Bad News, Good News on California Budget/Fiscal Front

Following up on Adam’s earlier post on his new policy brief detailing California’s package of budget-related ballot measures, there are several noteworthy items to highlight on the California fiscal front:

  • Our colleagues at released an excellent new video, Hasta La Vista, Arnold: What California’s Mess Means for America, documenting Gov. Arnold Schwarzenegger’s failed attempt to cut taxes, trim spending, and return the state to economic prosperity.
  • The fiscal pain is far from over in the Golden State. As the Sac Bee reported on Tuesday, California’s projected budget deficit has grown to as much as $21.3 billion through next June. Yes, that is over and above the $45 billion deficit state leaders closed earlier this year.
  • As the Sacramento Bee reports, California is getting ready to ask Congress to take an unprecedented step of issuing short-term guarantees for the state’s emergency borrowing. I suspect this proposal will be met with well-justified skepticism in D.C.—after all, if you were AAA-rated, would you be eager to provide a backstop for the state with the worst credit risk and a looming fiscal disaster?
  • In positive news, the L.A. Times reports that Gov. Schwarzenegger has developed a proposal to raise an estimated $600 million to $1 billion though the divestiture of state property. A state property inventory has been effectively sitting on the shelf since the Governor’s early days, so in one sense my reaction is “better late than never.” But I do think that the oft-maligned Governor deserves acknowledgement for driving this sensible initiative forward (though there’s a lot more divestiture potential than just $1 billion, to be sure).
  • In more good news, a new Rasmussen poll of California voters finds overwhelming support for spending cuts: “Seventy-three percent (73%) of California voters oppose raising state income taxes to eliminate the budget deficit. Raising the state sales tax is opposed by 69%. At the same time, 69% favor major cuts in government spending to eliminate the budget deficit. Just 16% oppose the spending cuts.”

For more, see Reason’s California-related research and commentary.

Leonard Gilroy is vice president of government reform at Reason Foundation, a nonprofit think tank advancing free minds and free markets. He also serves as senior managing director of the Pension Integrity Project at Reason Foundation, which assists policymakers and other stakeholders in designing, analyzing and implementing public sector pension reforms.