Next year's state budget picture is likely to look worse than this year's, even if the economy comes back. Why? Because the temporary tax increases that were part of the February 2009 budget deal expire at the end of the current budget year (which would be June 30, 2011).
A big question for the next governor will be: Do you want to extend the temporary tax hikes that Gov. Schwarzenegger approved?
Former Gov. Gray Davis, who served as Jerry Brown's chief of staff the last time Brown was governor and is still advising him today, has an answer for that question: yes. Davis tells the Sacramento Bee that there could be a special election early next year in which voters are asked to extend those tax increases. Davis cautions that he's speaking only for himself, not for Brown.
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Such an election and tax extension makes all the sense in the world -- if your goal is to balance the budget. The real question is if voters would go along. Californians voted down a two-year extension of these same tax increases in a May 2009 special election, so it seems unlikely that they would reverse course. In that election, the left (public employee unions, with the notable exception of the California Teachers Assn.) and the right (Howard Jarvis and other anti-tax groups) worked together to defeat the tax increases. One wonders what inducements the next governor would have to offer to change their minds -- and how big a dent such inducments would make in the already broken budget.