From State Board of Equalization Member Bill Leonard’s latest e-newsletter:
UNDER THE DOME
***The ‘No-Budget’ Budget***
As everybody knows from family or business budgeting, some 85% of spending is the same year after year with some adjustments for inflation. The real decisions are over the remaining 15% of available revenue, when it is available. The California state budget is the same. Except when it is warped by excessive borrowing (which is the current problem), the spending programs grow at a predictable rate. When spending gets out of hand there are major reforms that come together to make changes as we have done with Medi-Cal, welfare, and worker compensation spending in the past. However, most of the state spending is by formula, which is predictable and basically operates continuously year after year.
I propose that the Constitution be amended so that the 85% of the spending plan is done automatically by the Department of Finance, or other state agency. This would no longer permit the majority party in the Legislature to take the budget hostage for their demands on the Governor, and no longer permit the minority party to make demands as a condition of supplying their few votes for the budget. Thus, most all of state work would go on without interruption, legal challenges, or uncertain delays. This automatic level of spending would go into effect July 1st. The Legislature could intervene to make changes, mid-year corrections, or other tweaks, but if they did not act the state would still have a budget.
This does not bar the Legislature and the Governor from using separate bills to make major changes that affect the budget– like contracting out the state parks system, privatizing the University of California, or reducing Medi-Cal benefits to be no better than state employees get.
By doing this the real fight on new fiscal priorities would switch to separate bills that can be debated and amended and voted on for their merits. If there is a constitutional formula or a statutory appropriation which is proposed to be suspended or revised then it can and should be done by a separate bill that does not hold up the rest of the budget. Other bills might propose new programs or modifications of existing programs. If they require money to be appropriated from the state’s reserve funds then they appropriately require a 2/3 majority vote of the Legislature. Since 85% of the state spending is already determined, new programs can only be funded by cutting an existing program or by raising taxes. Tax increases, of course, require a 2/3 vote.
The great debates on priorities for the people of the state will still take place and controversial programs and taxes will still be subject to recorded votes so that the voters can judge the efforts of the Governor and Legislature. However, this will all be done with the basic state programs off the table.
The State Department of Finance, the Legislative Analyst Office, the Joint Legislative Budget Committee, the now defunct Commission of State Finance all have the talent to determine what a baseline budget would be and how to make a reasonable estimate of expected state revenues in order to calculate the automatic 85%.
