Balancing California’s unwieldy budget – Pacific Research Institute

Balancing California’s unwieldy budget

Gov. Jerry Brown’s State of the State speech Monday night was pretty much what anyone should have expected, as the new governor championed his “tough choices” budget and pushed hard for its centerpiece: a public vote on controversial tax extensions. Since his inauguration, Brown has made it clear that he opposes tax hikes, but with one key caveat — unless they come with a vote of the people.

Tonight it was a full-court press for a vote on a tax extensions, which are, realistically, major tax increases even though the governor acknowledged that California’s credit rating is the lowest of the 50 states, unemployment is higher than the national average and some journalists are calling California a “failed state.’”

Yet the last thing a state struggling to re-energize a struggling private sector needs is higher taxes.

Certainly, in California the Legislature has the power to put an initiative before the voters. And the people have a right to say “yea” or “nay.” But Brown presented this as some fundamental choice that touches on the essence of our self-governing political system. Bizarre.

In reality, Brown is trying to muscle the Legislature and voters to support transferring more of their wealth to a state government that has not managed its affairs or budgets with even a modicum of good sense and discipline.

This is a public relations stunt to relieve him of the difficulty of delving deeply into the bureaucracy, challenging his core union constituencies and rethinking and reworking government. The savings of that approach could be immense.

He continues to offer voters a false choice: higher taxes or fewer services. But he steadfastly avoids real, cost-saving reforms. He mentioned pension reform in passing, but there are no such reforms incorporated in his budget proposal.

He doesn’t mention contracting out and competition, which result in cost savings. He ignored an education study released Monday just a few blocks from the Capitol by Pepperdine’s Davenport Institute and co-sponsored by the California Chamber of Commerce.

That study found that, despite the governor’s and legislators’ decrying of deep education cuts, “In reality, total expenditures (excluding capital expenditures) have increased every year from FY 2003-04 through FY 2007-08, before leveling off in FY 2008-09.” When capital expenditures are thrown in the mix, “total expenditures have increased every fiscal year.”

So there have been no drastic cuts and the student population has declined, meaning that per-pupil expenditures also are up and the increases are well above the increases in per capital personal income for all Californians during the study period.

Yet to Brown education spending is sacrosanct.

Brown also stood up for one of his few genuinely original proposals — the plan to eliminate the state’s redevelopment agencies, which divert funds “directly from local property taxes that would otherwise pay for schools and core city and county services such as police and fire protection and care for the most vulnerable people in our society. So it is a matter of hard choices and I come down on the side of those who believe that core functions of government must be funded first.” Good for him for resisting the pressure from city officials, who have been lobbying him to save the debt-ridden agencies that mainly dole out corporate welfare and abuse property rights by using eminent domain on behalf of big developers who promise tax windfalls to cities.

I’ll give Brown credit. He hasn’t been hiding his plan. He’s sticking to his guns. He genuinely wants to fix the budget mess. But he blasted his opponents for not putting forth real alternatives. Yet there are alternatives, such as pension reform and education reform, and he just isn’t listening.

The big question: What happens after voters reject those tax measures?

That’s when things really get interesting.

Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.

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