This op-ed originally appeared in the Sacramento Bee
There is no need to spin from budget dance to budget dance every six months in California. But unless the state begins to deal with the huge structural problems that face us, we will continue to be dysfunctional. I had very high hopes for the “new” Governor, as expressed in previous editorials. When one party controls all levels of government, they should be able to at least push though a unified agenda to begin to “fix” the state’s finances, if that is the goal.
Throughout the Governor’s campaign he stressed that he could balance California’s budget in 6 months. Unfortunately, the “fix” put forth will only ensure that we bounce from deficit to deficit, hurt the most vulnerable and then go begging to the taxpayers for more money. This Governor’s budget increases state spending by 31% over the next 3 years, assuming new taxes are approved by the voters and we send many of our responsibilities down to local government. With no desire to consider negotiating even the most common sense reforms, and reign in state spending, now and in the future, we won’t stop dancing.
But what is different this year is the resurgence of a “loyal opposition.” Republicans have switched from “let’s make a deal” of the Schwarzenegger era to taking a principled stand on ensuring that if we don’t have a role in diagnosing the cure we are not going to go along with the Democrat’s prescribed medicine.
It has become very clear that the political calculation with the new regime is to grow the state government, and hence, the public employee union influence. The Governor’s budget adds over 1,300 positions this year, many in “enforcement” and tax collections, to further “revenue” enhancement. So, the first huge ideological divide is what creates revenue to pay for state services – hitting those paying or employing with more enforcement and new taxes and fees, or finding ways to increase private sector employment?
Which leads to the next bone of contention, is the state spending too much or just struggling with bad economic karma? While the housing crash began the downward spiral, we are dealing with many self-induced accessory crashes. State unemployment is hovering over 12%, but reaching as high as 30-40% in some farming communities that have been stagnated by lack of consistent water allocations due to anti-people regulations. We are losing 6 businesses a week due to relocations outside the state, many asserting overregulation and taxation, and yet we are increasing staff and fees in regulatory agencies. We recently passed legislation requiring a 33% renewable energy goal by 2020, which by all accounts will cause electricity costs to skyrocket. But wait, we are regulating the providers so they can’t “gouge” rate payers. That ought to fix things.
To be a player, “bipartisan” and considered relevant in Sacramento, one must follow the majority party’s agenda. But that means continuing down the same path of overspending, regulation, taxation and debt that got us into our financial calamity in the first place. Yes, we had a huge recession to cope with, but other states are bouncing back and our Golden Sate continues to lag in recovery.
It’s very difficult to show up day after day for work in Sacramento, 400 miles from home, and have suggestions in areas of your expertise ignored. But occasionally a crack in the veneer exposes an opportunity to make a difference. Not all Democrats are happy with their medicine; they swallowed hard this past week, as they made roughly $7B in spending cuts, many to social services, and deferred, robbed, and borrowed to reach what is claimed to be $12B in cuts. I’m predicting that party discipline will not last for very long.
Republicans provided many substitute measures to save billions of dollars, but all were rejected. So, we allowed those who rule to support their edicts, and then provided cover to pass the cuts, as state spending must decrease in any way politically feasible. For the moment, with the Democrats who are united in extending the “temporary taxes” another 5 years, “politically feasible” means hitting the most needy, releasing prisoners, and deferring (borrowing) payments to schools, but not reducing state overhead.
We are in the throes of implementing the 2011-12 budget which is not due until June. If the voters reject the proposed tax extensions, which Democrats are struggling to support (no vote in either house yet) we may see a turning of the tide. But if voters continue to feed the beast, we will patch the problem over for a very short while. In any event, the proposals put forth by the loyal opposition, such as reducing state spending by consolidating and streamlining government functions, pension reform to ensure viability of the system and solvency of the state, a firm spending cap to control Sacramento’s spending sprees and assure we reduce accumulated debt, and common sense solutions to make California more business friendly, will gain in bipartisan appeal.
Finally, we have a loyal opposition to counter the San Francisco/Berkeley dominance that has ruled and ruined us on the “left coast.”