(California now has a budget, and faces the consequences: There will be Draconian cuts in state services and irreparable holes in the social safety net – many will fall through, and be unable to get back up – and of course the counties are keen to sue the Capital for taking monies from them. The worst cut of all is the unkindest one of being condemned to repeat history, with recurring budget crises and fiscal shortfalls built into the band-aid solutions of the new budget.

For those of you among the many who could not bear reading the convoluted and frequently incoherent accounts of the evolution of the budget buffoonery in the Sacramento, the Financial Times whipped off a smart summation of the horrors.

The text below is from the pink paper’s Lex Column, a smart and often witty analysis of all matters financial, which appeared on July 22 when the budget first congealed. Nothing bad has changed. Read it and sob into your Obamabeer. – Ed.)

Dr Schwarzenegger recommended a strict regimen for the patient but, this being California; cosmetic surgery in the end was more expedient.

A little liposuction here, a nip and a tuck there and, from the proper angle, the budget looks marvelous again. Zoom in, though, and it is clear that the state’s cash flow problems could resurface… Even worse, a golden opportunity to solve structural problems was wasted.

Some real cuts are being made by reduced welfare spending, continued furloughs of state employees and prisoner releases. But cuts to education, the biggest budget item, must largely be repaid in the future years, forming a $10bn liability. The $2bn it is borrowing from cash-strapped local governments must also be repaid. Perhaps the most egregious fudge moves the last payday of the fiscal  year into the next for state employees, creating “savings” of $1.2bn that will have to be cut from the 2010-11 budget.

Meanwhile, borrowing needs are unclear and IOU issuance may continue for weeks. One positive is the lack of new taxes. Californians are already among the most heavily taxed Americans and depend too much on wealthy residents with volatile fortunes. The richest 1 per cent of Californians paid nearly half of state income taxes in 2007.

Even if robust economic recovery bolsters state revenues the way the housing boom did after the technology bust, ingredients for problems remain. Voters could have been mobilized to reverse binding referendums that limit property taxes, set aside minimum funding for education and require a legislative supermajority to pass a budget, but the moment has now passed. Until the next crisis, that is.