The Legislature passed a state budget without having to be docked any pay for being late, and Standard & Poor's, one of Wall Street's most important ratings agencies, has deemed California's fiscal position better than it has been in years. Whew! What a relief. Everyone can breathe easy now, right?
Of course, there will be pressure to do just that, but it would be a serious mistake to think California has weathered its fiscal storm. A far more accurate metaphor is that of being in the eye of the hurricane.
Yes, severe damage has been wrought by the front end of the storm, and all seems eerily calm now. But anyone who has ever experienced a hurricane knows that the quiet of the eye is temporary.
In fact, Standard & Poor's makes that very point. Its July 1 assessment of state finances as it begins the new fiscal year criticizes the politicization of state revenue estimates. We wish them luck in getting that one changed. The agency also warned about, you guessed it, long-term spending commitments that could frustrate efforts to pay down the state's massive debt.
The ratings agency expressed chagrin that Gov. Jerry Brown did not stick to his original plan outlined in May to more fully repay the debts to education that were owed from previous years. In negotiations with legislators, Brown agreed to carve out about $650 million of the planned debt repayment to schools for other purposes.
Previous disaster budget years had caused the state to run up a near $27 billion debt, and the ratings agency felt it would be much more prudent to use the $650 million toward retiring it.
But such are the vagaries of government budget-making. Quirks, political deals and inconsistencies abound in nearly every public budget. It is the messy nature of a beast that ultimately must be accountable to the broad interests of the public at large rather than to the narrower interests of a relative few corporate stockholders or investors.
Almost as if to illustrate the eccentricities of public budgeting, Brown used his line-item veto to remove a budget item that he had actively sought.
Brown had insisted on earmarking $20 million for online higher education, but he agreed to remove the stipulation after leaders of the state's university systems promised they would vigorously pursue online course offerings.
So Brown left the $20 million in the budget but withdrew the requirement that it be spent on online courses.
Even so, the $96.3 billion budget is a positive step compared with those of years past. But no one should be deluded into thinking that it is anything more than a single step in a long journey. The second wave of the hurricane is coming, and how well California weathers it depends on how well it exercises financial prudence today.