California Insider

My colleague Ed Fletcher had a story in the Bee this morning about the budding movement in the Capitol to levy a new tax on the satellite television industry. The tax, not surprisingly, is being pushed by cable television companies, who argue that utility taxes that hit cable but not satellite are unfair. One of the major supporters of the satellite tv tax is William Rosendahl, who is vice president of political affairs for Adelphia Communications and former chairman of the California Cable Telecommunications Assn. Given his background, Rosendahl seems a natural to lead this fight. But he is also chairman of the California Commission on Tax Policy in the New Economy, a supposedly high-minded effort to study tax reform issues on behalf of the governor and the Legislature. Most of the members of the commission come with a strong point of view. But as far as I can tell, Rosendahl is the only one with a financial stake in one of the policies he is pushing, and trying to get the commission to recommend. Seems like a conflcit of interest to me.

I’ve been trying for a couple of weeks now to answer this question: How much might the state spend next year compared to this year, on an apples to apples basis? There are so many shifts, transfers, loans and gimmicks in the budget that it’s difficult to tell. But the Assembly Republican Caucus has offered an analysis that seems right to me. I’ll put it out there as the working assumption until someone knocks it down or comes up with something better.

The bottom line: General fund spending this year will be $78.9 billion. Spending on the equivalent programs next year will be $82.2 billion, after making all the required adjustments to keep the story straight. Obviously that’s a little different from the line we’re hearing from the administration, that they’re making the biggest year-to-year cuts in modern times.

Here’s how to follow the pea. Start with the conference committee's official spending total as of June 7, which was $72.2 billion. Then add the following:

Realignment (shifting programs to counties and raising taxes to pay for them) $1.7 billion
Medi-Cal accounting gimmick: 1.0 billion
Raise the vehicle license fee: $4.2 billion
Various fund shifts and fees: $1.3 billion
Borrowing to pay pension obligations: $900 million
Deferring payments to teachers retirement fund: $500 million
New federal funds: $250 million

Each of these moves technically reduces the level of general fund spending in the budget without reducing the real amount the state is spending on services. So when the gov says he is asking for $18 billion in cuts and $8 billion in taxes, that’s not exactly true. Far from it, in fact.