Step right up! Step right up, folks! Be the first to witness the magnificent! The incredible! Arnie the Amazing Magician! That's right, folks, not only can he eliminate robots, aliens, barbarians, and about 500 Colombians, but he'll eliminate California's budget deficit right before your very eyes! "How?", you might ask. Well, my friends, a good magician never reveals his tricks. But since Arnie isn't a very good magician (or governor, for that matter), I'll let you in on a little secret: it's called...shhh...budget magic! Here's how it works:
This virtual ponzi scheme would shave an estimated $10 billion off California's $24 billion budget shortfall. Wow! What a wonderfully marvelous idea! How could this possibly go wrong? Why didn't anything think of this earlier? Wait, maybe because it's illegal!
Need an extra $2.3 billion? Easy — just make people pay more of next year's taxes this year, by increasing paycheck withholdings and estimated tax payments.
How about selling a chunk of a state insurance fund? That's good for a cool $1 billion on paper, even if experts say it's highly uncertain the sale would fetch that much, if it can be executed at all.
Expenses still too high? Here's a really creative one: Push back state employees' monthly paychecks in June 2010 by a single day — from June 30 to July 1 — and thus onto the next fiscal year's books. Just like that, $1.2 billion "saved."
So they're betting that all their economic woes will magically come to end and they'll make a surplus of money by next year, and they'll do it all without having to cut necessary programs like health care and scholarships for illegal aliens. Again I say to you, what could possibly go wrong? This plan, although proposed by state dems, was actually initially weakly opposed by the Governator.
Edward Chiang, a certified public accountant in San Jose, said it would be hard for [the Governor] to get away with the kind of financial accounting coming out of Sacramento.
"It's borderline kiting," said Chiang, referring to an accounting term that Webster's defines as "to get money or credit by using bad checks."
"Basically you use one receipt to pay for another and keep shifting it down the line, kind of like what Bernie Madoff did," he explained. "You can keep borrowing from Peter to pay Paul, as long as you don't run out of Peters." (Chiang added that he wasn't accusing anyone, particularly our muscle-bound governor, of doing anything illegal.)
Ultimately, Sacramento's number-crunchers believe an economic recovery will rescue the state from a Madoff-like fiasco. When the economy picks up, the thinking goes, tax revenue will shoot up and allow California to square its expenses with actual revenue.
"The odds are, there is a point during the next budget year that (revenue) will bottom out," said former Assemblyman John Laird, D-Santa Cruz.
When Schwarzenegger last week criticized the Democrats for including one-time "gimmicks" in that plan, a reporter pointed out that he had done the same thing.
"Very good point," the governor responded.