In February, the state Legislature--after months of debate--agreed to a budget that was projected to erase a $41.6 billion shortfall and provide for a $2.1 billion reserve as of June 30, 2010. However, the figures that budget was based upon used numbers through November 2008.
But Governor Schwarzenegger returned to Congress last week with the news that California will face a budget gap of $15.4 billion with the latest version of the budget. When the Legislature passed a state budget in February, the most current data was not available.
The $15.4 billion figure relied on voters approving the initiatives proposed in the May 19 special election, which would have added $5.8 billion to the state's general fund.
Because the initiatives failed, the budget gap is actually closer to $23 billion.
Regardless of the outcome of the May 19 election, the governor proposed that the Legislature approve the sale of state assets, including the Del Mar Fairgrounds, Cal Expo, San Quentin State Prison, Cow Palace, Orange County Fairgrounds, Ventura County Fair Grounds and the Los Angeles Coliseum.
Selling these properties, the governor says, will generate more than $1 billion for the state--a profit that will make a small dent in the $23 billion gap.
The governor also proposed reducing the state's work force by 5,000 and taking steps toward making government more efficient--reorganizing, eliminating and consolidating state agencies.
Clearly the state needs to raise money and get out of the hole. But selling off sources of revenue--the Fairgrounds generates $400 million annually for the state and region--is not a wise move.
Decreasing the state's workforce is not an irreversible decision. Nor is taking measures to make the state's government run more efficiently, a move that probably should never be reversed. But, selling an asset such as the Del Mar Fairgrounds would bring irreversible consequences on the state and greatly impact the county and our communities.
Any good investor knows that with property values hitting rock bottom, now is not the time to give up valuable assets for short-term gain.