SAN FRANCISCO - AUGUST 31: California governor Arnold Schwarzenegger points to a chart as he talks about the State budget during an appearance at City Summit 2010 August 31, 2010 in San Francisco, California lawmakers voted down a proposed budget that was backed by Gov. Schwarznegger and republicans. California is facing a $19 billion defecit and could run out of money by October with the budget being over two months late. (Photo by Justin Sullivan/Getty Images)
There was a telling exchange during Gov. Schwarzenegger's press conference Monday on his new proposal to make additional budget cuts as he leaves office.
The proposal appears to be going nowhere politically, but it did provide the governor an opportunity to make some smart points about the budget process. Schwarzenegger was particularly good in explaining one way media organizations (including, more than once, this blog) can mislead the public about budgeting.
The governor zeroed in on a media bad habit of putting together the deficit from the current budget year (about $6 billion) and projections of a shortfall for the future year after cash reserves are accounted for ($19 billion) and calling it the whole thing "the deficit." This leaves the impressions there is one $25 billion hole facing the state -- when, in fact, the state faces a $6 billion deficit this year and could face a $19 billion deficit next year if cuts aren't made or revenues aren't enhanced. But they aren't cumulative.
Below is the full exchange:
QUESTION: Governor, could you take a moment and try to explain for us a little bit, if you could, why you think Californians misunderstand the budget process so much and maybe possibly any role you could have had differently in that? When we look at polls, they still want no taxes but they want no cuts to education, no cuts to social services. They think it's all waste, fraud and abuse. Why don’t they get it?
GOV. SCHWARZENEGGER: Well, first of all, I think that it has a lot to do with that you guys are confusing them too. (Laughter) Because when I open up the paper and I read that the new budget deficit is $25.5 billion -- where do you get that information? And since when are we trying to confuse the people, to all of a sudden make it an 18-month budget? The current budget deficit is $6 billion, according to the Legislative Analyst, so when you go out and you tell people that we have a $25 billion deficit, that's the wrong information because we always go year by year.
So people get confused. I have had people come up to me and say, "Oh, my God, you just did the budget. Remember when you were here in the morning and you said you were so happy you got the budget done? It was two months ago. How could there be a $25 billion budget deficit already?"
I said, "It is not." So I had to explain that sometimes the press does not identify that this year it's $6 billion and, if nothing is done this year, then next fiscal year -- next -- it could be potentially $25.5 billion. So the people get confused, they have no idea how this works and that's just one complication.
UPDATED: One important point that I should have noted immediately: Schwarzenegger himself has been guilty several times during his tenure of this same trick -- using two years of budget figures and conflating deficit and future shortfalls -- when he's wanted to make the budget problem seem bigger.