Already Out of Balance

Via Robert, Kevin Yamamura explains how the current budget deal will almost certainly not hold.

While the budget accounts for lower revenues as the state works through an economic recession, if California's 11.6 percent unemployment rate worsens or the stock market slumps, the state could miss projections and face another shortfall. State revenues in June, for instance, were $536 million lower than the governor had anticipated just weeks before in his revised May budget.

The state is counting on a $1.7 billion payment from redevelopment agencies that faces a tough legal fight. The California Redevelopment Association is preparing to file suit against the fund shift within the next 60 days, said its executive director, John Shirey [...]

Under the latest budget agreement, redevelopment agencies would pay that money next May. If a court rules against the transfer, the state would have to find another $1.7 billion.

The budget also assumes California will receive $1 billion by selling a portion of its workers' compensation provider, known as the State Compensation Insurance Fund, or SCIF. The state hopes to sell part of its client lists to private insurers [...]

The state is counting on $1 billion in federal waivers and payments to save money in its Medi-Cal program for low-income residents. The state anticipates significant savings by shifting costs the federal government would pay through Medicare, as well as obtaining waivers that would enable Medi-Cal to reduce coverage.

Add to that the Governor's illegal blue pencil cuts that he was not authorized to make.

These things are just not going to happen. And even if they all did, the structural imbalance in the budget has already reached about $8 billion dollars for 2010-11, with more in the future as temporary tax increases run out. Dan Walters estimates that number at around $20 billion.

Ask any conservative in this state about it and they'll give you an answer of "we're paying the illegals" and " ditch the onerous business legislation." Without much of a political media, this gets picked up through the ether and talk radio, and despite it being completely untrue, it predominates among a noisy minority. The silent majority, who doesn't want to see class sizes of 44 pupils and children without health care suffering and all the rest, isn't engaged enough with politics to know how to make a difference.

It's a serious political problem that I don't expect the Democratic leadership in this state to wrestle with in the near term.