So, now that we have a "deal" (Yay Deal!), how long is this one going to last. Odds are that it won't be long until we are back at this game. Joe Matthews of the New America Foundation thinks it is only a matter of time.
I haven't seen the whole package. But this budget plan doesn't achieve the balance that political leaders have promised. Instead, it relies on billions in gimmicks, accounting tricks and borrowing. It is likely to have a short shelf life. Unless the economy turns around dramatically, more budget solutions will be required within months. The only question is whether we'll need another budget before the World Series or before the Super Bowl.
The borrowing from local governments represents a considerable risk. Dozens of municipalities are already on the financial brink, short of cash needed to pay bills because of the economic collapse and, regrettably in some cases, fiscal mismanagement. Without an economic comeback in short order, you could see a wave of municipal bankruptcies in California in the months ahead.
You won't get much argument from these quarters, this budget threatens the very stability of local budgets across the state. Already the City of Vallejo is in bankruptcy. A larger, and what was once called America's Finest, city might be there soon:
It's $50 million. For years, the idea that the city of San Diego was nearing bankruptcy was too much like a philosophical discussion. It was a matter of preferences -- not of math.
Now, we finally have a number measuring the exact distance between the city and insolvency: $50 million.
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San Diego City Hall has finally admitted that it can't pay what it owes to the pension fund that is holding and investing assets to pay retired city workers. The city has concluded that if its pension fund doesn't change the rules and they don't lessen the city's burden, the city will be insolvent.(Voice of San Diego 7/17/09)
This is something of a matter of changing pension rules, but it is also a matter of the City just not having enough money to pay its bills. Even if pension rules are slightly changed, the City of San Diego will still be pushing it to make its obligations.
But the deal is done, and municipalities better get used to a lower amount of money. The next wave of cuts starts now. But don't expect to wait too long until we are back here. This tricky budget isn't likely to hold up very long. |
