Needed: A Plan for Predictability

I was in Washington DC recently and spoke with a couple of venture capitalists who work in California. Each reported seeing other venture capital firms move employees out of our state.

The problem, they said, was that California had become too unpredictable.

It isn’t just that schools are being cut; it’s that no one knows how much the schools are being cut. It’s not that taxes get raised-it’s that no one knows exactly how or when it will happen. It’s OK and understandable, the venture capitalists said, if California raises taxes or cuts spending. But such actions need to be part of a credible plan that makes the state’s immediate budget future more predictable for people deciding whether to invest here.

Jerry Brown may recoil at the very notion of predictability, with the future being unknowable and all that. Meg Whitman is too untested for any plan to hold much power. But what California and its economy desperately need is a detailed plan from its next governor on budget matters – and a firm pledge to stick to that plan.

California’s budget and governance problems are taking an outsized toll on the state in large part because they have created so much uncertainty – the kind of uncertainty that makes people and businesses reluctant to plan and invest.

People simply don’t know: are there going to be enough teachers’ in my kids school? If I stay in California, will there be an opportunity for my kids’ to attend a public university? How much will the taxes I pay, or the fees my business pays, go up?

Brown, in particular, could give himself a big leg up – as a governor, if not as a candidate – by being very specific in a plan, even about taxes. Simply rolling out a credible plan – which should show upper and lower limits on budget cuts and tax increases – would give business and individuals a boost by giving them far more certainty than they have now about what they might be facing. That’s what leadership is all about.