TO FIX THE BUDGET, FIRST FIX THE STATE

Six simple steps for remodeling the government.

George Skelton: Capitol Journal | LA TIMES

 

June 29, 2009 From Sacramento -- Once again, Capitol politicians are fighting over how to fix the chronically bleeding state budget. And again, the answer should be clear: It's unfixable.

It will remain unfixable until California's system of governance is pulled apart and overhauled.

Interactive: Can you balance the budget? Full coverage: California's state budget crisis

Now, they're trying to fix an old, stalled clunker without the right parts.

Anticipating the e-mails, here are two simple truths:

Gov. Arnold Schwarzenegger could fire every state employee under his control -- roughly 235,000 -- and that wouldn't come close to balancing the budget.

Yes, illegal immigration is a drain on the state treasury -- maybe responsible for a fifth or more of the $24-billion deficit -- but there's little Sacramento can do about that. Washington sets most of the rules.

"California government does not work because it cannot work," Micah Weinberg, senior research fellow at the New America Foundation, told a reform forum sponsored by his organization last week.

John Grubb, senior vice president at the Bay Area Council, a business group that advocates calling California's first constitutional convention since 1879, put it this way: "You hear 'Throw the bums out!' If you throw the bums out, the next legislators are going to have the same problems."

In this system, it's easy to resemble a bum.

There are many ways California government could be improved, but these are my priorities:

* Realign state and local responsibilities. Return to the separate roles that were played productively through most of the 20th century until Proposition 13 messed things up three decades ago.

Easy. This isn't an argument about Prop. 13's low residential property tax rates, although I'd argue that big business hasn't been paying its fair share. It's about the unintended consequences of shifting more power over local policy and tax revenue from the communities to Sacramento. It's also about the need to relieve the state's financial burden. The locals should regain control over services and take back the responsibility for financing them. That probably means making it easier for them to raise taxes.

"The fundamental question we have to answer," says Fred Silva, fiscal policy advisor for the reform group California Forward, "is what should be the balance of power between the state and community governments."

* Rebuild the state's outdated tax machine. It needs to be less volatile, more reliable whether in boom times or bust.

It has been leaning too heavily on rich people, who have good and bad years, causing roller-coaster tax trauma in the Capitol. In 2007, the richest 1% paid 48% of the state income tax. The top 5% paid 68%.

Moreover, the sales tax was designed for the mid-20th century and ignores our economy's increasing reliance on tax-exempt services. The taxable percentage of California's consumption has been falling.

A blue-ribbon commission's long-awaited recommendations on how to modernize the tax system is due July 31. But the panel has been thinking so far out of the box -- leaning toward junking the progressive income tax entirely and going to a flat tax and replacing the state sales and corporations taxes with a new "business net receipts" tax -- that it could confuse voters and make them suspicious.

Then we would wind up keeping the same old decrepit machine.

* End Capitol gridlock. The main causes of legislative dysfunction are term limits and, especially, the two-thirds majority vote requirement for money bills.

Term limits have sapped the Legislature of experience, policy knowledge and long-range vision. About the only thing most lawmakers look at beyond their short tenures is the next political job. That's human nature. More power has seeped to the special interests.

Budgets wouldn't be incessantly late if they could be passed on a majority vote, as in 47 other states. Allow the majority party to act. If it screws up, the voters can install the other party in power. That happens periodically in Congress but very rarely in California's Legislature.

Tax increases should be allowed on a majority vote too. But that won't happen as long as voters regard legislators as lower than lizard bellies. At least permitting a majority budget vote would get things moving in the Capitol.

* Elect more pragmatists and fewer ideologues. Bring in some centrists.

Voters took a step toward that last November when they passed Proposition 11. Starting with the 2012 election, legislative districts no longer will be gerrymandered by legislators to protect themselves. Districts will be drawn by an independent commission. And the hope is that some seats will become more competitive between the parties.

There'll be an open primary measure on the June 2010 ballot. Under it, all voters would cast ballots in the same primary. The top two vote-getters, regardless of party, would advance to the general election. The goal is to force candidates to appeal to a broad range of voters, not just to the party core. It's worth a try.

* Reform the rotten initiative process. It's dominated by special interests with overflowing wallets, in cahoots with a growing political-industrial complex of consultants.

Ballot-box budgeting has handcuffed the Legislature, squirreling away tax money for specific projects that may not have a high priority.

One solution: Require any initiative that would spend money to identify the revenue source.

And return to an "indirect initiative" process -- long ago foolishly discarded -- in which the Legislature could alter a measure before it went on the ballot.

* Apply vision to budgeting. Enact budgets good for two years, rather than one. And Sacramento still needs a spending cap and a real rainy day fund.

Much repairing is needed.

Just don't tell me that California's budget can be fixed "once and for all" before the Fourth of July fireworks. If at least a patchwork budget isn't enacted by then, the state could explode into a grand finale.