Nov 04 2009
What kind of budget reforms does California need?
Part of the problem with the California State Legislature is that they don’t have effective budgeting experience. If you want to dispute this claim, think about what the Legislature does with budgeting. They wait until the state is in crisis to do anything, and even then they don’t always work to effectively stop the crisis, they wait as long as they can and longer to act. The Legislature spends windfall monies on spending increases and tax cuts, rather than putting it aside for a rainy day. The projections used to build the budget only look at that year, and the next year, without taking into account long term issues and economic forecasts. They use shoddy projections so that they can claim the budget is balanced. None of these things show effective budgeting experience.
The backlash against the Legislature is, in part, because they are so ineffective with budgeting. Instead of doing something that would be good, like creating fiscal reforms, the Legislature caves to public employee unions, special interests and self-interest. Instead of stepping up to the plate and making difficult decisions, they use spending and accounting tricks to push the bigger structural deficit off to someone else’s term. This is one reason why the Legislature is so disliked by the California public.
Does there need to be budget reform in California? Yes. Does it need to be done through a constitutional convention? No.
Instead of having outside reforms, the Legislature is capable of creating inside reforms. It would take a lot of guts - which the current legislators seem to lack - because any budget reform will hurt the interests of the CTA (teacher’s union) and the CCPOA (correctional officer’s union).
Any budget reform must eliminate Prop. 98 and reshape education spending - which takes more than 50% of the General Fund. The CTA lobbied hard for Prop. 98, claiming it would more than adequately fund public education. years later, the CTA is claiming that the state isn’t funding public education at a high enough level. This is a distinct retreat from their position with Prop. 98. If this is true, why wouldn’t they want to see Prop. 98 eliminated and education spending redone to be more effective for the teachers and students they claim to represent? Simply because the elimination of Prop. 98 would decrease their power. The CTA will be hurt by any education spending reform. Yet, with education taking up more than 50% of the General Fund, it is necessary to reform education spending if there will ever be a budget reform.
The CCPOA is the next biggest spending - with 10% of the budget being spent on corrections. Any budget reform is going to impact this because the reforms will take power away from the CCPOA and give it back to the lawmakers and the state - which is where it is supposed to be because the state is the employer of the correctional officers, not the CCPOA.
These changes will hurt the Democrats. But the Republicans need to take some punches too.
Business property taxes need to be uncoupled from residential property taxes in Prop. 13. This will make the Republicans wildly unpopular with their biggest supporters. However, if Prop. 13’s goal is really to keep people on fixed incomes (seniors) in the houses they bought when they had flexible income, then why is the commercial property tax also subject to Prop. 13? It doesn’t make sense, and needs to be redone in a way that creates more fiscal stability for California, and makes sense.
California also need to look at long term projections when dealing with budgeting. This will allow California to set aside money in a rainy day fund so that windfalls are not used to ramp up state spending, but instead can be put aside to spend in recession years. The Legislature can make all these reforms themselves, without needing an outside party - like a constitutional convention - to do it for them. All it takes is some guts and a willingness to put what is best for California ahead of party affiliation and re-election.
