Since Beyond Chron left on vacation two weeks ago, the state is no closer to resolving its $40 billion budget crisis – after Governor Schwarzenegger vetoed the Democratic plan to plug $18 billion in the hole. Despite the very real threat that the state will soon run out of money, Arnold lamented their proposal’s lack of “economic stimulus.” Specifically, he wants to gut labor and environmental protections for various highway projects – while the press gives him fawning coverage as a “green crusader.” Arnold’s latest budget package (proposed on New Year’s Eve) would steal mental health funds out of Prop 63, include even more education cuts than initially proposed and – as if recklessly borrowing money didn’t put us into this mess in the first place, borrow $5 billion off future anticipated revenues. The Governor announced this while vacationing in Idaho – but no one in the press bothered to care. Meanwhile, the SF Chronicle criticized State Assembly Speaker Karen Bass for being out of town during the budget standoff – although she was trying to get help from the feds.

It doesn’t take much to understand why Sacramento’s in its current budget mess. What’s truly infuriating, however, is that Schwarzenegger keeps getting fawning media coverage – while Democrats in the legislature who are trying to do something about it get nothing but grief.

It was Arnold who gutted the Vehicle License Fee on his first day in office that gives us an annual budget hole of $5 billion (and growing). It was Arnold who campaigned in 2004 on paying off just one year’s budget deficit by passing a bond that we’re still paying for as debt service. And it’s the Republicans in the legislature – and their adamant refusal to ever vote for a single tax increase whatsoever in any way, shape or form – who have abused the two-thirds requirement to pass a state budget each and every year, driving us further and further into fiscal irresponsibility. California’s one of the most liberal states – but in Sacramento, we get nothing but an Alabama budget.

No doubt the $18 billion budget package that Democrats in the state legislature pushed through last month was politically untested – and legally suspect. Because Republicans will never vote for any tax increase, their majority-vote proposal re-arranged current tax revenues (which is perfectly legal) – and replaced the state gas tax with a gasoline “fee” (which may or may not hold up in court.) But State Controller John Chiang announced that the state will have no money by February 1st, and get reduced to issuing IOU’s. At a time when no one else has a solution, give the Democrats credit for trying. Republicans in the legislature, of course, want the government to go bankrupt – but Arnold always claims to be a “moderate.”

But Schwarzenegger didn’t veto the budget package because the Democrats did an end-run around the two-thirds vote requirement. In fact, he says he’s just as upset with the Republicans as they are – and won’t even include them in budget negotiations anymore. Instead, he complained that the budget package didn’t include an “economic stimulus” – and then called on Democrats to capitulate to his demands. First, Arnold wants public works projects to be opened up to private contractors – which the Los Angeles Times noted yesterday could greatly help his cronies. Second, he wants to eliminate environmental review for eleven of the state’s highway projects.

The latter is particularly obnoxious, when you consider how the media praises Arnold as some kind of environmental champion. Newsweek recently put him on their front-page and called him a “green-crusader,” while we hear rumors that President-elect Obama could make Arnold his new Energy Czar. Assembly Speaker Karen Bass says that Democrats have agreed to 75% of what the Governor has asked for, and “every one of our constituencies have been offended by what we have [compromised on] so far. But at some point in time, if we have met you 75% of the way, if the economic stimulus proposals that you are putting forward will not address the fiscal crisis, then we have all year long to debate the 25% that are remaining of your proposals.”

On December 31st, Schwarzenegger’s staff introduced his own budget proposal that only further showed his contempt for the state’s fiscal health. His education plan includes no teacher salary increases, eliminates a program that gives subsidies to low-performing schools, and cuts five days out of the academic school year. Arnold would also slash mental health funding – replacing it with Proposition 63 money (although the voters in 2004 explicitly approved it as supplemental to existing programs.) What’s most offensive, however, is he wants the state to just borrow another $4.7 billion from Wall Street – in the hopes that the state can afford to pay it back in 2011. As Speaker Bass noted, “if we borrowed $4 billion, we would pay back hundreds of millions in interest.”

Unlike his Republican counterparts in the legislature, Arnold will support tax increases – but the regressive types like expanding the sales tax. And permanently reducing the tax credit that family members receive for their child or elder dependents. Nowhere did his proposal include an obvious solution: restoring the upper-income tax bracket to the level that Republican Governors Pete Wilson and Ronald Reagan agreed to when budget times were tough. Schwarzenegger would rather the state borrow more money and get even further and further into debt than ask the rich to sacrifice just a little bit – while the poor, the disabled, the elderly and the children continue to make do every year with less.

Schwarzenegger didn’t release the budget plan himself. He’s still on vacation in Idaho, leaving his staff in Sacramento to distribute it instead. But you didn’t hear the press accuse Arnold for being callous, as the state teeters dangerously close to insolvency. Last November, the Chronicle went out of its way to criticize Karen Bass because she “leaves town” during the “budget mess.” Bass wasn’t hitting the ski slopes of Idaho like Arnold; at that time, she was participating at a policy conference on mental health.

Another time, Bass went to Washington DC – as she met with the Obama transition team about a bailout package for California. Every state is suffering, and it’s obvious why a state official would want to meet with the President-elect about negotiating some kind of financial assistance. But California doesn’t need a federal bailout because the economy’s in the tank. California needs federal assistance to save us from irresponsible Republican fiscal policies. Which is the last thing we should expect from such a liberal state.