Our View: Budget time joke is anything but funny

Now, here's a surprise -- the state's budget deadline has come and gone, and California still doesn't have a financial plan for the coming fiscal year.

We're being facetious, of course. Rarely do the governor and members of the Legislature pay attention to the July 1 deadline for having a budget agreed upon, even though meeting the deadline is mandated in the California Constitution.

Funny, that the folks who are elected for the purpose of making laws can't seem to obey the law.

In years past, budget stalemates have been mildly annoying, and in rare cases, have resulted in the embarrassment of California having to issue IOUs to vendors providing goods and services to state government. It's even been fodder for late-night TV comedians. California is broke and issuing IOUs. Ha, ha.

There won't be many jokes this time around, at least not the kind to make you laugh.

California seems to have arrived at yet another budget logjam at precisely the wrong moment in history. Not only will a protracted stalemate be a burden on Californians who depend on government agencies for health care and other services, this busted deadline will likely slam all of us squarely in the pocket.

In recent years, when the budget was late, agencies doing business for the state have simply used private loans to tide them over until a budget is approved and funds released. But because the housing meltdown has resulted in a mortgage crisis, the nation's lenders are playing hardball. Loans will be tough to get, and costly.

Government agencies backed into a fiscal corner by the governor and Legislature's reluctance to play nice -- or even smart -- may need to go to lending syndicates, instead of the usual bonds, to finance operations until the state money starts rolling in. Such loans will cost significantly more than bonds. One state official said the cost of such borrowing could be $140 million more than the cost of bonds.

But our elected leaders don't seem to care about all of that. They are fixated on beating each other up, jockeying for advantage in the next election. Their attitudes can be, well, perplexing.

Gov. Arnold Schwarzenegger was asked last week what stage of budget agreement had been reached between Democrats and Republicans. He said he didn't know, passing the buck to Assembly Speaker Karen Bass, who promised that both sides have been working on a settlement -- "We spent four hours yesterday working."

Four hours? Aren't we paying these people to work full-time? What are they doing in Sacramento?

Not much, as it turns out, and the tipping point seems to be the same ol', same ol'. Democrats have proposed $11 billion in new taxes to help erase a $15-billion deficit. Republicans are sticking with their no-new-taxes mantra. GOP leaders in the Legislature have made it clear that the budget isn't going anywhere, until Democrats come down off their tax high horse.

Does this sound familiar? It should. We have suffered through this kind of fiscal gandydancing just about every budget cycle in the past two decades.

But this one is different. California government already has the second-lowest credit rating in the nation, and credit agencies say it could get downgraded, if the budget impasse drags on. A lower credit means the government -- that's us, folks, the taxpayers -- have to pay more to borrow money.

No, there is absolutely nothing funny about California's chronic budgeting problems. The people who hold up a budget agreement may be cartoon characters, but the situation they create by their intransigence is no laughing matter.

(July 6, 2008)