Progress In the Golden State: Deficit Now Only $7.1 Billion

The budget California Governor Arnold Schwarzenegger proposed last week improves on the one he inherited three years ago from Gray Davis, by a factor* margin of……..$27.9 billion! Thanks to a surprise gouging of Google and its employees, the Gubernator has managed to turn in what the San Francisco Chronicle calls a "crowd-pleasing" budget that "appears to have silenced his biggest critics and appeased his Republican base."

Such a feat becomes easier when you're no longer even trying to produce a balanced budget, and that seems to be what California now expects. The 2006-07 budget spends $101 billion on $93.9 billion in revenues. All but two of the spending line items are getting substantial boosts, many of them by double-digit percentages. I can't hold this against Arnold, and I guess I'd take a $7.1 billion shortfall over a $35 billion one. My com-state-riates demonstrated last year, when they rejected even the anemic set of reforms in the special election, that they are apparently comfortable with this sort of thing. Last year I theorized that this was evidence of a mad and superstitious electorate, but the notion that California is becoming an ungovernable state did not originate with me. It's the apparent successes like this one, rather than the obvious budget disasters, that drive that home: Nobody except some pointyheaded wonk seems to think it's weird that California needs a balanced budget.

A few weeks ago, Virginia Postrel theorized about why Texas handles immigration better than California—because The Lone Star State's real estate tax gets revenue out of a wider base than Cullifawnia's personal income tax. Would that also help the Golden State pay for all the largess necessary to get a budget passed? Any tax experts out there willing to do the thought experiment? This year you would have needed to replace $48.7 billion in revenue—by far the largest source of funds. (The others are the the sales tax with $28.2 billion; the corporation tax at $10 billion; the insurance tax with $2.3 billion; the $316 million liquor tax; the Meathead's favorite, the cigarette tax, clocking in at $118 million; and a bunch of smaller items.)

And if you're really feeling ambitious, take the California Budget Challenge. (It's like the Pepsi challenge but it leaves an even worse taste in your mouth.)

* Thanks to movie critic extraordinaire Alan Vanneman for noting that Arnold's budget beats Gray's by a margin of $27.9 billion, and a factor of about five.