As we reported earlier today, Democratic and Republican leaders in the state legislature huddled with their respective caucuses this morning in an attempt to pitch the feasibility of the current budget compromise. Depending on how much money you and your interest group stand to lose, initial descriptions of the budget range from "crappy" to "draconian" to "Malthusian."
Assemblyman Tom Ammiano has a different label for it: "In a sense this was a bi-partisan compromise, but it's the worst kind of make-up sex. You know what I mean?"
Perhaps, but even the worst make-up sex never drained billions from local coffers; that's not very much bang for your buck -- literally. But we digress. Ammiano expects the worst hit on San Francisco's cash flow from Sacramento to come in a severing of transportation funds (perfect timing!). But he is hopeful the shortfall can be back-filled via bond money.
While journalists covering the ongoing budget machinations have learned to hold our noses and write the phrase "hold our noses and vote," not everyone is willing to hold his or her nose.
"Counties across the state must alert their legislative delegations that a vote for this budget ... is a vote for local government ruin," said Paul McIntosh, executive director of the California State Association of Counties (CSAC). Added Chris McKenzie, the executive director of the League of California Cities, "It is a Ponzi scheme that is fated to fall apart in the next few weeks and months."
McKenzie's Ponzi allegory is aided by a complex system of financial juggling in which the state will enact rules cemented by Prop. 1A in 2004 -- allowing it to borrow $2 billion of property taxes from municipalities. Municipalities can, in turn, borrow against this borrowing. If a municipality were to borrow from a bank that had been bailed out, say, then you would essentially have borrowing against borrowing against borrowing. It's not really a Ponzi scheme by any stretch, but it certainly does sound malevolently complex.
Both Ammiano and Sen. Mark Leno said that talk of this budget inducing a governmental collapse was a digression into hyperbole.
"I think that's a little extreme," said Leno. "Like I said, [municipalities] will be able to borrow, and at no cost because the state will pick it up" -- California is mandated by law to pay back the $2 billion in property taxes, plus interest, within three years. "Me personally? This would not have been my first choice [to make up the shortfall]. I would have preferred a severance tax on oil. I would have liked an increase on the tobacco tax. I would have liked to see a withholding on individual contractors. But that was not happening."
The tentative budget has been split into 24 different bills. Some require a two-thirds votes while others -- including a proposed offshore oil-drilling operation near Santa Barbara -- require only a simple majority (Not surprisingly, Ammiano noted he's voting down on that one).
Leno saw some excellent side-dishes to go with this turd sandwich of a budget: "The IOUs and our ever-dropping credit rate were not helping the state's crisis at all. And the good news is we were able to prevail in sustaining the programs that are most important to us as a Democratic caucus: Our Cal-Works program, In-Home Supportive Services, Cal Grants, and we were able to add 88 percent of the money for state parks. And we did not have to suspend Prop. 98 for education funding."
As he did after the first go-round of budget insanity earlier this year, Leno reiterated that the state Democratic party, labor, "and, potentially, some business interests" will be placing a measure on the November, 2010 ballot to do away with the requirement that two-thirds of the legislature approve a state budget. When asked if this effort could be rolled out sooner, Leno noted that the November election of next year "is probably our best shot."
"The governor and my Republican colleagues have set out to starve the state for cash," said Leno. "Misconceptions about taxes have made the word almost unspeakable -- and, in the end, the taxpayers get what they pay for."