(2003-09-23) Walters On California Deficit

DanWalters explains the California deficit. The state's general fund revenues, with the exception of a $12 billion one-time windfall in 2000-01, have been remarkably consistent ever since the state came out of a severe recession... GrayDavis, however, did not follow his own advice. Within weeks, he agreed to commit about $8 billion of the windfall to ongoing spending, including big tax cuts, thus creating a chronic deficit that in subsequent years was papered over with slippery bookkeeping maneuvers and billions of dollars in loans... Cruz Bustamante contends that the deficit stems from the 2001 energy crisis, during which the general fund was tapped for about $8 billion to purchase power... It's a widely believed scenario, but entirely untrue, since all of the power buys were ultimately covered with a bond issue being repaid by Electric Utility customers. That means Bustamante is either woefully ignorant about the budget crisis he says he can fix (largely with $8 billion in new taxes that he probably can't get enacted) or he's consciously telling untruths.