California Budget Crisis Revisited

“I predict future happiness for Americans if they can prevent the government from wasting the labors of the people under the pretense of taking care of them.”

Thomas Jefferson

As you probably know, a budget crisis has stymied California legislators for nearly three months. In case you missed it, California is $19 billion (and growing) in the hole and no one seems to have a real solution to the problem. For the Democrats who control the Senate and State Assembly, the way out lies in canceling tax breaks to increase revenue. For the minority Republicans and Governor Schwarzenegger, it means making cuts to state funded programs to decrease spending. Both suggestions are short-sighted and lacking real reform- only temporary measures that will leave us no better off next year.

On the ballot this November in California are two propositions that are worth mentioning in the discussion about the condition of California’s finances: Prop 25 and 26. On the surface, Prop 25 seems like the perfect way to end the budget stalemates that have become so common in California and so devastating to the economy. Scratch through the shiny gloss about increasing government accountability and you will find a bill that is designed to give legislators more power to pass a budget filled with gimmicks and pet projects.

Proponents point to the provision that legislators won’t get paid if a budget doesn’t pass, which hardly matters. Eliminating the super-majority provision means lawmakers will be able to pass any budget they want- even if they know it has no chance of getting past the governor’s office. This proposition does nothing more than put a mask over the real problem facing the budget: we don’t have any money left to spend.

Prop 26, dubbed by many liberals as the “Polluter Protection Act” because it reclassifies ‘fees’ that businesses pay as ‘taxes’ and in doing so would reduce the likelihood that legislators would vote to increase taxes on polluting businesses, as many conservative lawmakers have taken a pledge to not raise taxes. I don’t like pollution any more than any other Californian, but I also can’t tolerate this assumption that businesses are a money tree for government spending. Remember, California is perceived as the least-business friendly state in the nation and businesses have been fleeing the state in record numbers, taking jobs and tax revenue with them. If you want to know why California has one of the highest unemployment rates in the nation, look no further. Keep that in mind at the polls this November.

We need genuine reform in regards to the budget, not feel-good rhetoric. We need long-term planning, provisions that limit government spending and a commitment to ending wasteful entitlement programs. Need an example of the waste that weighs the budget down? The California system of higher education was lauded as ground breaking when it debuted in the 1920’s and to its credit has educated hundreds of thousands of students. Now, the campuses are now overcrowded and underfunded, and also an incredible bargain. A year of tuition and fees at a California community college? $1248- less than half the national average. The same trend applies at the CSU and UC levels, and it is no mystery where the money to run higher education in California is coming from. Merely charging students what it costs to educate them would eliminate $13 billion of deficit.

I don’t want to give the impression that education is the only bad guy in the budget, or that students are somehow to blame for the financial problems facing California. Every state-run program in California needs to be evaluated in full, but it is going to take more than cuts and tax increases to fix the budget. We need to stop assuming that we can borrow against future revenue to pay our current expenses, a tried and true trick to balance the books in the past. We need a system where we are spending last year’s tax revenue (and not a penny more) instead of trying to guess what we are going to have a year from now (and nearly always overspending).

Here are my recommendations on steps we can take to fix the budget, and ultimately, the economy.

-Pass amendment requiring a bare-bones budget year with nominally higher taxes that allows tax revenue to collect for a year. The next budget can use only the money collected in the previous year, and taxes will return to normal levels until the budget stabilizes.

-After the collection year, evaluate the effectiveness of welfare, medical and education programs, and begin process of transferring opportunities to the private sector, resulting in lower taxes.

-Reform law enforcement. Reduce crowding in prisons by releasing one-time non-violent/sexual offenders and transfer illegal immigrants to the Federal government for deportation. Shift low-level offenders to county jails and off the state budget.

-End the stranglehold that unions hold on California’s businesses.

Sadly, California has become the poster child for every good reason to have limited government. We, as a state, have become too big to fail. The state educates our children, babysits them when they leave school, employs your neighbors, provides in-home medical care for your grandparents, feeds the family across the street, and will someday pay for your kid’s college education, and all they ask in return is the freedom to make your choices for you. Is this even America anymore?