Dems Put Brakes on Budget Train Wreck

MARCH 28, 2011

By WAYNE LUSVARDI

A new Field Poll  found that a supermajority of Democrats has swung against tax increases and wants to halt what appears to be an unstoppable future state budget train wreck.

In what should have been unsurprising to Gov. Jerry Brown and the Democratic Party-controlled Legislature, as well as to the media, the poll  found 68 percent of Democrats want pension payout ceilings and 66 percent want government employees to contribute a greater share toward their own retirement.  And half of Democrats support the Little Hoover Commission’s recommendations to create hybrid pension packages with 401(k) plans coupled with a reduction in current pension benefit levels.

Some Democrats want to jump onto the runaway train of the state budget and reverse the perilous track the governor, the Legislature and the public-employee unions have put it on.  Only the media are misreporting the recent state budget impasse as caused by Republican train wreckers.

Every decade or more Hollywood puts out films that try to capture  the imagery of what is happening in the larger society. In 2010, 20^th Century Fox released the film “Unstoppable” about a runaway train. The movie is about how an excursion train of school children becomes driverless and starts “coasting,” then defaults to full throttle.  The movie has a happy ending when one of the heroes that is able to finally stop the train goes into retirement afterwards with “full benefits.”

Unfortunately, we need a movie to tell us that the state budget and environmental programs and regulations are a runaway train wreck waiting to happen and can only be fixed by slowing the train down and finally stopping the out-of-control spending, while also deregulating environmental policies that are too strict and kill jobs.

Democratic State Treasurer Bill Lockyer has asserted that pensions won’t crush local governments and wants the Hoover pension report re-written.

Contradicting Bill Lockyer is Marcia Fritz, president of the California Foundation for Fiscal Responsiblity. She told the Wall Street Journal, “The taxpayer as well as government services are being crushed by unsustainable pension obligations.”

She goes so far as saying she wants a ballot initiative put to the voters authorizing a rollback in public pension levels.

Fritz also is a Democrat. Whoops! A passenger in the caboose of the runaway state budget train wants to tell the locomotive operator to put the engine into reverse.

Democratic Uncoupling

In other words, the recent state budget impasse is not as the mainstream media spins it as “mean” Republicans blocking the railroad tracks for passage of a balanced budget, while public schools and the public safety net are suffering.

It is Democrats waking up to the fact that pensions will soon crowd out basic lifeline services and funding for public schools that is creating havoc for the Democratic Party. It isn’t Republican Party infighting that is the problem, as reported by the media, but a divide in the Democratic Party.

Today California has an $86 billion General Fund budget that is running a $25  billion deficit. In 2015, even with the continuation of Gov. Jerry Brown’s tax increases, and pension payouts beginning to spike, the budget will balloon to more than $110 billion, despite some recent cosmetic budget cuts by the Legislature.

That means the tax increases won’t lower the deficit or the debt. In other words, the state budget is on autopilot and is headed for a train wreck. Brown’s budget fix will not stop the coming train wreck. It will only speed up the train.

Remote-Control Budget

Imagine being able to take over the controls of a train by remote control and the train engineer has no way to stop it. That is what “off-budget” environmental programs do. They make California’s budget train wreck unstoppable.

The above budget projection doesn’t even consider all the “off-budget” costs that will be increased on California households by unelected environmental regulatory agencies such as the State Water Quality Resources Control Board, the California Air Pollution Control Board (CARB), the California Environmental Protection Agency and many others.

The cumulative costs are staggering for imposing “cap and trade” controls on industries, eliminating ocean water cooling for 19 coastal power plants, building redundant green power plants and making perchlorate safety levels more stringent with no demonstrable improvement in public health.

When all the environmental and green power programs and regulations are rolled out starting in 2012, they will crowd out expendable money in state households for tax increases to plug the state general-fund budget.

Like the movie about a runaway train, applying brakes to all the state environmental programs and regulations will be too late to stop the budget train wreck once the train leaves the station.