April 6, 2012

It’s a good week in Sacramento. The Legislature is on recess.

But when lawmakers go back to work on Monday, The Desert Sun hopes they will tackle the 2012-13 budget in the open, honest way Gov. Jerry Brown has pledged since he took office — no more rose-colored glasses, please, and no gimmicks. They have 10 weeks until the June 15 constitutional deadline to do this right.

Assemblyman Brian Nestande last week amended a bill that would require the governor to list all the liabilities the budget would incur, including loans made to the general fund.

AB 1690 didn’t get anywhere before. It’s good to see him try again.

“One of the things I think is important to the system is to have a transparent budget,” Nestande told The Desert Sun editorial board this week.

The Palm Desert Republican wants to see pensions, bonds and everything else that California taxpayers are liable for laid out clearly so lawmakers can create a path to pay everything off, no matter how long it takes.

The bill also would forbid the governor from claiming revenue that doesn’t exist when the budget is approved as part of the solution. For instance, the 2009-10 budget counted on the $1 billion sale of the State Compensation Insurance Fund.

“Nobody thought that was realistic,” he said. “It never happens and there you have a $1 billion hole.”

Another example was the planned $1 billion sell-off of state buildings, a bad idea in the first place because it would have cost the state more to rent space in the long run. It was a quick fix in times of desperation and, fortunately, never happened. But it allowed the Legislature to pretend it was closer to a balanced budget than it really was.

“You can do that, but you should only count those revenues when you get the check,” Nestande said.

If a publicly held company were to operate that way, it would violate the Sarbanes-Oxley law and face criminal charges.

Nestande also proposes a constitutional amendment, ACA 13, that would require the state controller to certify that the budget is balanced. Texas has had a similar system since 1942.

When Nestande suggested this last year, Controller John Chiang complained it would take a vast increase in staff. But when the Legislature sent the governor a budget that was $1.85 billion out of kilter, Chiang blew the whistle and the governor vetoed it.

That review should be routine.

This year’s worst-case scenario would be if the Legislature approves a budget on the assumption that voters will approve an income tax increase on Californians who earn more than $250,000 and a sales tax increase for everyone. That’s not a safe assumption.

Last week, Sen. Bill Emmerson and other Republicans revealed a plan to eliminate the projected $9.2 billion deficit without raising taxes and without the trigger cuts to education the governor threatens to implement if the tax increases are rejected.

The GOP borrows many ideas from the legislative analyst’s office. The plan would cut $4.2 billion in state spending and use accounting maneuvers to save $1.4 billion and erase the deficit. It would replace Brown’s anticipated higher tax revenue with another $4.4 billion in cuts and transfers.

Some of those accounting maneuvers are the sort of gimmicks that make a fiscal purist cringe, but it demonstrates the budget can be balanced without higher taxes or cuts to education.

Now that Democrats can pass a budget with a simple majority, it’s doubtful the GOP plan will get anywhere. But The Desert Sun hopes Nestande’s ideas to take a hard look at the total liabilities at least get a fair hearing.