Budget Wars: The Conservative Agenda
The continuing shortfalls in the California budget since the passing of Proposition 13 suggests that the state now has a structural budget problem that must be addressed and that Governor Schwarzenegger and the legislature never really fixed the last deficit to begin with.
In another related news item, the City of Vallejo recently declared bankruptcy – this may just be the tip of the iceberg should the economy slip into recession as many economists are now anticipating. This is all indicative of the broader modern conservative agenda of "starving" government in order to "force" the cut of social services including public education.
The initial response of Governor Schwarzenegger was predictable – across the board cuts in social services including the closing of public parks, no tax increases, and a reluctance to close big business tax loopholes which some budget analysts estimate at $2-4 billion in potential revenue lost. In fact, it was primarily the Governor's previous actions during the last crisis that has contributed to the current deficit.
In January, the Governor identified a $14.5 billion gap in a state budget totaling $101 billion. That gap was primarily the result of three things. First, the reduction of the Vehicle License Fee in 2004 and the voter approval of Proposition 1A locked the expenditure that the VLF used to pay for into the constitution–that amount is now $6.1 billion. Second, the debt bonds approved by voters in 2004 will cost the state $3 billion in the current year. And third, the softening of revenues, due primarily to the state housing slump and high energy costs, negatively impacts the budget this year. (California Progress Report, 2-23-08).
Naturally, the corporate private sector is the primary beneficiary of this conservative agenda. The tax burden on for-profit corporations is continually reduced, natural state resources that were once protected by government are gradually sold off to big business interests, and former public services like education can now be converted to the private for profit marketplace. It is now time that California takes another hard look at the long range impacts of Proposition 13 and the entire tax reduction agenda which primarily benefits large corporations at the public expense.
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