Governor's gaming money

If there's something positive to be found in the governor's revised budget it's that he appears to be coming around to the idea that California is not going to cut its way out of a $15.2 billion shortfall.

His new plan includes about $7 billion in ideas for generating new revenue.

But the positives largely end there. The cuts Gov. Arnold Schwarzenegger is proposing disproportionately affect the state's most vulnerable residents, and his revenue-generating ideas seek to tap into one of the only remaining stable sources of income these days -- gaming money.

In the $144.5 billion revised budget released Wednesday, the governor backs off on his earlier plan to close 48 state parks -- including Armstrong Redwoods -- releasing low-risk prison inmates and suspending the state's minimum school funding guarantee. Instead, he proposes cutting deeper into health care and welfare programs for the poor.

For example, as part of $627 million more in cuts to health and human services, the governor is recommending that undocumented immigrants meet a monthly eligibility requirement for emergency services. How such a limitation would be administered and whether it would get buy-in from health care workers are significant unknowns.

In addition, he recommends that the threshold for Medi-Cal eligibility be lowered to those earning 61 percent or less of the federal poverty level.

Meanwhile, the centerpiece of Schwarzenegger's revenue-generating ideas is to sell bonds based on anticipated lottery revenue. He expects to raise $15 billion over the next three years with the expectation of using $5 billion in the next fiscal year to bridge the state's budget gap.

The plan is to keep the remaining $10 billion in a reserve fund that would help the state get through tough times in the future.

We commend the governor for continuing to press the notion of a rainy day fund to guard against the kind of significant revenue drops that the state is now experiencing. But the net effect of this plan -- along with the governor's newfound appetite for Indian gaming revenue -- is to balance the budget by encouraging more gambling.

Hardly a sound fiscal policy.

The governor also is proposing to have a "surcharge" on homeowners' insurance polices and to divert gas taxes to help bridge the budget gap. To succeed, he will need to persuade Republicans in the Legislature, who have cornered themselves by pledging not to approve any new taxes.

The bottom line is even if all of the above is accomplished, the state would still be facing a $6 billion budget deficit.

We have long advocated a balanced approach to dealing with the state's budget deficit. As stated, we're encouraged that the governor appears willing to recognize the need for raising revenues. But this plan is not a good bet for California.