No end in sight for State Budget mess

Here's a great post from the Sac Bee's Capitol alert, which realistically forecasts a long budget stalemate:

With budget talks breaking down this week and the big June 30 marker having come and gone, the question on a lot of minds is where the next pressure points lie.
Mike Zapler at the Mercury News laid out scenarios today, and there wasn't a lot of good news for anyone hoping for a quick resolution.
Some thought that the next pressure point would be this Friday, the final date banks said they would accept IOUs as cash for customers. But there hasn't been a flurry of talks this week, and Assembly Speaker Karen Bass walked away from negotiations as a form of protest against the governor's position. So it doesn't appear that Friday looms very large as a deadline.
Department of Finance Director Mike Genest said last week the state would lose an opportunity to retroactively cut $1 billion in CSU and UC for 2008-09 after July, making July 31 another potential pressure point.
The Fitch Ratings downgrade release on Monday laid out a long summer scenario, noting that the state can get by on IOUs through September. That means California will have enough cash to make its constitutionally-required priority payments while satisfying its non-priority demands with IOUs. If legislative leaders don't feel like the world will collapse with the current IOU scenario, it could become a typical budget year in which negotiations drag on for weeks.
Dan Schnur, director of the Unruh Institute of Politics at the University of Southern California, said the Capitol atmosphere doesn't feel as desperate as it did when the state last issued IOUs in 1992. At that time, Schnur was working for former Gov. Pete Wilson.
"Back in my day, when the state issued IOUs in the early '90s, it rained hell down on the state Capitol," he said. "There was nonstop media coverage and public outcry which resulted in significant pressure for the relevant players to get back to work. In the absence of that same attention, the negotiators don't feel the same pressure."
There is at least one notable difference between then and now -- California paid state employees then with IOUs, a practice that courts have since banned.
Schnur said he also thought that major news events overtook budget coverage in the last month. Pop singer Michael Jackson died June 25. Republican vice presidential candidate Sarah Palin announced she would step down as Alaska governor on July 3.
"Compared to Michael Jackson and Sarah Palin, the state paying its bills with IOUs just isn't that exciting," he said. "On one hand, it's a little too facile (a point), but on the other hand, there really was a lot more competition for news and media coverage."
Of course, the state lasted two months with IOUs in 1992, and we're still only a week into them this year.
Schnur also noted that after lawmakers nearly reached a deal in the run-up to June 30, it was natural this week for negotiators to retrench and take a step back.
Former Schwarzenegger communications director Rob Stutzman said he thought the impasse would continue for a while. Schwarzenegger seems resolute in his demand for permanent changes, and "at this point, he'd be crazy not to be. He'd look bad by not signing those bills at the end of the fiscal year unless he gets a grander deal in the end."
For now, leaders are meeting sporadically, and Schwarzenegger and Bass are battling for media attention. Bass on Monday skipped Big 5 but held a well-attended press conference to bash the governor's stance on budget talks, while her office produced a video attacking Schwarzenegger and her spokeswoman sent a memo suggesting the governor's press secretary made sexist criticisms.
Schwarzenegger held a press conference Monday to promote his changes to In-Home Supportive Services and held a similar event Wednesday to talk about reducing welfare rolls.

This isn't good news at all for us at the local level. While we've done everything we can to balance our budgets and minimize impacts on both our employees and our residents, we really can't adopt a meaningful budget until the state finishes their budget. In past years, we could just ignore the mess at the state, but our friends in Sacramento are not going to let that happen this year. Every budget solution contemplates picking our pocket and taking away substantial revenues from local government.

While they started out just talking about "borrowing" property tax dollars, they are now more focused on outright thefts such as the Highway User Tax and our Redevelopment Tax Increment. In each case, the takings would be devestating to anyone who lives in a city--which of course is pretty much everyone in the state. The scary part is that the proposals get more outrageous by the day. Previously, they were talking about a $350 million illegal raid of Redevelopment funds. Now they are proposing a $1.3 billion theft. This is a dollar amount that equates to more than $4 million out of Manteca' s pocket--far more than the $1 million we would have lost via the "borrowing" of property taxes.

If the state actually took this huge chunk of redevelopment funds, it would likely put 25% to 50% of all the redevelopment agencies into the red and put a lot of bonds into default. The state's level of irresponsibility is now reaching a level that could take down every other government entity in the state. Let's hope that cooler heads prevail at some point and that the state attempts to clean up their own mess without the huge collateral damage they are now proposing.