How to Free the Budget Hostages

David Crane
Lecturer and Research Scholar at Stanford University and President of Govern for California

Governor Newsom’s Revised Budget proposes cuts to programs in the event more federal COVID funds are not provided. We propose a solution that would free the 10 programs below and improve the state’s structural deficit without jeopardizing the financial security of retired state employees. The first eight programs would be funded by savings from substituting Oregon’s or Colorado’s programs for providing […]

Read more

More Budget Do’s and Don’ts

David Crane
Lecturer and Research Scholar at Stanford University and President of Govern for California

Having served in state government during two difficult budget periods (2003-4 and 2009-10) and on the Volcker-Ravitch State Budget Crisis Task Force in 2012, I have participated in and studied many bad and good state budget practices. Some takeaways: Maintain Perspective. As Governor Newsom pointed out last week, the state’s expected shortfall this time is […]

Read more

California’s Request For Federal Funds

David Crane
Lecturer and Research Scholar at Stanford University and President of Govern for California

About Governor Newsom’s request for $14 billion of additional federal support– Even when added to the $8 billion already provided to California by the CARES Act, the total ($22 billion) would be less than half the $48 billion proposed for California under the HEROES Act passed by the US House of Representatives last week. But, […]

Read more

California Isn’t Colorado

David Crane
Lecturer and Research Scholar at Stanford University and President of Govern for California

Recently California joined with Colorado in asking the federal government for more COVID-related financial support for states but the two states have very different needs for the money. California spends $120 per resident — nearly $5 billion per year — on insurance subsidies for retired state employees (known as “OPEB”) while Colorado spends only $5 […]

Read more

Budget Do’s and Don’t’s

David Crane
Lecturer and Research Scholar at Stanford University and President of Govern for California

Dear Legislators, Soon you will be addressing the budget. Three suggestions: Permit no cuts, layoffs or borrowings before retirement spending is trimmed. School districts, UC, CSU, community colleges and the state are diverting $25 billion per year to retirement spending that should be reduced before services are cut, employees are laid off, or funds borrowed. […]

Read more

School Finances

David Crane
Lecturer and Research Scholar at Stanford University and President of Govern for California

School budgets will be a big issue facing legislators upon their return to Sacramento.  In 2012, voters passed a ballot measure entitled “Temporary Taxes to Fund Education” that, when combined with a rising stock market, sharply boosted school funding (“Proposition 98 Funding”): But even that sharp increase in revenue could not keep pace with the […]

Read more

For Whom the Budget Bell Tolls

David Crane
Lecturer and Research Scholar at Stanford University and President of Govern for California

The California Department of Finance is in the process of preparing the May Revised Budget. A difficult process every year because of the state’s dependence on unpredictable capital gains taxes, this year DOF must also contend with a COVID-related revenue reduction. Absent reform, that bodes ill for discretionary programs that, even in good times, fare relatively poorly. See below […]

Read more

LA Should Reform Before Furloughing

David Crane
Lecturer and Research Scholar at Stanford University and President of Govern for California

Sunday, Los Angeles Mayor Eric Garcetti warned of employee furloughs to help meet an anticipated $600 million revenue shortfall. Before LA furloughs workers providing important services, the city should save up to $300 million per year by emulating the City of Glendale in reforming and means-testing a subsidy currently provided to retired employees.  LA provides […]

Read more

Pension Math

David Crane
Lecturer and Research Scholar at Stanford University and President of Govern for California

Lately we are often asked about the impact on pension costs from a stock market decline. Our answer might surprise you. On December 31, 1999, the Dow Jones Industrial Average closed at 11,497. That fiscal year, the state spent $1.3 billion on pensions. 20 years later, the DJIA closed at 28,462. That fiscal year, the […]

Read more

COVID 19 Will End—This Problem Will Not

David Crane
Lecturer and Research Scholar at Stanford University and President of Govern for California

In addition to its regular pension spending, the State of California is providing an extra $12 billion over a four-year period to boost the assets of the state’s two pension funds in an effort to reduce future pension spending. But the impact will be negligible. That’s because pension liabilities will grow >10x as much over […]

Read more