Word from the state Legislative Analyst on Wednesday is that the budget
is scarier than we thought. But Governor-elect
Jerry Brown is determined to tame the budget beast.
Brown discussed the issues and his plans at a special meeting of
legislators and local officials. It was
clear that the once and future Governor grasps the enormity of the problem, as
he outlined the most important themes:
- The last three annual budgets were passed with
dubious solutions that were predominately one-time in nature, often
with borrowed resources. - More than 70 percent of the General Fund budget
is managed by schools and counties.
This isn’t a Sacramento problem; it is everyone’s problem. - Higher education and the prison system are the
primary activities managed by the state. - The revenue system that supports state spending relies
on the income tax, in particular on upper income people. - Recovery will take time. There are more threats ahead, and there
are no magic elixirs.
So what
course should the Governor and lawmakers take to get the state out of this mess?
It
should be clear to the newly minted lawmakers – especially those who came from
local government – that the problem cannot be solved with arithmetic
alone. Now is the time to examine
constitutional – and fundamental – responsibilities and make changes that allow
public officials to focus on the highest priorities and get the most done with
the available resources.
Forget
the spin; voters in November gave clear direction to elected leaders: Focus on results and accountability – in
schools, in criminal justice, in workforce development, and in the safety net.
Over
the last two years, California Forward developed and advocated for new budget
system that would enable leaders to make those tough choices. Some progress is
being made, mostly by individual lawmakers who realize that hope is not a
revenue source. California Forward has also
advocated for empowering community-level government to pursue state goals, and
we have rolled up our sleeves to develop detailed proposals.
Now
is the time to get real about the changes that will not only close the chronic
budget gap but address the acute distrust that Californians have for their
government.
As
the Governor-to-be suggested Wednesday, it will take a multiyear workout
plan. Not a put-off plan – we will all
see through that – but a plan that stops the bleeding and makes government work
again. The education and the economy
will then improve, and tax revenue will recover because Californians are
recovering.
So,
if the new Governor and Legislature wanted to put together a multiyear workout
plan – infused with California Forward’s principles for fixing the state-they
would do the following:
- Adopt a three year work plan, and set a goal for
fiscal balance
The multi-year spending plan would balance revenues
and expenditures by June 30, 2014. This
time frame is enough to make meaningful changes in California’s approach toward
education, health and human services, and criminal justice. The plan could include:
–
A one-time suspension of the constitutional requirement to
balance the budget every June 30.
Requiring balance is naturally a good fiscal practice, but lawmakers
have dug such a deep hole that we have to be honest about how long it will take
to climb out of it. A constitutional
amendment already on the 2012 ballot, if enacted, would prevent overspending in
the future (taking shovels away from lawmakers) and build up the reserves.
–
Over the three years, policymakers should systematically
review every state-run program, benchmark costs and performance against peer
states, and strive to be at 80 percent of peer proficiency by the end of the
workout plan. This work should be
disciplined by milestones for making changes and honestly scoring savings
needed to reach balance by June 30, 2014.
–
The Governor, working with the Treasurer and Controller,
should develop a cash-flow plan for the three-year period. These constitutional officers – working with
lenders – should use their authority and standing to make sure the work out plan
is fiscally sound and that the state is making adequate progress.
- Restructure state and local program
responsibilities in education, criminal justice, and health and human
services
–
Over the next 24 months, the state should restructure the
operation of state-funded, community-run programs. Begin with health, social services, and
criminal justice programs.
–
The statewide interest should be expressed in terms of
outcome goals, and the state should work with community governments to achieve
those goals. Local governments should
have discretion over how to use resources to best achieve outcomes, and in
exchange will be held accountable for results.
–
Policymakers must fully engage the public in crafting and
implementing these solutions – balancing the involvement and influence of
capitol-based lobbyists.
- Establish a budgeting process that prevents
lawmakers from spending money the government does not have, and makes sure
that available resources are spent as well as possible.
–
Enact SB 14 (Wolk) and SB 15 (DeSaulnier) that would put in
place a process that focuses on results over the long-term.
–
Enact a PayGo system that would require lawmakers and
initiative proponents to pay for their policy decisions. Lawmakers should represent the public will
when spending more money or cutting taxes – but they should be required to pay
for those choices when they make them.
–
Enact a means to capture spikes in revenue, and use those
funds to build the reserve and pay off debt (as would be required by ACA 4, if
approved by voters).
Step 1: Stop the bleeding.
Step 2: Make government work
again.
Step 3: Recovery happens.
LINKS
Governor-Elect Jerry Brown Budget Brief