I received an interesting email from the Assembly Caucus this week. It asked me for "budget solutions and ideas," and said they would be distributed to the caucus.
I figured out one thing from my time in the Legislature. The budget analysts in the Department of Finance and the Legislative Analyst’s Office use English words to analyze the budget, but those words don’t have English meanings. The words are budgetese, completely unintelligible to anyone for whom English is the primary language. They can only be interpreted by another budget analyst, whose usual motivation in the budget process is to maintain the status quo. As a result, Legislators, who spend a lot of their time racing around Sacramento trying to catch up to the task they were supposed to do yesterday, have no idea what is going on, and, especially in this era of term limits, they just do what they are told to do by the analysts.
So, I am going to make a proposal for the next budget. It will be in English, and I think it will be understandable. It will require a degree of concentration, so I want each Legislator who reads this to shake their hands and their feet, roll their shoulders, loosen their neck, and roll their head. Now, close their eyes, and put their hands together as if to begin a karate move. Very good, now concentrate. Here comes the suggestion, in 3 easy steps:
(1) First, determine the actual revenue that the state will receive without the tax increase. If my reading of the analysis is correct, that is about $74 billion general fund. I may be wrong, but it doesn’t matter, get the number, and make sure it is the right one.
(2) Second, find the state budget that is closest to these numbers. If I remember correctly, that budget is the 2002-03 budget. Again, I may be wrong, but that would be close. Just find that budget that is close to the numbers, however they are presented by the analysts. The previous budget numbers, by the way, are available in Schedule 6 of the Governor’s Budget Summary.
(3) Now here is the hard part–adopt that budget.
The priorities were set there, the numbers are easily available, it is not all that long ago, people will understand what they are getting, and it will be easy to explain. We have already had that budget once, it will work again. The only thing you have to do to reach that number is adopt the changes in law that will help you achieve those numbers. The good thing is-you are lawmakers, you can change the law, all of the laws, that force you to spend more money than that. Change them.
I know it is easier said than done. I know it is politically painful, but it is analytically easy, and, from a public relations point of view, it is easy to explain to the public. The only ones who won’t like it are the leeches that live off of the public trough. But that is easy to deal with as well. For years, they have been having their way with the taxpayers and the budget, with the Legislators essentially acting as the pimps and panderers. They have gotten everything they want in every budget.
So, if lay offs are necessary, change the law to accomplish the lay offs. If labor contracts have to be changed, change the law to allow them to be changed. If entitlement spending has to be cut, change the law to allow it to be cut. Cut reimbursements, cut staff, cut regulations, cut all the legal requirements that increase the cost of doing government business.
It is no excuse that the "Democrats won’t do it." They will, if you have the intestinal fortitude to look them in the eye and say "This is the only deal we will agree to." The Democrats in the Legislature were the driving force behind this crisis, but the Capitulator, and Republican Legislators, acceeded to their budgetary nonsense, and we now have a disaster. Only Republicans will fix it.
I know. Nobody will like you. You will be attacked relentlessly. You will be told it is impossible by newspapers, Governor’s staff, Democratic Legislators, and yes, even your own Republican staff. It is, however, the only solution that can be easily explained, easily implemented, and make complete sense. It will also restore fiscal sanity to a state that long ago fell off its meds. It can be done, and it must be done. Nothing else will work.
May 9th, 2009 at 12:00 am
Good approach. May I also suggest abolishing and consolidating state agencies whose purposes are dubious, duplicative or merely dumping grounds for former politicians in search of remunerative employment (useful or not).
As a for instance, Gov. Wilson proposed, over 10 years ago, consolidating the Franchise Tax Board, the Board of Equalization and Department of Finance into one agency. He estimated then (in the 1990s) that it would save over $400 million/year. Surely the savings are at least as high now, and the budget imperative is even greater (other than the political hacks who may lose BOE or FTB seats). Call this, for argument sake, the Department of Revenue.
Here’s another idea, which taxpayers will appreciate, and that will make the new Dept of Revenue’s job easier: change the way CA calculates its personal income tax from the current myriad of inclusions and exclusions from Federal AGI and a “progressive” (actually, regressive in terms of its impact on job creation) rate structure to a simple percentage of Federal income tax. This would still be “progressive” according to the liberal definition, and a lot easier to calculate for CA’s taxpayers.
Here’s another proposal: have the IRS collect CA’s income tax, the way the Canada’s Federal Revenue Agency collects it on behalf of the Provinces. The IRS is well equipped to do this, and it would eliminate a duplicative State function.
Here’s another suggestion: modify CA’s Sales and Use Tax to apply to EVERYTHING – services, food purchased in grocery stores, bank fees, legal/accounting functions – with an exclusion only for health care/prescription drugs/etc. Before you gag, this should be done in a REVENUE-NEUTRAL manner, so that the overall amount collected is no more than it would have been BEFORE the tax grab that went into effect in Apr’09. This would also simplify life for the new Dept. of Revenue, and put CA’s system on a more competitive basis with other states. It would also make the Sales/Use tax revenue stream more predictable and less prone to economic ups and downs.
These suggestions will be criticized by anyone with a vested interest in the status quo, especially Democrats, attorneys and others who live at the public trough. A reasonable examination of their economic impact will show them to be more efficient from an economic perspective, less costly to administer and make evasion more difficult.
May 9th, 2009 at 12:00 am
Makes sense to me. When you figure that the real issue is, as the Governor has stated, is that we have a spending problem, not a revenue problem. We over expand during good years and fail to cut those bloated programs during lean years. This suggestion of yours would mandate that departments and agencies get what they got the last time there was a budget that met these revenue projections. Letting Sacramento try to define where to cut is hopeless.
May 9th, 2009 at 12:00 am
Ray- sounds simple, so simple you could eliminate the State Legislature and the Governor because you could just have a Civil Servant make that decision. But Ray you would be laying off tens of thousands of teachers, even though there are more school age kids and you would lay off thousands of law enforcement officials that we have added post 9/11 so it is not so simple Ray and you know it. California ranks in many areas compared to other states in the 40s, mixing with Mississippi. Ray- most Californians want Califonia to be first and the best. You don’t get the Gold Medal by coming in 40th. Bob Mulholland
May 9th, 2009 at 12:00 am
Or perhaps, Bob, if salaries were reduced to the levels they were in the budget year adopted, for all employees, superintendents, asst superintendents, etc and teachers, staff sizes would be reduced to whatever they were in the year adopted by the Legislature. I don’t know what the numbers of employees that will lose their jobs under this plan, but the state, and all the local agencies would be in the exact same position they were in in the adopted year, 02-03 or 03-04, or 05-06. Life wasn’t too bad in the state then, and spending more since then hasn’t gotten us any better law enforcement, or schools, or state services, or freeways, or anything. People know that, and will understand this. That is why it will work,and can be sold on a policy and political level.
May 9th, 2009 at 12:00 am
Ray,
I think you are on to something here, because even Bob had trouble demonizing what you propose!
John
May 11th, 2009 at 12:00 am
Ray said ” (3) Now here is the hard part–adopt that budget ” , I will agree with you on that Ray, but also the harder part is getting Republicans to endorse candidates and budgets that conform to conservative principals, Ray who did you endorse for gov. in 2003 recall election Tom McClintock or Arnold?, In 2004 did you endorse prop 57 the 15 billion dollar bond to paper over the overspent budgets of the 2000-2004 years or did you advocate McClintocks 13% one year reduction in spending in 2004 to take care of the deficit spending then?, In 2006 did you endorse Arnold again? Look who Arnold is teaming up with today on prop. 1A tax increase Gray Davis, who knew. Look at the mess the Republican party has helped get this state into with Arnold as gov. and key Republican legislators endorsing his policies of borrowing and now raising taxes! Again i ask where did you stand Ray when you could have cast a key vote or endorsement to stop some of these policies and elected officials we find ourselves strapped with today? To Bob Mulholland we need to get rid of teachers who are not preforming there jobs , but also in the school budget there is plenty of room to get rid of administrators ,building more classrooms where there is declining enrollment etc., and the whole unfunded mandates (retirements, health care etc.)every city county and state face today and will increase exponentially in the coming years ,until Democrats and Republicans face that 800 # gorilla and the enormous salary increases the public employees at all levels have gotten the last 10 years ,all the bickering between the right and left is not going to solve the crisis we find our state in today.