The Budget: May 2008 Archives

Yesterday I wrote that the Governor's plan to borrow from future lottery revenues is a risky gamble -- yet another scheme to put off the need to ask corporations and the wealthy to pay their fair share of taxes.

The Legislature's budget analyst doesn't like the scheme either. From Monday's Sacramento Bee, Governor's lottery plan could hurt school funding, analyst says,

The Legislature's budget analyst on Monday called Gov. Arnold Schwarzenegger's lottery proposal "flawed" and warned lawmakers that money for public schools could fall short of current levels under the plan.

... Currently, lottery profits benefit public schools, from kindergarten to community colleges. Hill wrote that the Schwarzenegger administration made "overly optimistic" assumptions about the potential growth in lottery sales. She warned that public education funding "would fall well short of their current levels -- perhaps by $5 billion over the next 12 years combined."

The headline article in Sunday's San Jose Mercury News: A winning bet on lottery money for Schwarzenegger?
FOR GOVERNOR'S BUDGET PLAN TO WORK, TICKET PROFITS MUST DOUBLE

The article discusses ways to increase lottery sales so the Governor can borrow from future revenue to pay today's bills. (And we get to pay huge investment bank fees for the privilege of borrowing our money from our future.)

The article does not discuss the consequences of the possible failure of this wild plan to base the state's financial future on gambling revenue. If it fails we will still owe a huge amount of money to the big Wall Street firms, but will have even less revenue coming in to pay the additional interest and principal. We're talking about the possibility of bankruptcy here, folks.

The article does not discuss the consequences of using marketing methods to push gambling to California's low income citizens. We already know there is a gambling problem just from the amount of advertising that is being done today. Now lottery-pushers are talking about online betting, allowing use of credit cards so people can go into debt, and increased advertising. This can only lead to terrible victimization of people who are susceptible to gambling addiction.

Mostly, though, this Sunday headline article does not discuss realistic ideas for raising revenue to pay for the state's schools, roads, police, firefighters, courts, health care facilities, DMV workers, environmental oversight and the rest of the absolutely necessary things that our state government does for us. These ideas include asking the wealthy to pay the same sales taxes when they buy yachts and jets that the rest of us pay when we buy clothing and cars and necessities, or asking the big corporations to pay realistic property taxes on commercial real estate, or asking the oil companies to pay something when they pump our oil out of the ground and sell it back to us, or closing some of the loopholes that allow big corporations and wealthy to escape paying their share of taxes.

Nope, instead of looking at realistic revenue ideas we're all being distracted by this silly lottery scheme.

The Governor wants to borrow future lottery revenue to help pay this years bills.

If we pay this years bills with next year's revenue, then there is that much less revenue next year to pay next year's bills.

It's time to realize that borrowing to pay future bills doesn't work. This governor's past borrowing is a big part of why we are in the mess we are in today. Now we owe the money we borrowed and the interest.

There are ways to solve this but they simply are going to have to involve asking the wealthy and corporations to pay their fair share. There is no way around it anymore.

Borrowing isn't an answer, it's just a way to cover the problem.