He might have done it this year, but he got some financial help from a timely windfall of tax revenues and voter-approved restructuring of the state’s debt using bonds. But without another miracle or cuts that no one in either party wants to make, the state’s budget crisis continues. Next year, according to the widely respected Legislative Analyst’s Office, the state will have a $7 billion deficit; the following year, a -$10 billion deficit. Unless, of course, the big economic recovery Schwarzenegger hopes for happens. Little sign of that, however.
Believe it or not, the state could almost finesse next year’s big deficit. How? By Schwarzenegger’s reneging on his promise to the education community for more funding and by using what’s left of the recovery-bond proceeds. But neither seems very smart heading into an election year. After some Sturm und Drang, the former Mr. Universe will shoulder the load by balancing more cuts with a temporary tax increase.
2. Energy Crisis Returns
Like a low-grade fever, the energy crisis that sent Gray Davis’ once lofty poll ratings into the tank will heat up. Once the worst was past, politicians and the media lost interest. But the crisis was never solved.
Many new power plants set in the Davis administration have fallen by the wayside, due to a decline in the merchant power business and because power generators aren’t sure what the California market will ultimately look like. Yet the economy and the population keep growing. Supply is getting tight again. The state squeaked past a few scares last summer as it reached new record highs in power usage. Energy will re-emerge as a major issue.
Will Arnold run for re-election or not? Some think his governorship is still a bit of a lark, pointing to his ongoing fondness for adoring crowds at highly choreographed, Hollywood-style events. His popularity is at record levels, and making tough choices usually offends large numbers of people. Indeed, there has been location scouting abroad for Terminator 4, and the role that Schwarzenegger made famous has not been recast.
That said, bet on him making it clear next year that he will run for re-election in 2006. If he really wants a constitutional amendment allowing him to run for president, he needs to pile up historic achievements. The biggest problems he was elected to solve are still here.