Editorial: California’s precarious debt trap

Every day since California missed the July 1, 2008 deadline for passing its budget the state has been buried under an increasingly heavy load of accumulated debt. Neither the state Senate nor House of Representatives seemed to be able to agree on a budget. Governor Arnold Schwarzenegger gave more and more passionate speeches, threatening to veto any bill sent to him unless state democrats and republicans agreed on a budget that would offer solutions to the state’s steadily worsening fiscal crisis.

In the final days of California’s budget impasse, payments sent to reimburse doctors for Medi-Cal patients were stopped, as were other state-funded health services. Financial aid to California students in the form of Cal Grants was also withheld.

On Sept. 23, Gov. Schwarzenegger finally signed and approved the Legislature’s proposed budget, backing down from his threats to veto any budget proposal that didn’t meet his demands. With a budget, the state was finally able to divest billions of dollars to Medi-Cal patients, restart frozen state programs, and award students with their Cal Grants.

The Governor approved the budget without the usual fanfare, which accompanied budgets of previous years, saying it was “inexcusable” to have a budget that’s three months late.

In the last 20 years the state has managed to deliver a budget by the July 1 deadline only four times, but the 85 day delay in 2008 set a record for the latest state budget ever.

To create enough revenue for the state to function, the budget was crafted with creative measures such as collecting taxes for the entire year earlier than usual, something Gov. Schwarzenegger describes as, “[Kicking] that can down the alley.” The current strategies in the state’s budget are only small bandages to a much larger problem: out-of-control debt, which is forecasted to increase to more than $40 billion by 2010.

As it stands, California is slowly becoming yet another victim in a sea of financial insolvency that is effectively drowning more and more of the country. On Jan. 17, State Controller John Chiang alerted California that the state would be delaying tax refunds and scheduled health and disability payments to prevent the state from having to issue IOUs for the near $4 billion in payments.

To dig the state out of so much debt, tough problems call for tough solutions. Politicians in the Capitol need to do the job they were sent there to do: make decisions in the best interest of the voters, whom they represent. Forcing voters to decide on tough budget issues in a special election is not acceptable. If our representatives can’t find the courage to make hard choices in a crisis, then voters need to elect people who will.