PRESTOPUNDIT -- A Good Blog at a Great Price. Guaranteed.

Whatever happened to a spending limit?

Gov. Arnold Schwarzenegger promised he would clean house in the state government, but Thursday he got his clock cleaned on the budget deal he worked out with Democratic leaders in the Legislature. There are two major parts to the deal .. The second part would .. "become operative," in the preliminary wording of the constitutional amendment being considered, only if the bond is passed by voters. This part mandates a balanced budget: "This measure would prohibit the Legislature from sending to the governor for consideration, and the governor from signing into law, a budget bill for the 2004-05 fiscal year or any subsequent fiscal year, that ... exceeds the estimate of General Fund revenues ... for that fiscal year."

But this does not restrain spending by even $1. "The litmus test is this," Assemblyman John Campbell, R-Irvine and a member of the Assembly budget committee, told us: "Had this been in effect in 1998, would this have prevented [Gov. Gray] Davis and his cronies from doing what they did? No." In those years, temporary increases in revenue from the dot-com boom led to a wild spending spree that could not be sustained during the bust years ...

"It's really a bunch of nothing," Sen. Tom McClintock, R-Simi Valley, told us. "There's no limit on spending. I don't see how this does anything as a practical matter to produce a balanced budget."

This version of a balanced budget allows too much latitude for increased spending in good years and does not strike at the core of the state's budget problems. As Mr. Campbell pointed out, the talk for several months was that a bond measure would be advanced only if it was tied to a hard spending limit to make sure a $38 billion budget deficit fiasco doesn't occur again.

All eyes are on Gov. Schwarzenegger in this regard: Will he cut deals that start to address the core problems, or deals that only swipe at the margins? This deal, as proposed, is one that brushes the margins.

The balanced budget amendment also includes a "Budget Stabilization Account" beginning in 2006, a sort of reserve fund, with half of the fund yearly going toward retiring the debt from this measure. But the account could be raided with a two-thirds vote of the Legislature (or even just a majority, according to one version of the legislation being advanced late yesterday). Sen. McClintock pointed out that current law already requires a "prudent" budget reserve that can be used with a two-thirds vote of the Legislature. So the new account isn't substantially different from the old reserve, and even could be weaker.

Basically, this isn't a spending limitation or even much of a balanced-budget requirement, but a way to get the $15 billion bond on the ballot. It imposes no real discipline on the Legislature .. It also would set a bad example by showing that the Legislature can float deficit bonds at will, with no spending limit in place.

It looks like Schwarzenegger got rolled.