Yesterday, State Senate and Assembly members were sworn into office including 29 freshman members of the Legislature. Governor-elect Jerry Brown and the new Legislature are immediately faced with a 12.4 percent unemployment rate and a $26 billion budget deficit. How lawmakers will meet the challenge of making additional cuts to key programs while finding acceptable ways to generating new revenue without hurting private sector job creation is the question that they and all Californians are asking.
The road to California’s economic and budget recovery is littered with roadblocks, including a partisan chasm between legislators in Sacramento. Despite their political leanings, politicians must contend with a public that chooses spending cuts over tax hikes, and at the same time opposes most of the specific cuts that could close the gap.
There is a bright side. As Patrick McGreevy and Michael Mishak noted in the Los Angeles Times on Sunday, a new crop of moderate Democrats are set to take office. They will carry new sway under recently enacted initiatives that allow a simple-majority vote to pass a state budget, while continuing the two-thirds requirement to approve new taxes or fees. These moderates could be the new voice of centrist voters, especially those who are Independents and decline-to-state.
For the business community, this is an opportunity to help lawmakers remove the barriers that California government has placed on job creation over the years when they passed legislation that had good intent, but made business expansions painfully slow and sometimes impossible. Included should be reasonable reforms to the state’s CEQA law, fixing outdated workplace restrictions, and responsibly implementing AB 32-related regulations so that existing employers are not priced out of the market while helping to clean the environment. There are hundreds of thousands of Californians who could be working today if Governor Brown and the new legislature declared a job crisis emergency and rapidly moved projects that are waiting for permits and approvals through the process in a way that is good for both jobs and the environment.
The solution to California’s budget imbalance is new jobs from new economic activity along with an honest review of the State’s tax structure and how it must be reformed. Both require tough choices and movement from the status quo. We cannot fix the current budget deficit through spending cuts alone. Just like the federal deficit reform commission’s recommendations released last week, real reform means everyone will feel some pain – and financial responsibility – for righting the State’s fiscal ship. What we have is an emergency.
This time of the year, we regularly greet friends and associates with “Happy New Year.” I wish the same to the new California State Legislature and pledge them our engagement in passing legislation that will enable Californians to go back to work and balance our state budget with new revenue from a growing economy. Let me emphasize once again. We have a 12.4 percent statewide unemployment rate and a $26 billion budget deficit. We have an emergency.