Like an alcoholic facedown in the gutter, California’s fiscal system may have finally hit rock bottom after last week’s special election defeat. Lawmakers now face two choices — confront our broken system once and for all or continue politics as usual until there is forced intervention in the form of statewide default or bankruptcy.
As a leading political strategist and Director of the Jesse M. Unruh Institute of Politics at the University of Southern California, Dan Schnur perfectly summarized in a recent op-ed in the Los Angeles Times, conservatives and liberals began to “construct lessons that precisely fit their ideology and worldview” as soon as the polls closed. The right declared a victory for anti-tax crusaders and the left called the election a backlash against budget cuts. Both sides continued to cling to the same arguments that delayed the enactment of a state budget last year.
The next steps taken by the Governor and the Legislature are critical and will set the stage for long-term fiscal reform or a crisis in perpetuity. Last week, the L.A. Area Chamber released our advocacy agenda to Recover, Reform and Rebuild California, which focus on near and long-term efforts to restore the fiscal health of our state.
In the short term, because of a pending cash crisis, the process will begin with major cuts in services that will impact every business and every family in California. The Governor presented his first proposal last week and the cuts were front page stories in all state and national news media. The governor and the legislature have four to six weeks to put the cuts in place. We urge the legislature to move quickly and to give our schools maximum flexibility in making these cuts.
For long-term budget cuts, lawmakers would be wise to establish an independent commission to evaluate all state programs and recommend long term budget reductions. The creation of performance-based budgeting and use of an outside body like the highly-successful federal military Base Realignment & Closure (BRAC) commission provide useful templates.
Every experienced observer has noted that long term budget and tax reform will be required to protect the state from the boom-and-bust budget process that led us into this crisis. The forthcoming recommendations from the Commission for 21st Century Economy’s tax reform should start that discussion.
Rebuilding California must start with securing the state’s precious lifeblood — our water supply. Implementing the Delta Vision Plan immediately will ensure the sustainability and security of the vital Sacramento-San Joaquin Delta.
California has hit the bottom and there is no time to waste in starting the rehabilitation process. We invite you to be a part of that process by joining the Chamber and more than 100 Southern California business leaders when we discuss our Recover, Reform and Rebuild agenda one-on-one with lawmakers in Sacramento on June 10-11. The future of California is on the line, and successful rehab requires everyone’s help and sacrifice.
And that’s The Business Perspective.