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Perils and promise for an ugly budget deal

By   /   Monday, July 27th, 2009  /   Comments Off on Perils and promise for an ugly budget deal

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As this newspaper was going to press, the California budget was little more than a thumbnail sketch produced for the media and the credit markets.

Nonetheless, the compromise had the required impact — headlines for the press and a dramatic decline in the interest rate on Golden State bonds.

Although the heavy lifting on the budget remains to be done, we’d like to point out some high and low points:

• Reinstating the Tranquillon Ridge accord on drilling off the Santa Barbara coast makes sense. Environmental groups signed on to this plan that will effectively “sunset” a refinery at Gaviota after a defined period while also raising a ton of money for the state. Yes, it will exacerbate a disagreement among Democrats — notably Assemblyman Pedro Nava, who opposes the plan. Yes, there may be a lawsuit. But the advantages to the state in the long run far outweigh the risks.

• Infrastructure spending should benefit. California’s crumbling roads, bridges and water systems don’t get much of a break with this budget. But by ordering deep cuts in human services programs such as Cal Works and by reducing the huge overhead imposed by the prison system, there inevitably will be a tilt toward infrastructure. It may take a court fight to do it, but California simply cannot operate a first-world economy with third-world infrastructure.

• The payroll scam will come back to bite California. This is a sham deal in which the state will defer the June 30 payroll to July 1, pushing off hundreds of millions of dollars into the next year. That’s fine for just one year. But when the next year rolls around, there will be three paydays in July — and the sting of that last payroll will be felt year after year after year.

• Small business retains its Rodney Dangerfield role. California’s budget remains a budget built for public employee unions, recipients of state assistance and people who commit crimes. It’s not a particularly business-friendly budget and as such will do nothing to restore California to the leading edge of entrepreneurship and small-business growth. Small businesses are not numerous enough nor vocal enough to command any respect whatsoever. So, the Golden State is doomed to watching its competitive edge fade into dullness.


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