I had a sense I was in the movie “Groundhog Day” at the Milken Institute State of the State conference in Beverly Hills yesterday. Each year it seems experts at the annual conference are discussing how California can right the ship and solve the state’s fiscal problems. Different actors but the same play over again.
The morning panel session called Time For Change: How to Reform the State’s Budget Process featured an all-star cast. Former Governor Pete Wilson shared the podium with Treasurer Bill Lockyer, Former Assembly Speaker Bob Hertzberg, State Controller John Chiang, and California Finance Director Mike Genest.
Solutions were familiar as were objections to proposed solutions. Differences were aired. There was no lightening strike solving the budget crisis. However, some interesting points were made.
Both Wilson and Lockyer seem to agree that new taxes will not be raised. From Wilson’s prospective, taxes have reached their limit and increased taxation would hamper the business climate and scare away investors and job creators.
Lockyer admitted he was probably in a minority among Democrats in believing that “additional taxes are not going to occur.” Lockyer said he favored a cap on state spending. The Treasurer pointed out that using population and inflation numbers as a guideline, school funding in recent years had not exceeded the cap. He said such a cap would have been broken only by spending on prisons and tax cuts if tax cuts are tabulated as a state expenditure.
(The state does count tax cuts as expenditures. I think it is wrong because the tax money belongs to the taxpayer and should not be counted as a pay out on the government books. That’s my pet peeve and not the way government accountants keep score.)
Hertzberg admitted that reforms to the public employee pension system are appropriate but he defended the public workers. He said he objected to what he called a war against the workers. He called the public employees the backbone of California.
Lockyer noted that the bad examples of excessive pensions were mostly on the local level. However, he admitted the current pension benefits are unsustainable. He said the health care benefits for the public sector workers were potentially a bigger problem.
Lockyer said the pension problem stems from candidates needing the support of donors to run for office, and that they are perpetual candidates, running constantly, because of term limits.
To fix the problem, Lockyer offered three choices: change term limits; approve public financing; or pick the legislature by lottery!
His point, of course, was to remove the legislators from political donors who will demand support for their agenda. With term limits, Lockyer said, officials can’t say no to the donors who helped elect them.
Then again, isn’t one of the ideas to pick the delegates to the constitutional convention to use a lottery? Maybe Bill Lockyer is on to something.