YEARS OF FISCAL mismanagement in Sacramento, compounded by a sharp recession, have resulted in a state budget crisis that cannot be resolved without considerable pain.

No longer can borrowing, transferring funds, advancing tax receipts and delaying payments prevent the state from making drastic cuts in basic government services, including education, public safety, welfare and health care.

That was the stark, but realistic, message Gov. Arnold Schwarzenegger delivered on Thursday. He warned that even if the measures on Tuesday's ballot passed, the state would have to reduce education funding by $3 billion. There would be teacher layoffs, a shorter school year by five days and larger class sizes.

University funding would be cut by another $1 billion. Health and human services would suffer hundreds of millions in reductions, and Medi-Cal payments to private hospitals would be cut by 10 percent.

The governor also announced he would lay off 5,000 state workers.

Still, the state would have to borrow $6 billion in short-term, high-interest loans, which would have to be repaid in the 2010-11 fiscal year, and tax collections would be advanced.

That's the "good" news.

If the ballot measures fail, as several recent polls indicate, the situation gets worse.

The state would force local governments to lend it $2 billion from local property tax receipts at a time when counties and cities are struggling to balance their own budgets.


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If the key ballot measures that raise money for the 2009-10 fiscal year — Propositions 1C, 1D and 1E — fail, another $2.3 billion would be taken from K-12 schools, bringing the total reductions to $5.3 billion and cutting the school year by 7.5 days.

Public universities would lose another $200 million, and health and human services funding would drop by an additional $600 million.

To raise more money for the next fiscal year, the state would increase tax withholdings from employee paychecks by 10 percent. That raises $1.7 billion for the 2009-10 fiscal year, but digs a similar-size revenue hole for the following year.

Schwarzenegger also proposed releasing 19,000 undocumented immigrants in state prisons to federal authorities for deportation and freeing a number of lower-offending criminals to county jails.

One wonders how counties are supposed to handle a slew of new inmates at a time when they are cutting their own budgets and counties and cities face $2 billion in property tax losses.

Even if all of the governor's suggested spending reductions and revenue-raising schemes are implemented, the state budget's long-term structural imbalance will remain.

That is especially true if Prop. 1A fails. It is the only measure on the ballot that seeks long-term budget reform with controls on spending. It also is the only measure that would raise revenues beyond the tax increases approved last February, which phase out in 2010-11.

If Prop. 1A fails, the state will lose a chance to generate $16 billion with tax-increase extensions. The 0.25 percentage point increase in income taxes and the doubling of the vehicle license tax would be extended two years through 2012-13. The 1-cent rise in the sales tax would extend one year, through 2011-12.

The loss of these funds and the lack of spending curbs almost guarantee future budget crises. That is why Californians should vote yes on Prop. 1A, even if they reject all the others.

Had the state managed its money in a more responsible manner over the last decade, it would not be in nearly as much fiscal trouble as it is today. All state governments are suffering from the recession, but none are as bad off as California, even though our state and local tax burden as a percentage of income is sixth in the nation.

California also would be better off if state lawmakers had done a more competent job on the budget last February. A permanent and full revival of the motor vehicle tax and an income surtax extending for a few years could have raised money not just for fiscal 2009-10 but for a few more years until the economy recovers.

Instead, the state faces a major budget crisis today and all but ensures more in the future. Perhaps the pain of severe budget cuts, tax increases and a lack of budget reforms will serve as a wake-up call for all Californians, especially those we elect to office in Sacramento.