The failure of our lawmakers to reach a reasonable compromise on the state budget dangerously erodes the confidence Californians now have in their government.
That palpable public mistrust was an overarching concern when California Forward fashioned a five-part reform package for a new budget system that, if adopted, would result in smarter fiscal decisions at the state Capitol over the long-term.
The reform proposals – titled It’s about Trust: A State Budget Process that Restores Public Confidence and just released – is based on the best management practices from state and local governments around the nation and on conversations with thousands of Californians.
Budget reforms cannot fill the estimated two-year $42 billion budget gap — that requires the difficult arithmetic of cutting programs, raising taxes and borrowing money. But the reforms are a way for Democrats and Republicans to send a clear message to their constitutiencies: revise the budget-making process so that the next fiscal crisis is managable. Because right now, if we’ve learned anything, it’s that our current budget-making process is part of the problem.
It’s important to remember that even before the stock market peaked, state officials were hounded by a budget gap that they could not resolve. Before the housing bubble burst, government in California struggled to serve a growing and aging population. And before the global financial meltdown, the Golden State had a national reputation for smoke and mirror budgets.
California Forward is now working with members of the Legislature as well as regional and community leaders to develop understanding and agreement on the following key budget reforms:
1. Look to the future. A multiyear budgeting system would focus fiscal choices on long-term implications and discourage short-term solutions that push liabilities and difficult decisions into the future.
2. Focus on priorities and outcomes. A results-based process for making budget decisions would enable leaders to assess whether to increase, continue, or alter policies and programs, rather than letting budgets grow on auto-pilot, regardless of whether services are, in fact, having a positive impact on the lives of Californians.
3. Create a culture of accountability. The Legislature does not dedicate adequate time to reviewing whether programs are achieving their goals and what must change for them to improve. Budget decisions should be guided by what programs are trying to achieve and what must change to achieve those goals. A system of evaluating programs based on progress would strategically reduce spending while preserving programs that provide the greatest value.
4. Pay our own way. Create a process so that any policy change that increases costs must also contain a provision that identifies where the money will come from, whether from new revenue or expenditure reductions elsewhere. Changing the state’s spending obligations so that they do not grow faster than revenue would safeguard long-term fiscal planning so programs can be fully implemented and their costs accounted for in future budgets.
5. Create stability. A new budget process would identify nonrecurring revenue and hold it for times when economic downturns reduce tax revenue. Since 1990, revenues have fluctuated wildly – from a decrease of 5 percent to an increase of 23 percent, which makes it difficult for state leaders to effectively manage resources.
We hope to hear feedback from those who routinely read Fox & Hounds Daily about these reforms, especially now as we present them to the Legislature.