It certainly is an unusual situation, but we Republicans are encouraging you to vote to increase the debt of the state of California, and we are doing it with a straight face.
As you know, Proposition 57 is asking Californians to commit to a bond issue of $15 billion. This commitment will allow our state budget to be stabilized, so that we can begin the process of moving forward.
If you study the state budgets over the last few years as I have, you would see that we have had a deficit at the end of each year that keeps getting larger each and every year. Even when revenues were perceived to be at a peak, we were outspending those revenues. The state budget began each year in the hole that just got deeper as the months went by.
Now we have a twofold problem. We must deal with the backlog created from prior years and try to balance this year's budget, where expenses still are outstripping revenues. Proposition 57 will allow us to focus on eliminating the current budget imbalance without the draconian past debt facing us.
As it is, we will face serious cuts in our state budget. The growth in expenditures will have to be eliminated and actual cuts in important programs will have to be made.
As much as some of us would like to effect the cuts now that are necessary to erase this debt, we have come to the conclusion that it would significantly harm our state's economy. This would stifle the immediate economic growth we need to reach budget equilibrium.
This new debt is not going away. That is understood. We are going to have to pay it back over the next decade. It will be in a fashion that will allow our legislators to craft a budget that will not start wallowed in debt before the opening discussions begin. By our good fortune, this debt will be financed at today's very low interest rates.
The question then becomes how do we prevent this disastrous situation from re-occurring. We must pass the companion proposition -- No. 58. It specifically makes it illegal to create any future bonds to finance a budget deficit again. It requires the Legislature to balance the budget.
Proposition 58, in addition to requiring a balanced budget each year, establishes that there must be a budget reserve in case projected revenues fall short. This is an important part of the measure.
A year in advance, some very smart people sit down and project what the revenues are going to be for the next 12 months for the world's sixth largest economy. As smart as they are, it is a Herculean task, where it is easy to be off a billion dollars or more. This reserve will recognize that projections are only projections, and we should provide a cushion for dealing with the inevitable changes.
These new budget requirements can only be deviated from when there is a fiscal emergency upon which both the governor and Legislature agree. Some would say that a balanced budget should be locked in stone.
Those feelings are certainly justified after the dismal performance of the last few years. Once we divorce ourselves from those feelings and look at the budgeting process on a long-term basis, it becomes easier to see that this is a necessary clause that allows our elected officials to act responsibly, when a true disaster happens. If, God forbid, another earthquake occurs matching the damage caused by the Northridge quake, we would all want our leaders in Sacramento to do what is necessary to return our lives to normal.
These are the reasons why a broad spectrum of the political and financial universe is supporting both Proposition 57 and 58. It is a reasoned plan of action.
There may be alternative plans that seem good, but this one is worked out and ready to go. Let's give it a chance and make judgment about its success after we see the full effects.
There are many important votes to cast on March 2, but none is more important for the future stability of our state than to vote yes on Proposition 57 and 58.
Bruce L. Bialosky is the Southern California chairman of the Republican Jewish Coalition.