Human folly, unlike petroleum, is one resource in endless supply. You could ask Dominique Strauss-Kahn or Arnold Schwarzenegger or even California’s new-old governor, Jerry Brown. He thinks you can spin gold from words. Consider how he plans to make this alchemy work:
When he was inaugurated in January, Brown faced a state deficit of approximately $26 billion. His plan was to call for a special election in June to get extensions of certain sales, vehicle license, and income tax rates beyond their June 30 “sunset” date. Brown’s logic was that if the extensions passed, the state would get $12 billion, to go along with the $11 billion in spending cuts promised by the legislature. If the tax extensions were voted down, Brown would invoke drastic cuts, affected constituencies would howl, but he and his party couldn’t be blamed because they had asked the people to decide.
It didn’t happen. He couldn’t get the necessary handful of Republican votes in Sacramento to go to the ballot. He then trotted out a long list of proposed cuts. Predictably, howls ensued from border to border. Meanwhile, improvements in income tax revenue of about $6 billion eased the burden, but there are still billions to go. So, Brown now wants the legislature, by fiat, to extend the sales, motor vehicle and income tax rates, then put them on the November ballot for ratification by the people after the fact.
If they don’t — and polls show the extensions are not popular — will he be required to pay back the extra taxes collected between June and November? If so, the whole exercise would be a case of “budget gimmickry,” the very thing he has been railing against for months.
Meanwhile, speaking of folly, Brown’s administration has signed a contract with Santa Clara County to “borrow” for three-and-a-half years one William Lightbourne to oversee the “realignment” of various social services responsibilities to counties and cities. For this, the state is paying $52,000 more than the law would permit in payment to an employee, plus $127,000 in benefits and perquisites.
Brown has announced he will eliminate 43 state commissions (along with their overhead) and the state payroll by 5,500 jobs. This is a modest start; however, he’s a piker compared to New York’s liberal Democratic governor, Andrew Cuomo, who has cut 10,000 jobs and capped public employee pensions.
Brown has paid lip service to pension reform, but that’s all. Getting public employees to increase their contribution to their own pensions and creating a two-tiered system with less generous pensions for new hires — all this is way off in the mist. So the cost spigot is still fully open. No wonder: public employee unions are California’s largest, most powerful special interest and the source of Brown’s and most Democrats’ campaign coffers.
Another obstacle to converting words to gold by Brown is the fact his proposed budget has crept up by five percent since he first put it forth in January. By law, the state must have a budget for the fiscal year beginning July 1 by June 30. For several years, this law has been honored in the breech, being passed as late as September. On Brown’s watch, that negative state of affairs will almost certainly continue.
To make his alchemy even less likely is the fact that some 33,000 state prisoners must be released over the next two years to satisfy a U.S. Supreme Court ruling that “overcrowding” must be stopped. Where will they go and who will pay for it?
A century-and-a-half ago doughty miners extracted hundreds of millions of dollars in gold from the Mother Lode east of Sacramento. What Jerry Brown & Co. are mining, instead, is Fool’s Gold.