Our View: Measure fixes problems with Prop. 98 and brings honesty to Sacramento budgeting

Pay no attention to all those deceptive television commercials: Proposition 76 is not perfect, but it will not gut our schools, and it will help Sacramento's dysfunctional government shake off its dangerous addiction to deficit spending.

Wags have called Prop. 76 the "we really mean it this time" balanced budget amendment. The crack reflects a prudent skepticism.

California passed a spending limit in 1979. Just last year, voters approved Proposition 58, which authorized $15 billion in borrowing but required the Legislature to pass balanced budgets from now on.

And yet, Democrats, Republicans and the nonpartisan Legislative Analyst agree that California faces increasing public debt as government spending grows faster than tax revenues.

What's wrong here? The simple answer is that deficits are about all our politicians can agree upon. Democrats refuse to cut spending but Republicans won't raise taxes. So the binge continues, fueled by Enron-style accounting tricks; the state ran deficits in each of the last six years.

Prop. 76 seeks to break this pattern.

The measure's core provision is that overall spending could not increase faster than the average revenue growth of the previous three years. The formula would smooth out spending, preventing wild binges in good economic years. What's more, lawmakers couldn't spend more than the state takes in unless they built up reserves in previous years.

Behind the complexity, the desired outcome is pretty simple: Spend only what you earn, and build reserves to keep programs going in bad years.

Prop. 76 also cuts up Sacramento's favorite credit card by banning the annual raids on special funds that pay for transportation and other priorities. Politicians will find it harder to neglect our roads.

So why do many teachers and school administrators oppose Prop. 76?

Under last year's budget deal, teachers union officials say that Gov. Arnold Schwarzenegger promised this year to kick an extra $3.8 billion into the roughly $50 billion school budget —— which already had increased by $3 billion, or more than 6 percent. The governor says he promised the cash would flow over several years.

Nobody knows who is telling the truth, but educators feel betrayed: Prop. 76 would let the government take as long as 15 years to come up with the extra money, although the booming economy and record tax receipts would certainly move up that timetable.

Educators also worry that the measure will undermine Proposition 98, which was supposed to guarantee steady funding increases for the state's school system.

The trouble is, Prop. 98 hasn't worked well. Lawmakers suspended or watered down its provisions in all but a handful of budget years. Money for schools increased along with the overall budget, but hopes of gaining significant ground haven't panned out.

Prop. 76 gets honest about the failures of Prop. 98, killing off a loophole that let Sacramento avoid making schools a priority. At the same time, the measure would uphold a second provision of Prop. 98 that boosts money according to enrollment growth and economic growth. Over time, this would result in higher funding levels.

On paper, Prop. 76 is better for schools than today's fiscal chaos. But as with the rest of the budget —— health, welfare, parks, roads, prisons, etc. —— school funding would only be as secure as the economy, that engine of tax revenues.

The measure also contains risks. Spending could ratchet down if politicians fail to build reserves, forcing deeper cuts in bad years. The cuts could fall heaviest on cities and, eventually, upon schools.

We also worry that Sacramento's creative types will find a way to skirt the spending limits.

On balance, however, Prop. 76 would create a healthy discipline: by forcing the Legislature to pay its bills, politicians would be forced to raise taxes if they want to approve politically popular spending.