Finding Balance in California's Budget

The only things certain in California are debt and taxes, and the country's oldest current governor is struggling to erase the former without raising the latter.
by | April 29, 2011

The only things certain in California are debt and taxes, and the country’s oldest current governor is struggling to erase the former without raising the latter.

After a landslide victory, Gov. Jerry Brown came into office on a mission to rebuild from the financial ruins left behind by the Governator. His target: a $26 billion budget gap. He made big promises, proposed painful budget cuts and laid out his plan for tax extensions (set to expire June 30). But in California, nobody likes the T-word. California voters reportedly haven’t passed a general tax increase since the early 1990s. And they shot down tax extensions in 2009.

But Brown hasn’t been able to strike a deal with Republicans to even put a tax extension on the ballot, which is too bad because this moment could represent a turning point in the economic future of a state neck-deep in dysfunction. Spending cuts are slowing eating away at the state’s health and welfare programs and education system.

In fact, despite the general objection to tax hikes, most Californians don’t want to see anymore hacking done to the public school system. Mark Baldassare, president and CEO of the Public Policy Institute of California told the San Francisco Chronicle that state residents "really want to protect K-12 education and they're really reluctant about raising taxes." According to a new poll from the institute, 61 percent of 2,504 adults support a plan for half spending cuts and half tax increases if K-12 education would be spared. But at the same time, 62 percent of likely voters opposed the idea of raising personal income taxes for anyone except the wealthy to fund K-12 education.

Such contradictions cripple reform efforts, and unless the state accepts the reality that change requires sacrifices, nothing will ever get done. Finding the right balance is critical for moving forward. In the Los Angeles Times, Michael Hiltzik writes:

If you're managing public policy responsibly, you know you can't close a budget gap of the magnitude of California's by ruling either spending cuts or tax increases out of bounds -- especially if you want to make a significant dent in the deficit in a single year. Place the burden entirely on expenditures, and you're destroying programs crucial to your citizens' health and welfare and shredding the social safety net; do it all with tax increases, and you risk increasing the inequities already implanted in the tax structure -- those affecting the middle and working class as well as the politically influential moneyed class.

As the stalemate drags on, other solutions for cost-cutting have emerged. According to a Los Angeles Times/USC Dornsife poll, 70 percent of respondents backed the idea of a pension cap for current and future public employees and more than half support a later retirement age. In the past week, Brown has been on a rampage, forbidding non-essential travel by state employees and targeting the millions of dollars in interest-free loans that state agencies have been dolling out to state workers without collecting repayment.

“This situation reinforces the worst stereotype of ineffective and inefficient government,” Brown said in a statement. “I have ordered state agencies to immediately investigate the backlog of uncollected debts, and find every penny owed to taxpayers. State agencies must regain control of this program.”

The debauchery runs so deep that it’s going to take years and years to undo. But it must start with compromise because time is money, and California has neither.