Executive director’s note: Rube Goldberg, the Rubicon, and the ‘May revise’

As you probably know by now, all the happy talk coming from the Governor’s Office and elsewhere about the proposal to “fully fund” the Proposition 98 guarantee for 2008–09 creates a fiction when it comes to funding for the public schools.

“Fully funding” Proposition 98 still leaves the public schools about $4 billion short of what it would take to carry out next year the exact same programs they’re supporting in the current year. That’s because we have moved into a Test 3 formula for Proposition 98—the so-called “bad budget year” scenario—which artificially suppresses the guarantee for the coming year.

Without going into the full complexity of Proposition 98 in this column, another contributing factor to the “suppression” of the Proposition 98 guarantee in the coming year is something that we have complained about for years, and that is the manipulation of the guarantee by substituting one-time monies for ongoing programs, thereby artificially reducing the base of Proposition 98 in subsequent years.

I suppose that we should take some small comfort that the governor has modified his original proposal; under the “May revise,” schools would actually get a slight increase in overall funding compared to 2007–08. That is a darn sight better than the year-to-year reduction the governor was proposing in January—which would have been the first decrease since the Great Depression!

The governor has also proposed some measure of flexibility when it comes to categorical programs and the maintenance of AB 1200 reserves. It doesn’t take a bookkeeping genius, though, to know that these proposals won’t generate enough fund flexibility to make up the projected shortfall that has already resulted in thousands of layoffs of teachers and other personnel for the coming year.

By the time you are reading this, the Legislature and the governor are apt to be in the middle of a prolonged budget fight that could last well past the July 1 deadline for the governor to sign the budget for next year, creating even more uncertainty as we prepare to open school for 2008–09.

So what else is new? The more things change, the more they stay the same. That is especially the case when it comes to protracted debates on the state budget, and the impact on those of us at the end of the food chain.

It has been going on like this for years. This time around, though, there’s an extra ingredient to a recipe that was already heading for disaster, and that’s the governor’s plan for the creation of the Budget Stabilization Act. He cooked this idea up to: smooth out revenues over time and establish a spending cap; create “rainy day” reserves for education and the rest of state government; and allow governors to reduce funding for schools up to three times during the course of the fiscal year (á la Proposition 76, which was defeated by the voters in 2005). But there’s more—the governor also proposes the “securitization” of the state lottery, which he hopes would prime the pump with $15 billion for state coffers over the next three years.

Some folks have characterized this series of ideas as some sort of Ponzi scheme; my Dad would have immediately thought of Rube Goldberg, who was famous for developing extraordinary contraptions with complicated mechanics that were designed to carry out such simple functions as turning on a light switch.

To his credit, the governor is trying to use an available asset—the state lottery—which he has been told underperforms significantly when compared to lotteries in other states. But I’m not certain how desirable it is to encourage gambling to get California out of its fiscal mess, and the Indian tribes that operate casinos in the state are likely to take a dim view of creating more competition for that gambling dollar.

To the governor’s further credit, he has crossed the Rubicon on taxes by proposing that a 1 percent sales tax increase be the back-up plan if the lottery proposal fails at the ballot box or it doesn’t generate enough money to fill up the rainy-day funds that would be created by the Budget Stabilization Act.

Have you got all that?

Believe it or not, there is a precedent for a Republican governor of this state having a coherent, bipartisan discussion with a Legislature controlled by Democrats about revenues and expenditures. Ronald Reagan in 1967, George Deukmejian in 1983 and Pete Wilson in 1991 all reached agreement with the Legislature on an approach to balancing the state budget that included both tax increases (some of which were temporary) and spending cuts.

Unfortunately, we can’t seem to get that kind of sensible conversation going in 2008. Chastened by legislators from his own party, the governor doesn’t want to appear to be raising taxes, and has run out of accounting gimmicks and borrowing schemes to balance the budget from year to year. If revenues are not on the table, the only thing left in his arsenal to bring some order to the feast-or-famine volatility of the state’s tax system (and the resulting pressure on its budget) is a plan so complicated that even its authors don’t seem to fully understand it.

In the meantime, the governor and Assembly Speaker Karen Bass have announced their desire to create a blue-ribbon commission to examine the state’s tax structure. That development is certainly welcome, but isn’t there already a report on some shelf somewhere that we could just open and discuss? Is there really time for us to go through another study?

For our part, we in the education community are under no obligation to accept a cuts-only budget plan. If the governor and the Legislature are unwilling or unable to have that discussion about revenues, then let them get out of the way and leave it to locally elected officials to make those revenue and expenditure decisions and take the heat for making tough choices.