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.