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A Bucket of Woe: Jerry Brown's Unsurprisingly Unhappy Budget

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In one of the least surprising announcements of late, Gov. Jerry Brown on Monday unveiled the annual spring revision of the California state budget, proposing steps to deal with what he says has become a $15.7 billion budget deficit, up from $9.2 billion in January. Absent more tough cuts, and passage of his November revenue initiative, things get much worse very fast, especially for the schools.

Meanwhile, things are apt to get significantly worse for social welfare programs and state workers.

The deficit number was a surprise to some, probably feigned in some cases, especially by Brown's longtime conservative critics.

Fox News, to mention the most obvious of these folks, spinning furiously, claimed that Brown is actually worse than JP Morgan Chase CEO Jamie Dimon. Why? Because Dimon only hid a $2 billion loss while Brown "hid" a "$16 billion deficit blunder."

I mention this, not because I take the Fox report seriously, but because it is the preposterous hyper-partisan extreme that illustrates a common problem.

Governor Jerry Brown announced in this video over the weekend that California's budget deficit has increased to nearly $16 billion, due to weaker revenues than expected, higher spending than expected due to blocking moves by the courts and federal government, and cuts called for in January that have yet to be made.

Which is that there is nothing surprising about the budget deficit number, not for anyone who has been paying attention to, and remembering, regular statements from Brown and state Controller John Chiang about revenues, and from Brown about budget cuts being blocked, by the courts and federal government, and balked at, by the legislature.

It was a simple exercise in arithmetic. Add up the revenue shortfalls reported for months, and repeatedly throughout April, with the blocked budget cuts, and you won't be surprised. (An added factor, as Sacramento Bee columnist Dan Morain points out, is that revenue from corporate taxes is 6 percent lower than expected, and is actually down in absolute terms, even though corporate profits are booming. And corporate taxes make up a shrinking share of the state budget, due to tax breaks.)

Of course, the overall doesn't get done much in an era of news nibbles via Twitter. And many like to hype the surprise when the overall becomes impossible to miss.

Which brings us to an interesting question. Does the air of shock around the latest in California's chronic budget crisis count as a failure of Brown's communications strategy? Or as a success? After all, a bad shock may be what the electoral doctor ordered for Brown's November revenue initiative. I assume he noticed that the numbers weren't being added up in the press.

Brown's initiative looks pretty good in the polls, but if people think things are already turning out well enough, that's an excuse to vote against the tiny quarter-cent increase in the sales tax. (There's not much doubt they will vote to raise taxes on the rich.)

Brown didn't hide anything on the budget. If anything, he kept up a running commentary on the problems around the budget. He just hadn't put it all together in one speech, as some might have had him do.

I wrote last week on my New West Notes blog that a very rugged California state budget in the annual "May revise" was coming on Monday and that Brown had been warning for months about the need for more cuts, and the legislature had refused. I also mentioned that I've mentioned this about 50 or 60 times. Now the situation is, all too predictably, worse.

It all stems from California's chronic budget crisis, which has multiple causes. I've discussed the web of political and systemic dysfunctionality that hamstrings Brown, as I warned him in the fall of 2010, as it ensnared Arnold Schwarzenegger and Gray Davis, many times. The latest proximate cause, and it's a doozy, came at the end of the Bush years.

California has one of the biggest economies in the world. But even a huge economy reels from the loss of more than a million jobs during the great global recession, which cut revenues to state government by nearly 25 percent. Even though revenues have been recovering, California is still among 33 states in the U.S. that have yet to see tax revenues return to the levels at the beginning of 2008.

Which leads us to the coming campaign.

Last week, Brown and his allies turned in 1.5 million signatures for his initiative, about twice as many signatures as needed to qualify his November revenue initiative, and about twice as many as turned in by heiress Molly Munger's minions for her income tax hike-for nearly all boost for schools, a zombie presence on the ballot which trails badly in all polling. But many of those signatures will be invalid, as they always are, which accounts for the overage.

While a number of consultants, strategists, and advisers will be involved in the campaign, the lead consultants will be San Francisco-based SCN Campaigns, whose senior partner is longtime Democratic consultant Ace Smith.

Smith was Brown's campaign director in his landslide victory for California attorney general in 2006.

Then the two men had a bit of a falling out, as Smith, who managed Los Angeles Mayor Antonio Villaraigosa's re-election campaign, seemed to feel that Villaraigosa was the likely next governor.

That was unfortunate for them both, because my observation was that Smith did a very good job teaming up with Brown and Anne Gust Brown, who always plays a senior management role.

That view may have been part of his vision of how things would play out in presidential politics. Smith picked Hillary Clinton as the future, serving as her state director in California, where she managed to beat Barack Obama, and in Texas, where Clinton and Obama split the dual primary/caucus contest. Villaraigosa was a national co-chair for Hillary, and as one of the country's highest-profile Latinos would have loomed very large as a Clinton administration ally.

Brown, in contrast, ran against Bill Clinton in 1992, ending up the distant runner-up for the nomination, and was neutral in the race between Hillary and Obama.

But Hillary did not become president, and no one has ever beaten a Brown for a statewide Democratic nomination in California. This is a streak that goes back to 1946.

Villaraigosa dropped out of the Democratic primary race against Brown, as did everyone else.

But the relationship was not easy to patch up. Smith did aid Brown's 2010 campaign with some independent expenditure efforts early on, which Brown appreciated. His committee, however, did not become the principal independent expenditure effort.

Now Smith, who directed opposition research for Kathleen Brown's premature 1994 gubernatorial campaign, is working with the Browns again.

It's not clear who will run the campaign against Brown's initiative, if anyone, as the governor is doing a good job of neutralizing institutional opposition. But there will be some sort of opposition, hyped or otherwise.

You can check things during the day on my site, New West Notes ... www.newwestnotes.com.

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