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Examples of such “gimmickry”

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Examples of such “gimmickry”

Arnold Schwarzenegger was swept into the governor’s office to replace embattled Gov. Gray Davis in October 2003. Four year later, however, falling tax revenues have forced California to borrow $7 billion just to pay its recent bills

Despite soaring popularity, California Gov. Arnold Schwarzenegger faces a looming budget crisis much like the one that forced the 2003 recall of his predecessor and brought the former actor and bodybuilder to power.

Schwarzenegger was swept into the governor’s office to replace embattled Gov. Gray Davis in October 2003 with the promise that he’d reduce debt and “tear up the state’s credit card.” Four years later, however, falling tax revenues have forced the state to borrow $7 billion just to pay its recent bills.

In the three months ended Sept. 30, the state has spent $10.2 billion more than it received in taxes and fees, according to state officials. The annual shortfall is expected to be between $6 billion and $9 billion.

The sale during the first week of November of the so-called "revenue-anticipation notes" or bonds is the largest since the state issued $6 billion in similar securities in 2003 to close the budget gap that signaled the end of the Davis administration.

California sold $3 billion in revenue-anticipation notes in 2006 and $1.5 billion for fiscal 2007, according to state figures.

``The continuing slump in the housing market has been a drag on the economy and that has a spillover effect on state revenue,'' Schwarzenegger’s budget spokesman H.D. Palmer tells Bloomberg. ``It's very likely going to involve some very difficult decisions on the spending side.''

One out of every 250 homes in California is facing foreclosure, the third highest rate in the nation behind Nevada and Florida, according to RealtyTrac Inc.

Despite the backlash for such budget problems against Davis, Schwarzenegger seems thus far immune. He’s riding a continuing wave of popularity built on an increasingly centrist agenda and augmented by a strong showing in media during the recent California wildfires.

But that positive public picture won’t last once the full depth of the state’s budget morass is revealed, critics charge.

The governor’s new $145 billion budget proposal is weighed down with items such as his health care reform plan, which looks to provide coverage to some six million uninsured Californians, at an estimated cost of more than $14 billion.

“Gov. Schwarzenegger’s budget runs the very real risk of plunging California into insolvency within the next two years,” Republican State Sen. Tom McClintock of Thousand Oaks, Calif., tells Newsmax. He adds that the Schwarzenegger administration has “employed accounting gimmickry that would make an Enron accountant blush.”

Examples of such “gimmickry” include Schwarzenegger’s unrealistically rosy projections for revenue increases that ignore California’s sinking housing market, rising unemployment and “brittle economy,” says McClintock.

California’s constitution requires that the state budget be balanced, and Budget Director Mike Genest has asserted that the proposed budget “is, in fact, balanced. Under this plan, the state would not spend more than it collects in revenues for the coming fiscal year.”

Still Genest conceded to the Sacramento Bee in October that “the revenue situation is not going to be as good as we had hoped.”

Already Lockyer is predicting higher taxes, and a cutoff of taxpayer funding for the University of California.

Schwarzenegger’s “aim for the center” politics were evident in his willingness to compromise on liberal spending in the state budget, despite his promise to “tear up the credit cards” Democrats had used to borrow money.

After Democratic lawmakers violated the state constitution by leaving for vacation before the budget was completed, Schwarzenegger never used his power as governor to call them back into session. And he kept silent when the Democratic leader of the State Senate referred to Republican lawmakers as “economic terrorists.”

But Schwarzenegger did use his big stick during the budget impasse not only to pressure incompliant Republican lawmakers, all but destroying what little political power the Republican’s have in the state’s legislature.

In August, Schwarzenegger told reporters that future California budgets must be passed without causing delays in the orderly funding of government activities.

“If that means we should go and shoot for, as some suggested, a simple majority to pass the budget rather than a two-thirds vote,” he said, “maybe that’s the solution.”

California’s constitution makes it one of only three states, along with Arkansas and Rhode Island, which requires a two-thirds vote of its legislature to pass a budget.

Democrats control both California’s assembly and senate, but Republicans hold enough seats to block a budget making it one area of lawmaking where they hold some bargaining power.

© 2007 Newsmax. All rights reserved.
When I was young, I was led to believe there were organisations to kill my snakes for me. But as I got a little older I learned I had to kill my snakes myself.
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