More trouble in California?

Bloomberg is up with a story of how the California budget is once again in the hole to the tune of $1.1 Billion.

“California Governor Arnold Schwarzenegger will know within a month whether a $1.1 billion drop in revenue collections is part of a growing budget shortfall or an isolated event, his budget spokesman said.

Revenue in the three months ended Sept. 30 was 5.3 percent less than assumed in the $85 billion annual budget, state controller John Chiang reported yesterday. Income tax receipts led the gap, as unemployment reached 12.2 percent in August.”

This development is going to turn the race for Governor back in an interesting direction and could be a good one for Republicans….maybe.

The Democratic nominee for Governor, most likely former Governor Moonbeam Brown, will have to explain how he will deal with the sinking ship SS California which is taking on more and more water and a middle class electorate just hanging on in the middle of recession. Raise taxes, more cuts in education, which will annoy the CTA, more cuts to state employees, which will annoy the state workers unions including the powerful state prison guard union, or what.

Over on the Republican side, the nominee for Governor is going to face the same economic facts, but will not have to pander to the various state unions in order to deal with the problem. There is an opportunity to be bold on the R side to deal with the budget problem, but how bold will the R nominee be and will the electorate beleive promises made after the tenure of the “Girlyman Governator” who famously said during the recall election “We have a spending problem, not a revenue problem”, and failed to deliver on anything.

California once again is turning into ground zero for a debate between the views of both parties over the role of government, taxation, government spending on services, and how to balance competing interests and demands. How this debate plays out might just be a harbinger of future races and for that matter the 2012 Presidential race.