Whose Budget Is It Anyway?

It may be old rhetoric, but there is some truth to the Democrats’ claim that Gov. George Deukmejian has balanced his 1990-91 budget on the backs of the poor, the disabled, the elderly and the sick. In fact, the $1 billion in cuts that the Republican governor is proposing in health and welfare programs won’t just help to balance the budget. The cuts are being used, in effect, to help restore the budget reserve to more than $1 billion.

The governor argues that he is not really cutting the budget, but merely holding the rate of increase to within the available state revenues. Otherwise, he says, the state would be doomed to annual tax increases just to keep up with the cost. Ronald Reagan made much the same claim as governor 20 years ago.

Such contrasting views help illustrate the political complexity of building a $54-billion state budget these days. Another way of looking at the budget is that there would be plenty of money for health and welfare if only Proposition 98, enacted two years ago, did not guarantee education more than 40% of the state’s general fund.

Of course, everything might be fine if California were to end up with another windfall of unexpected tax revenues. But even then the state could not spend much of it, because revenues would run into the Gann spending limit enacted by voters in 1979. Gann surpluses used to be rebated to taxpayers, but Proposition 98 diverted such revenues to education instead.

That process would change again if Californians vote in June for a 10-year, $18.5-billion state transportation program. The measure also would relax the Gann spending limits by a modest amount. If the plan passes, just three weeks before the new budget year starts, then the state could indeed use any windfall for other state programs such as health and welfare. If the plan fails, California will face a crisis because the present state fuel tax is so low it will not even keep up with routine maintenance of highways.

In the controversy over health and welfare, Deukmejian is not likely to get the reductions he wants anyway, especially the elimination of the cost-of-living adjustments that are written into state law. Majority Democrats in the Legislature strongly support the inflation increases, as they should.

If there is any good news in the complex budget tangle, it is that the governor seems willing to negotiate with lawmakers, as he did last year. Chances are good that they will work out some sort of compromise based on the hope that the June 5 ballot measure passes. If the transportation/Gann program fails, then it’s time to panic.