SACRAMENTO, CA -When the legislature reconvenes next week, the state's elected officials will most likely push an agenda that maintains the status quo. But California's taxpayers deserve a legislature that will tackle some of the state's most nagging problems. Lawmakers could start by reforming the state's public employee pension system.

Despite another year of good investment returns, California's public employee pension obligations are still unsustainable. Lawmakers need to provide public employees with the option of individual pension accounts, allowing investment choices and protection from political manipulation. It would also provide taxpayers with a pension system that is fiscally stable and predictable. Other fiscal issues await attention.

In 2007, once again, California will spend more than it collects in revenues. California needs to restrict its spending growth to the rate of population growth adjusted for inflation in order to end the continual deficit spending. Legislators should enact a state spending cap, along with comprehensive tort reform.

America's civil liability system over-awards trial attorneys and imposes unnecessary costs on workers, businesses, investors and consumers. California should follow the example of Mississippi, South Carolina, Georgia and Texas, and adopt much needed reforms to cut down frivolous claims. While lawmakers are at it, they should close the ADA lawsuit abuse loophole.

In California, small business owners are often threatened by "drive-by lawsuits''--when attorneys search out disabled patrons to sue unknowing business owners for Americans with Disability Act infractions. Lawmakers should give proprietors time to fix any alleged infringements without costly, frivolous litigation and shakedowns by greedy attorneys. Californians also need protection from their own local governments.

In Kelo v. The City of New London, the Supreme Court ruled that cities can take someone's property and give it to corporations. Proposition 90 would have ended this practice, limiting the use of property seizures to public uses only. Now after the failure of Proposition 90, it's up to California's elected officials to end eminent-domain abuse and restore private property rights. While they are at it, they can eliminate wasteful boards and commissions.

The California Performance Review, released to the public in 2004, recommended an overhaul of state government. As of November 2006, many of its suggestions, including the abolition of 88 boards of commissions, remain unfulfilled. The California Performance Review also found that the state handed out merit raises to a full 99 percent of eligible state employees. Elected officials need to create a system that rewards real merit in the state workforce.

California's public employees should also have the right to decide how their wages are spent. Forcing them to support political candidates or campaigns they disagree with is inherently unfair. Lawmakers must end this practice by requiring public employee unions to ask permission before spending their money. There are other steps they can take in the interest of diversity and inclusion.

For example, stop the implementation of union-only provisions. The state continues to implement project labor agreements, which exclude companies with non-union workers from bidding on state-funded projects. These agreements cost the state millions annually. California's officials should allow public projects to be undertaken by the lowest bidder, regardless of union status.

To recap: reform pensions, cap spending, stop shakedown suits, protect property rights, establish true merit pay, protect paychecks and open bidding on public projects to everybody. Of course, this list is far from exhaustive, but if the state's elected officials could just complete a handful of these tasks, it would prove to doubters that the legislature can be an effective institution for change rather than a guardian of the status quo.

More important, these reforms would benefit all Californians by making California a less costly place to live and work. When lawmakers reconvene on Monday, it's up to them to restore the luster of the Golden State.

Anthony P. Archie is Public Policy Fellow in Business and Economic Studies at the Pacific Research Institute.
He can be reached via email at aarchie@pacificresearch.org.