CSUN University News Clippings

Commentary: Dead-of-night budget deals may backfire

(July 22, 2009)

By Dan Walters

One of the more insidious – and corrosive – aspects of the state’s perpetual budget crisis is the inclination of Capitol politicians to enact major policy changes on the fly.

Desperate to “score” revenues or savings on paper and claim to have balanced the chronically imbalanced budget, they often draft decrees that are slammed into law without any thought of long-term consequences.

The latest dead-of-night budget deal, reached Monday night by Gov. Arnold Schwarzenegger and legislative leaders, offers multiple examples of desperation-tinged policymaking, but four illustrate the syndrome:

• The “Big 5″ agreed to include a $1.2 billion “unallocated” cut in state prison spending, but when it was reported that it could mean early release of as many as 27,000 inmates, Republicans threatened to withhold votes on the entire budget package.

Assembly GOP leader Sam Blakeslee called it “a radioactive corrections bill.” Administration officials quickly denied to reporters that it would mean massive early releases, saying that it would be a selective program of diverting low-risk and ill inmates in alternative supervision, deporting some illegal alien inmates and keeping some minor offenders out of prison with a goal of reducing the prison population by 27,000.

It demonstrates how verbal understandings on hot-button issues can blow up and why a much-needed overhaul of our troubled penal system should be done openly and publicly, not behind closed doors.

• A huge part of the “solution” is grabbing more than $4 billion from local governments despite their severe budget problems.

The heart is a scheme peddled by lobbyists for the City of Industry to extend soon-to-expire redevelopment projects without having to prove blight, as current law requires.

Cities that participate in extensions, up to 40 years, would shift some redevelopment revenues to the state, which then would borrow against those revenues. But if the scheme doesn’t pass legal muster or fails to generate enough money – both very distinct possibilities – the state would involuntarily “borrow” local government taxes and grab their gas tax revenues.

• The budget deal whacks state aid to school districts by billions of dollars. To ease the impact, the state would allow districts to reduce their budget reserve requirements and change the way their budgets are evaluated.

The practical effect may be to reduce accountability and transparency in school finances, allowing districts that otherwise would be placed on financial supervision to operate dangerously close to the margin and threaten their future solvency.

• Politicians want to sell part of the State Compensation Insurance Fund, a state-owned workers’ compensation insurer, for a billion dollars, but no one knows whether there’s a buyer, no one knows how it would affect employers and injured workers, and everyone should know that selling assets to pay operating costs is very bad fiscal practice.

Publication: Sacramento Bee