The headline in the new review of Governor Jerry Brown's revised budget is certainly that the state's deficit woes may be closer to $17 billion.
But the report raises deeper questions about how the governor, who's ridiculed budget gimmicks of years past, is attempting to reshape the single largest budget law on the books: the K-14 school funding guarantee, Proposition 98.
The first look at Brown's revised budget by the independent Legislative Analyst's Office (PDF) seems to generally validate the administration's forecast of state revenues -- which, itself, could be news... given how much debate there's been in recent months about those forecasts.
But it's a different tax dollar estimate -- the governor's assumption of how much in property tax dollars will be left from the shutdown of local redevelopment agencies -- that leads LAO researchers to believe the deficit is closer to $16.6 billion. That's $900 million deeper than measured by Brown's team.
Even the short explanation is a bit mind-numbing. Brace yourself.
The complex formulas in Proposition 98, approved by voters in 1988, say that tax dollars not provided to K-14 schools on the local level must come from the state's general fund. And the LAO report thinks there are fewer of those local dollars than does the governor -- hence, the money has to come from the state... and thus deepens the projected shortfall.
But through the years, Prop 98 has become the quintessential magic box of California government -- that is to say, it's used to say whatever the political forces of the state want it to say about how much money must be spent on education. Many education advocates now believe Prop 98 is manipulated so often as to have actually become a hindrance rather than a help.
The LAO report suggests Governor Brown is adding his own mark on the legacy of questionable Prop 98 interpretations.
"The May Revision," says the report, "appears arbitrary in its decisions regarding what constitutes an 'education' program -- seemingly identifying a new education program when expedient for budget purposes."
At issue are the kinds of programs the governor wants to count towards the Prop 98 education guarantee in the event his November tax initiative fails -- programs like debt payments and student mental health services.
Reading the LAO's new criticism of counting those kinds of programs under the Prop 98 school revenue promise feels a little bit like... the fight over calling ketchup a vegetable.
Extending (or stretching) that metaphor, the LAO recommendation seems to be that legislators count some of this year's ketchup allotment as payback for some previously missed vegetables.
The report says by counting some current school spending as a settle-up of past obligations, the effect would be $1.9 billion of less mandatory school spending (but, bizarrely to the normal world, no less spent on day-to-day school needs) and thus... more money for other state government programs now on the chopping block.
And that could offer Democrats like Senate President pro Tem Darrell Steinberg the opening they've been looking for. Steinberg said this week that he's looking for ways to avoid some of the governor's deepest cuts, like those to the welfare-to-work program CalWorks. A redefinition of school funding formulas could do the trick, though the politics of education funding is very tricky... especially in an election year.
Meantime, look for more legislative hearings on Governor Brown's plan next week. And don't forget... if legislators want to keep getting paid, they've got to send Brown a budget no later than June 15.