Initiative Reform is Only the First Step for the Think Long Committee

Nathan Gardels
Sr. Advisor, Berggruen Institute on Governance, Think Long Committee for California

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Governor Brown signs SB 1253 with representatives of the initiative reform coalition. The author, Nathan Gardels, is on the far left.

The passage of SB1253 by a wide bi-partisan margin in the Legislature, and its signature into law by Governor Jerry Brown, marks a milestone for California’s 100 year- old direct democracy initiative process. It is the most significant change in proposition politics in four decades.

The Ballot Initiative Transparency Act, as the measure is labeled, is also a milestone for the Think Long Committee for California since this is the first of a series of reforms outlined in our “Blueprint for California,” released in late 2011, that we will be seeking to implement in the months and years ahead. Along with initiative reform, our comprehensive agenda for structural change also includes budget reform and tax reform.

Each is integrally related to the others and key to putting California once again on a sound footing for the future.

Initiative Reform: The initiative, whereby citizens can make laws directly, is so uniquely influential in California political life that it is virtually a fourth branch of governance. Yet, over the years it has become too often captured by moneyed special interests who hide behind slogans that mask their real intent or those with a narrow cultural or ideological agenda. With scarce public review to assess the overall interests of the state before going to the general ballot, initiatives have also often produced unintended consequences, including fiscal havoc by locking in spending and locking out revenues.

Even when mistakes are discovered, there has been no possibility of amending the ballot language once a measure is qualified.

SB1253 goes a long way toward correcting these flaws. Under the new law the Legislature holds hearings months before ballots go to print, allowing lawmakers and proponents to make changes, corrections and compromises before ballots go to the voters. Initiative backers also gain the ability to correct mistakes before an initiative appears on the ballot, preventing drafting or legal errors that have led to litigation and confusion. And the law pushes the Secretary of State to feature the top funders of proposed initiatives in online ballot materials.

Under the new measure, initiative backers can withdraw a measure after petitions and signatures are submitted, but before ballots are printed, simplifying the ballot and helping to avoid unintended consequences; voters can request an email version of the voter guide, reducing costs. The time for signature gathering is also extended by a month to allow more grassroots participation.

As important as the passage of the legislation was the model of civic engagement that produced it. While the proposal originated in the Think Long Committee Final Report and was authored by Senate Pro Tem Darrell Steinberg, it was developed over the last year and a half through regular meetings of a broad coalition that included the League of Women Voters, Common Cause, NAACP, California Church IMPACT, California Business Roundtable, California Chamber of Commerce, California School Employees Association, and California Forward as well as the Think Long Committee.

Common Cause’s Kathay Feng tirelessly kept the process moving. Former Assembly Speaker and Think Long Committee member Bob Hertzberg shepherded it through the coalition and the Legislature. Former California Supreme Court Justice Ron George, also a Think Long Committee member, brought his unparalleled expertise to the table.

BUDGET REFORM: Another pillar of the Think Long blueprint is the establishment of a budget reserve to get the state through the revenue drought of hard times and manage the volatility that has afflicted the state’s finances for decades. We also proposed multi-year budgeting. Next month, voters will have the chance to vote on Proposition 2, the so-called Rainy Day Fund. Key aspects of this proposal include:

  • The director of finance will estimate general fund revenues and expenditures for three years;
  • The state will deposit 1.5% of general fund revenues into the Rainy Day Fund until it reaches 10% of the state’s operating budget. Capital-gains revenue would be set aside automatically when it tops 8% of general fund revenue, and that money would go toward schools and community colleges during down years.

In short, Prop. 2 will capture one-time spikes in revenue to use for paying down the state’s wall of debt while creating a cushion to avoid budget cuts in an economic downturn.

The political action arm of the Think Long Committee will support the Prop. 2 campaign with a significant contribution.

While the Rainy Day Fund, as Joel Fox has said in these pages, is an “insurance policy” in the event of an economic stroke, it does not address the underlying cause of the state’s perennial fiscal woes. To do that we need a new tax system that reflects California’s 21st Century economy.

TAX REFORM: Ultimately, the only way to reconcile budget stability with the necessary revenue to fund education and infrastructure for the future is to modernize California’s tax system.

The Think Long proposal, which we will pursue over the next four years as Governor Brown’s temporary tax increase sunsets, would generate $20 billion annually for higher education, local governments and infrastructure.

The essence of the plan is to broaden the tax base while maintaining California’s signature progressive tax rate structure. Income taxes, upon which the state is over-dependent, would be reduced across the board, as would the sales tax on goods.

A new, low tax on services (exempting health care and education) would be implemented to reflect the state’s modern economy. California has a $2 trillion economy, half of it in services. If you buy a donut in a coffee shop, you pay a sales tax. But if you buy a legal, accounting or financial service, it is not taxed at all. That needs to change.

To stimulate job creation at decent wages, consideration should also be given to reducing corporate taxes in tandem with raising the minimum wage.

It simply makes no sense to continue with a tax system crafted in another era when the economic structure of the state has been so fundamentally transformed.

These are all ideas whose time has come. Taken together these three pillars of reform on initiatives, budget and taxes will restore common sense and good governance to the Golden State. The Think Long Committee is committed to “acting long” over the coming years to see these reforms through to their realization.

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