California Miracle: An On-Time Budget!

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Lucy Nicholson / Reuters

California Governor Jerry Brown speaks to the press in Los Angeles, California June 16, 2011.

It's been a long time since Californians have seen a state budget passed on time. In fact, they were so fed up that last year voters approved a measure to dock their lawmakers's pay if they were late again. It seems to have worked. The California State legislature sent a plan to Gov. Jerry Brown after they passed it Monday night. The governor signed it today, making it only the sixth on-time budget in the last 20 years. While the final plan wasn't the solution Brown had sought, a balanced budget without gimmicks or delays may appease voters who are deeply distrustful of state politicians.

That may be a victory in itself. Democrats delivered a budget that didn't contain the kind of financial Band-Aids such as selling state buildings that were favored in past years. And they did it all alone, without the support of the minority party. That may help them win seats away from the Republicans in next year's elections, says Henry Brady, dean of the Goldman School of Public Policy at the University of California, Berkeley. "It puts Republicans out in the cold," Brady says. "An on-time budget that looks and feels balanced and that the pundits say really isn't a smoke and mirrors budget is going to have a pretty good feeling for the people of the state of California. To that extent, I think the Democrats could call it a win for them."

The budget calls for more cuts to areas such as universities and the judiciary after the state already slashed $11 billion in total cuts in March. The plan expects $4 billion from increased revenue from an improving economy over the next 12 months. If those revenues don't materialize, the budget has built-in "triggers" that would make additional cuts of around $2.5 billion. "This budget is the most austere fiscal blueprint California has seen in more than a generation," state Senate President Pro Tem Darrell Steinberg told reporters Monday. "Spending levels are at historic lows and every sector of society will feel the difficult choices we've made to bring the budget into balance."

On Monday, Brown admitted he'd failed at his original goal to extend expiring taxes to plug a gap in the state's budget while avoiding more cuts. But he had trouble getting the votes of four Republican lawmakers he needed to make this happen, and this week he finally gave up. "There is an almost religious reluctance to ever deal with the state budget in a way that requires new revenues," Brown said about Republican lawmakers.

Brown and his party aren't giving up on getting more revenues from taxes. California's fiscal woes aren't over, as it will face a deficit again next year. But it will be much smaller, around $5 billion instead of the $20 billion they've been dealing with, according to Brown, who didn't explain the accounting behind his math. So Democrats will aim to put a measure on the ballot next year asking voters to approve higher taxes, according to state Speaker of the Assembly John Perez. "He hasn't necessarily lost on some of the tax extensions. There's still some chance of getting some of those things," says Alan Auerbach, director of the Robert D. Burch Center for Tax Policy and Public Finance at Berkeley. "We need reforms on the spending side and on the tax side so that we don't have to confront these kinds of problems every year. But certainly for the time being, I think this is progress."

Californians still have to deal with the deep cuts this budget calls for. But at least they may be less likely to bash Sacramento for tardy action. Residents are highly critical of their lawmakers, with only 16% of Californians voicing approval for the legislature, according to a March Field poll. That number hasn't been above 20% since 2008 and hasn't hit 50% since the 1980s. "I personally just will be thrilled if we get a budget," Brady says. "Voters feel better and have a little more faith in the legislature and that's probably a good thing."