MATTOLE VALLEY, Calif. — From coast to coast state governors
(including some Republicans) and state legislatures are wringing
their hands over budget deficits, acting as if these had been
caused by a sudden and random Act of God.
The cause of the deficits is more earthly: reckless spending of
surpluses during the years when growth seemed unstoppable and
endless. The best — that is, most egregious — example took place
in California where Democrat Gray Davis inherited a surplus from
his predecessor, Republican Pete Wilson in January 1999. Rather
than return the surplus to the taxpayers or sock it away in a
“rainy day” fund, Davis put the money into increased spending. At
the time, he declared that this would involve only one-time
expenditures, committing the state to no new and undue burdens.
Sure.
Four years later, upon being reelected, the now-unpopular Davis
solemnly declared that the surplus had mysteriously metamorphosed
into a $35 billion deficit — more than the combined annual
budgets of several other states.
To bring this to human scale, if your family or small business
faced a deficit because of reduced income, you would look at your
budget and would, as Ronald Reagan said upon becoming California’s
governor back in 1967, “cut, squeeze and trim” until you got it to
balance.
Republican State Senator Tom McClintock has proposed an updating
of the “cut, squeeze and trim” approach with a nine percent,
across-the-board cut in state spending for 18 months. He says this
would eliminate the deficit. Such a strategy, however, would
require reducing the state work force — mostly by attrition.
Public employee unions are dead-set against such reductions. They,
along with other labor unions, developers and health care entities,
were among the most generous donors to Davis’s reelection
campaign.
Speaking of that campaign, the news is just out that Davis
raised and spent $77.8 million on his, a national record for a
non-presidential campaign. Too bad he didn’t save some of it to
donate to the deficit-reduction effort.
Instead, the Democrat-dominated legislature is primed to jack up
vehicle license fees, which would bring in $4.1 billion this year.
Davis is threatening a veto, not over some deep philosophical
principle, but because it will cause voter discontent. Meanwhile
the Wall Street credit raters are threatening to downgrade the
state’s rating if he vetoes such legislation.
Davis & Co. are threatening counties and cities with
reductions in various mandated state subsidies. Education, which
already gobbles up a majority of the state’s budget, is threatened
with that horror of horrors, larger class size. (This is the
equivalent of a school district threatening to eliminate the high
school football team the day after the school bond issue is
defeated.) It should also be noted that despite California’s huge
investment in education, student scores in basic subjects have
barely budged in recent years.
Davis is also said to be flirting with the idea of taxing
Internet transactions. Not only will this not produce hosannas in
Silicon Valley where the business downturn has already cost several
thousand jobs, it will also bring down the wrath of anti-Internet
tax forces across the nation.
At a time like this, Davis must be wishing he’d taken the $77.8
million and deposited it in a Swiss bank account.
