This year, we have heard Republicans and Democrats in the Legislature talk about our budget system, but the time for talk is over – it is time for everyone to compromise and get this done.
Republicans must step out of their ideological corner on the right and Democrats must step out of their corner on the left. It is time for us to meet in the middle and compromise so we can move on with other vital business for all Californians.
That’s why yesterday I announced a compromise budget proposal that addresses our $15.2 billion deficit, makes additional spending cuts, increases revenues, and most importantly reforms our broken budget system.
There are elements of this proposal that both parties in the Legislature must compromise on. Democrats must compromise on spending cuts and limits on future spending in exchange for a budget that includes a revenue increase to meet their priorities. Republicans must compromise to allow a temporary sales tax increase that decreases after three years in exchange for a long term fix that solves our systemic budget problems. I have compromised too.
None of us was sent to Sacramento to hunker down in our partisan, ideological corners. We were sent here by Californians who want us to find common ground and get results that move California forward. My compromise budget does just that.
It includes an additional $2 billion in spending cuts above what the conference committee agreed to. It sets up one of the strongest rainy-day funds in the nation that would require the state to put money aside in good years to stabilize revenues in tough years – up to 12.5 percent of our General Fund, which could only be drawn upon in the event of a deficit and a 2/3rds vote of the Legislature.
It gives future governors the power to make mid-year spending cuts when we see a deficit coming instead of just sitting on our hands and watching the budget go off the cliff. Under my compromise proposal, we could suspend cost of living adjustments for up to 120 days and cut state operations budgets by up to 7 percent while the Legislature works to come up with solutions. The ability to adjust spending mid-year when the economy slows down is essential to responsible budgeting.
These are groundbreaking reforms that would end our feast-or-famine budgeting and help restore the public’s faith in state government. If my reforms were in place today, our budget problem would be $13 billion smaller. Also, if this Rainy-Day Fund had been in place, we would have had more than $20 billion to spend on one-time investments such as infrastructure instead of ongoing programs – which is another way to restrain unrealistic spending in Sacramento.
My compromise proposal also includes an economic stimulus package to put people back to work and help revive our economy.
Everyone knows that I hate tax increases. And this proposal includes a temporary, 1-cent increase in the state sales tax. But let me be clear: the sales tax would go up 1 cent for three years; then it would come back down; and then it would decrease permanently by 1/4 of a cent, so that it would ultimately be a tax decrease.
In the Legislature, Republicans are offering a plan to increase borrowing and Democrats are offering a plan for $9 billion in higher taxes.
This budget I have proposed does not borrow or steal money from voter-approved local government funds. That type of borrowing would increase our debt and make it even harder to be fiscally responsible next year, or the year after that.
My plan does not simply kick the can down the road for someone else to deal with. It is a fiscally responsible compromise with reforms that fix our system.
The ideas that are being put forth by both parties in the Legislature do not leave room for common ground and are not fiscally responsible. We can do better than that. The compromise budget I have proposed puts our state on the road to fiscal sanity and will give California a budget system that works.