SACRAMENTO, CA - Last week, as I waited in a long line at the state capitol to get a copy of Gov. Gray Davis’s proposed 2002-03 budget, I noticed a group of small schoolchildren outside the governor’s office. When Davis emerged, he gave many of the kids high-fives. Those children didn’t realize that they had just greeted the man who wants them to pay for his current budget-deficit woes when they are grown and in their twenties.

Gov. Davis blames much of the state’s $12.4 billion deficit on the recession and September 11. Davis doesn’t mention that while California’s population increased by five percent during the first three years of his term, state general-fund spending skyrocketed by 37 percent.

Recall that in May 2001, when Davis presented his revised 2001-02 budget, the state faced a $4.2 billion deficit. Davis balanced the budget using a series of band-aids. Elizabeth Hill, the state Legislative Analyst, warned that Davis did not cut on going spending enough, relying instead on short-term fixes such as transferring money between accounts, reducing one-time expenditures, and drawing down the state’s reserve fund. Hill predicted that the state would face a large deficit in 2002-03, which is exactly what happened.

Indeed, by November of last year, Davis was forced to propose $2.5 billion in additional spending reductions in the face of falling revenues. However, even that amount, plus the $2.7 billion in spending reductions he proposes in his 2002-03 budget, does not come close to bridging the gap. Davis’s new budget proposal, thus, must rely on more fiscal sleight of hand.

The governor’s chief budget-balancing strategy consists not of spending cuts, but $5.6 billion in loans, transfers, and other internal shifts from various state special funds to the general-fund budget. Sacramento Bee columnist Dan Weintraub notes that: “One of those loans will not be repaid for more than 20 years. Children born this year would, as adults, still be paying for the operating expenses in this year’s budget. That seems neither fair nor responsible, and is eerily parallel to the ‘solution’ Davis devised to last year’s energy crisis.” Instead of giving high-fives, those kids Davis greeted outside his office last week should have been holding on to their allowance money.

Davis believes that the economy will rebound within a year, increasing revenues and saving his bacon. However, the Legislative Analyst’s Office (LAO) says that the state will run multi-billion-dollar deficits until at least 2006-07. The LAO concludes that “The fact that the state’s projected annual operating deficit does not disappear over time indicates that the state cannot simply ‘grow itself’ out of its budget problem.” Davis refuses to face this reality.

While Democratic leaders such as State Sen. John Burton advocate huge tax increases to balance the budget, the better alternative would be to impose long-term fiscal discipline on the budgetmaking process. State Senator Tom McClintock suggests requiring the budget to grow no faster than the combined rate of inflation and population. If such a spending limit had been in place over the last three years, state spending would still have grown by 13 percent, but instead of a $12.4 billion deficit, the state would be enjoying a $28 billion surplus. Spending discipline, not budget trickery or higher taxes, is the real solution to the budget crisis.