?Wall of debt? rises on Gov. Jerry Brown?s watch

Jerry Brown devoted the first months of his second governorship last year to dickering with Republicans on placing a multibillion-dollar tax increase before voters.

The negotiations failed, and eventually Brown turned to an initiative. His tax-hike measure, Proposition 30, will be on the November ballot.

During his drive for Republican votes, Brown cited repaying ?a wall of debt? as a major justification for a tax increase.

During the final years of predecessor Arnold Schwarzenegger?s governorship, as the recession deepened and tax revenue plummeted, Schwarzenegger and the Legislature propped up the budget by borrowing heavily, both formally and informally.

They added more debt to the misnamed ?economic recovery bonds? that Schwarzenegger had floated in 2004 to save the state from defaulting on short-term notes.

By the time Brown took office in January 2011, budget debts ? including the remnants of the 2004 bond issue ? had climbed to well over $30 billion, including deferred payments to schools and local governments, raids on local government, diversion of money from transportation and other special funds, and deferred payroll and pension-fund outlays.

Brown declared that reducing the ?wall of debt? would be his ?top priority? if taxes were increased. ?The wall of debt has to be brought down,? he told reporters.

So now that Brown is asking voters for new taxes, is it still his ?top priority??

Well, yes and no.

Brown has since shifted rhetorical gears, arguing that taxes are needed to save schools from deep cuts and prop up ?public safety? services. And the two budgets he has signed since then actually added to the debt by borrowing more money, while the debt-retirement plan he once proposed has been scaled back.

A newly revised debt-retirement plan pegs the ?wall of debt? at $34.2 billion, but it would largely repay schools for money owed under Proposition 98, the school finance law, because helping schools is the centerpiece of his pitch to voters for new taxes.

Beyond schools, the plan would mostly meet legal requirements to retire the 2004 bonds that Schwarzenegger sponsored and to repay the money borrowed from local governments.

A previous version that Brown?s Department of Finance released in February had all of the debt erased by the 2015-16 fiscal year. The revision, however, says $8.8 billion would remain unpaid by then.

What happened?

The February version was based on Brown?s 2012-13 budget proposal. The July version takes into account the 2012-13 budget that he signed in June, which boosts borrowing from special funds even more and diverts money from debt retirement into spending.

That?s why, one assumes, Brown hasn?t been talking lately about tearing down the ?wall of debt.?

Dan Walters covers state politics for the Sacramento Bee.

Source: http://www.sfexaminer.com/opinion/op-eds/2012/08/wall-debt-rises-gov-jerry-brown-s-watch

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