In a disturbing development, California Governor Arnold Schwarzenegger sent a letter today to U.S. Treasury Secretary Henry Paulson saying the state may need to borrow $7 billion from the federal government to pay its bills. This indicates just how vital it is for Texas lawmakers to keep a lid on spending.

While California’s own policies did not cause the credit crisis (though federal policies involving Freddie Mac and Fannie Mae are major causes), the state is in such a vulnerable position largely because it spends nearly twice as much per capita as Texas.

Due to Hurricane Ike and the national slowdown, Texas is unlikely to have the $15 billion surplus that was projected, but the surplus will still be substantial. However, if that money is committed to new spending projects, experience shows just how difficult it will be to cut that spending when revenue tails off.

Fortunately, Texas already has billions socked away in its rainy day fund, so lawmakers should return most of the surplus by buying down property taxes. Lowering the tax burden will enable Texas to continue growing at a faster pace than California and nearly all other states, thereby preserving jobs and ultimately government revenues.

It is sad to see California facing such a calamitous situation. For years liberals have ridiculed Texas for being at the bottom of all states in per capita spending. Now it should be apparent even to them that prudence and restraint in government spending lays a strong foundation that enables a state to survive when times are tough.

For the L.A. Times article on California’s situation, see:,0,5726760.story