Just This Once, California
A set of ballot propositions promoted by California's new governor to solve his state's financial crisis can only start frugal instincts atwitching.
Should any state borrow $15 billion to cover a mammoth deficit? Isn't that like taking out a new credit card to pay off the old one, instead of reforming bad spending habits and cutting up that card?
Shouldn't the world's fifth-largest economy - a state whose deficit is expected to represent 40 percent of all red ink facing state capitals in fiscal 2005 - be able to exhibit more fiscal restraint than this?
The bond would not even be directed at any specific purpose, such as highways or schools, which are what bonds are for. It would cover operating expenses, and it would increase debt because of interest costs.
As counterintuitive as it may feel, though, common-sense voters should suppress their instincts in this case.
Consider the alternatives. If Republicans like state Sen. Tom McClintock had their way, it would take budget cuts of more than 13 percent to avoid the bond. But the GOP governor, Arnold Schwarzenegger, faced an entrenched Democratic legislature. And if Democrats like state Treasurer Phil Angelides were to decide, they would raise taxes, and still leave a need to borrow.
Walking through these alternatives it's clear why the governor and California legislators settled on the bond measure, Proposition 57, and then coupled it with another measure, Proposition 58, to set state government on the straight and narrow from here on out. Prop. 58 mandates a balanced budget: no more borrowing to cover deficits. (Too bad it doesn't go further and cap spending to match population growth and inflation).
A few other tidbits should tip the scale in favor of these propositions. The Legislature had already planned on, and passed, a $10 billion-plus bond, though it's likely to be found unconstitutional. Prop. 57 incorporates that amount, but in a legally sound way. The new bond would also be issued at a time of low interest rates.
Californians recalled their last governor over the fiscal crisis, and now expect Hollywood's Terminator to do something about it. Well, now he's done something, and his effort has been a bipartisan one with the legislature. "Trust me," the actor-governor says about the propositions.
OK, Arnold, but just this once.
And no sequels, please.