generate something less than the amount plugged into the budget.

Another assumption is that the deficit to be closed is what Brown says, $15.7 billion. Legislative Analyst Mac Taylor has been telling his bosses in the Legislature that the gap between revenue and spending is probably $2 billion more but they chose the lower administration figure just because it would be easier to cover.

Even without the increase in income and sales tax rates, the budget’s underlying revenue assumptions are questionable. It assumes, for instance, that the state will get about $2 billion from Facebook’s big stock offering, but the process was bollixed and the stock has been falling, not gaining in value.

The budget assumes that when the Air Resources Board auctions off cap-and-trade credits for carbon emissions next fall, it will generate a billion dollars and the state could use half of it for the general fund budget. But no one really knows how that auction will turn out, and using the proceeds, whatever they may be, for the general fund budget is of dubious legality.

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