Too many gimmicks in so-called balanced budget

By Mike Morrell
Monday, June 17, 2013

Also published in The Sun

If you've been following the news out of Sacramento recently, you would think the state's financial troubles are all over. Last week, with little more than 24 hours to actually read it, the Legislature passed a $96.3 billion budget the majority party says is balanced.

It makes for a good headline, but as Paul Harvey used to say, here's "the rest of the story."

First, let me start with the good. Although I disagree with much in this budget, one provision I was proud to support was $15 million to fund the UC Riverside School of Medicine. I believe this program will play a crucial role in helping the Inland Empire meet health care challenges in the coming years and bring jobs to the region.

But that is a diamond in the rough. Yes, the General Fund budget is balanced on paper. However, there are other parts that are far from balanced and this plan for 2013-14 does not address the growing debt facing taxpayers. It is one of the significant problems that prevented me from supporting the overall budget.

For example, the Stanford Institute for Economic Policy Research has estimated our combined public pension debt at $485 billion, with taxpayers eventually footing that bill. If we add up the state's total assets and income and compare it against the state's liabilities, California's net worth according to the state auditor clocks in at a negative $127.2 billion.

While the General Fund may be balanced, the majority party's budget ignores our complete fiscal health, increasing spending this year and down the road -- a majority of which is nothing but accounting gimmicks. These increases are not paid for and commit our state to higher spending in future budgets.

The budget increases welfare grants by 5 percent which will cost $53 million in the current budget, but $318 million when fully implemented. In addition, the budget funds this grant increase by stealing local funding. There is no question that we must help our friends and family who are suffering financial hardship, but that comes through creating private sector jobs, not through higher spending. Further, our charities, nonprofits and churches can deliver much better results with less overhead when it comes to helping those in need.

In another gimmick, they borrow $500 million from the Cap and Trade program. Instead of using the money as required on environmental projects, the majority party uses the funds to fuel spending elsewhere. This new debt will cost $28 million in interest payments annually.

Additionally, I am disappointed that the budget does not restore full Cal Grant eligibility for students to attend private colleges and enter the workforce. Earlier this year, I authored legislation to make that a reality, but I was blocked.

It is also concerning that the budget does not include a strong rainy day fund to store away funds for inevitable economic downturns. Without this safeguard, we can likely expect another push for tax increases and attempts to weaken our property tax protections in voter-approved Proposition 13 such as Assembly Constitutional Amendment 8, which the majority party passed on the same day they passed the budget.

All this is contrary to building a vibrant economy. History has proven that as government expands, liberty contracts and freedom and prosperity soon cease to exist. This budget could have been worse, but the increased spending still commits our state to future spending without a guarantee that we'll be able to pay for it down the road. As legislators, our goal should be to protect our taxpayers from frivolous and unnecessary spending.

When government is restrained and citizens and businesses keep more of their money, investment is fueled and jobs are created. The citizens of this state are just as capable of managing their money as those who control the Legislature in California -- if not more so.