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Pastimes : The California Energy Crisis - Information & Forum -- Ignore unavailable to you. Want to Upgrade?

To: gamesmistress who wrote (267)	5/15/2001 8:34:26 PM
From: Don Knowlton	Respond to of 1715

More Gray Davis leadership: Now he's playing "chicken" with the legislature on the state budget! <snip> Dan Walters: Davis wants to preserve rosy budget, let red ink rain on Legislature (Published May 15, 2001) Once upon a time, the grammatically incorrect "May revise" was a low-level exercise in fine-tuning income and outgo numbers prior to passage of a state budget. Beginning in the late 1990s, however, the spring ritual became elevated in importance because an exploding economy was generating billions of unanticipated tax dollars, thus allowing the governor and legislators to create lavish new spending programs. A year ago, Gov. Gray Davis and the state legislators were looking at a $14 billion budget surplus, fueling another round of tax cuts and spending. But the high-technology balloon has burst, the tech-oriented Nasdaq market has tanked and Monday's budget revision, released by the Davis administration, anticipates about a $4.2 billion reduction in revenues from what was originally projected in January. If it's a cold dose of reality on the revenue side of the ledger, however, the expenditure column of the revised budget is swathed in politically contrived fantasy -- and represents the beginning of a high-stakes chess game pitting Davis against a Legislature dominated by fellow Democrats. While the revised Davis budget for fiscal 2001-02 reduces overall general fund spending from the January version -- with reductions principally in transportation, housing and proposed tax cuts -- it boosts spending on K-12 schools and community colleges to nearly $5 billion over the minimum guarantees of the California Constitution. <snip> <snip> The new Davis budget is plainly unworkable. By maintaining education spending and cutting reserves to the bone, the spending plan makes no allowance for further drops in revenues, even though harsh experience is that in an economic slump, income tends to fall much further and faster than Department of Finance bean-counters project. Furthermore, the budget assumes that the $7 billion -- and still rising -- in general fund expenditures for electric power will be completely reimbursed from a $13.4 billion state bond issue and that no additional money will be needed during the high energy consumption summer months. But that, too, flies in the face of reasonable expectations. The governor's energy purchase plans are based on very optimistic conservation numbers and, most ominously, on a declining price of electricity while the futures market indicates that prices may, in fact, jump by 50 percent over the next few months. It's entirely possible that the entire bond issue will have been consumed by the time the bonds are sold in August and that the state will still be laying out billions of dollars each month for juice. State legislative leaders, even the most liberal ones, want to create a multibillion-dollar budget reserve for those huge uncertainties, but with Davis taking his damn-the-torpedoes approach, they would be the ones to cut spending, including for the schools, to build up reserves. Or they could approve the Davis budget more or less as proposed and let him take the heat if, and when, the uncertainties become a multibillion-dollar red ink shower. While politicians scramble to claim credit when times are good, they scheme to shift the blame when times turn sour, and Davis' budget is the opening move of that finger-pointing game. <snip> sacbee.com