A Window Into State spending

This article was co-authored by Pedro Morillas

Readers of this column may do a double take to see CALPIRG and the
Howard Jarvis Taxpayers Association advocating an identical
position. But when it comes to government transparency, we are
surely reading off the same sheet of music.

There is little debate that confidence in California government is
at a historic low. But even though a budget resolution has been
reached, a big challenge for Sacramento in the months ahead will be
to restore the trust that has been squandered.

Amid the dark fiscal news, one ray of hope coming from the budget
fiasco was the governor’s executive order to put government
contracts online and make them searchable by the public. Budget
transparency, while not a new idea, can be revolutionary. Public
oversight of the state’s purse is a cornerstone of democratic
government and provides an added incentive for those in government
to spend tax dollars as efficiently as possible. Transparency is an
important part of any real budget reform.

Tax Commission Still Requires Vigilance

The California Commission for the 21st Century Economy was created
by the Governor and Legislature in October of 2008. Its main
purpose, at least that which was represented to the public, was to
deal with the real issue of California’s revenue volatility. By now,
almost everyone knows that California is overly reliant on the
income tax to run the state and, because of its steep progressivity,
we are even more reliant on a handful of the “evil rich” to pay the
lion’s share of that tax. (Of course, notwithstanding this reliance,
our elected leadership still goes out of its way to drive these rich
folks out of California to places where profit and success aren’t
dirty words.)

Days after the Commission was created, this columnist wrote a piece
ringing the alarm bells. At the time, none of the commission members
had been selected but the real concern was that all twelve of the
Commission members were to be selected by individuals — the
Governor and Legislative leaders — who had just actively pushed for
massive tax increases. Without quality taxpayer representation, the
commission would have zero credibility.

Aloha, Senator Steinberg!

Senator Steinberg, I realize that you are not inclined to listen to
the concerns of ordinary taxpayers so you will probably ignore this
message — hmmm, perhaps if we called ourselves a taxpayers “union”
that would get your attention. Also, if you do read this, it will
probably not be for several weeks as, immediately after the
California Senate voted on the budget amendments, you jetted off to
Hawaii.

In the political arena, citizens have come to expect a certain
amount of dissembling from their elected officials. But even
expecting a “normal” level of nonsense from politicians, there are
certain moments when we hear something so profoundly inane from
elected representatives that our jaws drop.

On Thursday, you addressed reporters in the hallway of the Capitol
to discuss the schedule of taking the vote on the negotiated budget
amendments. One of your observations, unprompted by any reporter’s
question, was as follows:

Defeat of Prop. 1A is a Win for Business

The phrase “feeding the alligators” is a metaphor about the dangers
of appeasement. One may be able to buy temporary peace by feeding a
threatening alligator, but the problem is that the alligator will,
sooner or later, get hungry again. And because it was previously
fed, it is now larger and more dangerous.

Regrettably, the California business community has often chosen to
feed the ever-growing alligator of government when it comes to
important political battles. Thirty-one years ago, California
business interests were united in their opposition to Proposition 13
due to fear that if homeowners received tax relief, the Legislature
would try to make up the difference by raising levies on them. For
short term protection for themselves, business was willing to feed
average taxpayers and homeowners to the alligator.

Disconnect and the Tea Parties

In normal times, political institutions generally reflect the
members they serve. In theory, a legislative body reflects the
combined wisdom and experience of its elected representatives. And
those representatives, again in theory, reflect the views of the
citizens who elected them. The same can be said of virtually any
organization, whether a labor union or a political party.

But every now and then, those in the leadership positions of
political institutions, for whatever reason, become disconnected
with the very people they purport to represent.

Perhaps the clearest example of this occurred in 1978 with
Proposition 13. It is hard to fathom the depth and breadth of the
stated opposition to the measure. Virtually every organization in
California had taken an opposing position. Virtually every editorial
board, all business organizations (including the California Chamber
and the California Taxpayers Association), all labor organizations
and, of course, the entire academic brain trust from our world
renowned universities campaigned vigorously for the defeat of
Proposition 13.

An End to Padded Water Bills?

When you buy a pair of shoes, you assume that the price you pay
includes the store’s cost for the footwear and a profit margin on
top of that. However, when you pay your water bill to a government
agency, you do not expect a profit margin to be built into the
price. But if you live in Los Angeles, that would be wrong.

The City of Los Angeles has a long-standing practice of skimming
money off the top of the customers’ water bills.

The Howard Jarvis Taxpayers Association has just concluded a legal
case that may put an end to this practice once and for all. In
encouraging news for Los Angeles water customers, on March 25th the
Los Angeles Superior Court issued a tentative ruling in LA vs. All
Persons finding the City’s practice of padding water bills to pay
for unrelated City expenses to be unconstitutional.

The Ballot Argument That Wasn’t

All those who favor putting the breaks on Sacramento’s ability to overspend, please raise your hands.

I see that is most of you. Those against? I see a couple of public employee union bosses over in the corner are opposed.

Well those Sacramento politicians who made a "deal" last month to resolve the budget process with a tax increase that will cost the typical California family over $1,100, are offering another deal they hope will appeal to the majority of you.

What they are offering is Proposition 1A on the May 19 Special Election ballot. 1A is being promoted as a spending limit that will compel those under the Capitol dome to behave responsibly.

If taxpayers are wary of any offer of reform coming from those who have behaved so irresponsibly that they have run up a $42 billion deficit, their suspicions are justified.

Optics – Better No Budget than a Bad Budget

Rumors abound that the Big Five have agreed in concept to a budget solution. As the details of the plan are presented to the legislators who will have to vote on it, taxpayers hope that those who call themselves fiscal conservatives remember a few basic principles.

First, it is far better to have no budget solution at all than to acquiesce to a bad budget solution; i.e., one that adds to California’s already crushing tax burden. This is not to advocate for continued gridlock. This is to advocate for the economic survival of the state.

We are cognizant of the substantial political pressure from many corners to get a deal – any deal – no matter what the merits. And the fear has been expressed that the failure to address quickly the severe cash flow problem will hurt Republicans because they are more likely to be portrayed by the MSM as the obstructionists. In short, the “optics” of some tragedy – for example, the death of a recipient of in-home health services – is more likely to hurt those who hold the line on taxes.

Shared Sacrifice in the Golden State

A couple of weeks ago, the governor and legislative leaders took
time out from the self-proclaimed budget crisis — the governor has
called it “financial Armageddon” — to journey across the continent
to participate in the inaugural festivities. Although we have our
doubts about President Obama — starting with the pork laden
stimulus package — there were a couple of nuggets of wisdom in his
inaugural address.

To begin with, Obama praised the selflessness of workers who, to
help us get through dark times, “would rather cut their hours than
see a friend lose their job.” This, of course, is anathema to
Assembly Speaker Karen Bass and Senate Pro Tem Daryl Steinberg.
While supporting higher taxes for all, they have been staunchly
resisting the governor’s proposal that state workers take an unpaid
two-day furlough each month to help us through our cash flow
problem. This, in spite of the fact that the Census Bureau lists
California public employees as the highest paid in the nation.

What Budget Crisis?

Humans have been around for tens of thousands of years. And yet, as recently as a thousand years ago, there was a broad consensus — even among the most highly educated — that the world was flat. The problem with "consensus" is that it becomes groupthink. If an idea has no challengers, it becomes difficult to disprove and those who speak against the established orthodoxy are always marginalized.

There seems to be a consensus in California that we have a "Budget Crisis." But if "crisis" is defined as a situation where impending disaster is a probable outcome — think Cuban Missile Crisis – then the notion that California is in the midst of crisis needs to be challenged.