The May Revise Is Here, The May Revise Is Here!

I think we can pretty much conclude that Arnold Schwarzenegger, for all his bluster, is just another cowardly politician. On Monday he dropped his plan to release 22,000 elderly and nonviolent inmates early, because God forbid anyone be seen as insufficiently "toughoncrime". Today his May revise of the budget is out, and he's again retreated to borrowing against our children's future because he can't bring himself to actually do something meaningful about revenue.

• Arnold will float bonds using the state lottery as security. $15 billion over 3 years will be raised but $10 billion goes into "rainy day fund"

• If that fails, 1% sales tax hike to last no more than 3 years

• Prop 98 suspension abandoned; instead COLA will not be paid

• State parks closures abandoned; instead fees to rise $1 to $2

• $6 billion still left to cut or balance out somehow.

Overall thoughts: Here we go again. Arnold Schwarzenegger came to office in the recall of Gray Davis in 2003 promising to solve our state's budget problems once and for all. Instead he immediately blew a $6 billion hole in the budget with the Vehicle License Fee cut and then borrowed to close the rest of the gap - costing the state around $3 billion in annual debt service.

Now that Arnold's solution has predictably failed, he is predictably offering more of the same. Borrowing against the lottery is a problematic concept for many reasons, the main one being it avoids the core issues of our budget. It's yet another one-time fix that does nothing to solve the structural revenue shortfall that has plagued our state for 30 years.

Yep. Not much more to say than that. I would add that citizen activism around education cuts and park closures has seemed to work. We're not out of the woods on education and will have to see the final numbers, and at the least education funding won't grow at the same rate as expected because of the elimination of cost-of-living increases. But people all over the state were furious at the proposed 10% and rallied against it, and Schwarzenegger, girlie-man that he is, backed down.

...Selling anticipated lottery revenue is probably better than privatizing it altogether, but it's still borrowing against the future. At some point those lottery revenues won't be there for the next governor, and we'll be back to the drawing board. It's stupid economics and he keeps doing it over and over.