Let’s Make a Deal California

The California Legislature again failed to adopt a balanced budget by the June 30th end of the fiscal year so because of formulas that drive almost everyone crazy the state budget deficit in the new current fiscal year beginning July 1st has grown to $26.3 billion from $24 billion.

Now the LA Times has developed a game published on its web site that lets you try your own hand at balancing the budget.  I did it this morning and was surprised at how easy this was to do.  Yes, it required hard choices but just as we do around our own kitchen tables, the State must look at the money is in its check book and the demands on that money and make choices.  You can make your own choices at:  http://www.latimes.com/news/local/la-statebudget-fl-2,0,6957202.htmlstory.

So what’s the problem, you ask?

There is no end in sight to this deadlock, but expect calls for action to change the governance of the Golden State to grow as frustrations grow.  What those changes are depends upon who you ask.  When you cut to the chase, the issues that cause this recurring nightmare boil down to a few fundamentals:

Hiram Johnson’s Unintended Consequences. California’s policy, budget and spending decisions are made without regard to how we will pay for them.  Some of this is an outgrowth of the Progressive Era provisions in the State Constitution championed by Governor Hiram Johnson that enabled the initiative and referendum and required the 2/3 vote in the Legislature to pass the budget and raise taxes.  These provisions were designed to give the people a direct role in the legislative progress as a check on the State Legislature and the special interest groups which feed it—and feed off of it.

The initiative process gives the people the authority to legislate directly by getting signatures on a petition sufficient to put a measure on the ballot.  Virtually every California election is cluttered by a wide range of propositions like this which suggests the threshold for getting a measure on the ballot are too low.  Fortunately, over time, Californians have learned that these propositions are often driven by zealots for their pet causes and should be rejected unless there is a compelling reason otherwise.  This process got us Proposition 13 to limit increases in property taxes which achieved that objective but had the unintended consequence of driving up all other taxes and taking away local control over revenue raising and giving it to the state. It also got us Proposition 98 which the voters passed requiring that roughly 40% of all state general fund revenue go to elementary and secondary schools and community colleges. What were they thinking!!!   This one knee jerk reaction to declining budgets for schools hijacked the State Budget by combining the organizing skills of California’s teachers unions and the voters fear of failing schools in the Prop 13 aftermath.  It also destroyed the voters best defense over rising taxes and out of control state bureaucracy—local control.  Opps!

The referendum allows the people to overturn acts of the legislature using the same petition and ballot measure process.  A successful referendum required a hot button issue so it is used less often, but it is capable of producing great angst such as our current debate over gay marriage.  The Legislature and California Supreme Court have largely come down on the side of approving gay marriage.  But California voters have twice voted against it including the latest Proposition 8 which the California Supreme Court was forced to find valid.  So the matter has shifted to the Federal Courts but the battle rages on.

The State Constitution requires a 2/3 vote of the Legislature to adopt the State Budget and approve tax increases.  This provision was designed to force consensus building but it did not contemplate a political party system in which both major parties are dominated by their fringes.  Why?  Because the continued conflicts within the parties driven by special interests groups has caused most of the moderates in both parties to leave and join the fastest growing political party in California—the “decline to state” party.  Since only registered party members can vote in our primary elections the extremes in both parties control its policy and positioning and the actions of the legislative leaders.  The Democrats are dominated by labor unions, liberal causes, and the urban San Francisco/Los Angeles population centers.  The Republicans are dominated by the hardened conservatives, abortion opponents, fiscal hawks, and generally lead in the Central Valley, rural Northern California and Orange County where their strength is being diluted.  This results in a Hatfield-McCoy like atmosphere in Sacramento where getting to a 2/3 vote on anything is very tough.

California voters are disgusted by the Legislature and both major political parties.  But we have actually come to like the gridlock this conflict creates because—for the most part, except for the annual budget problem—it prevents the Legislature from acting on all the crazy ideas it would otherwise be inclined to do for the “base” in each party.

You will hear calls for a Constitutional Convention to “fix California’s governance problems” from both sides of the fence.  Be cautious of this because a reform process by the Democrats is likely to focus on going after the 2/3 vote rule in order to give the Democrat majority the ability to pass a budget, raise taxes, and enact programs to fit the demands of constituencies it seeks to serve and reward.  Republican calls for a convention are more likely to be focused on forcing the state to spend less, tax less and reduce the progressive nature of its tax structure.  Neither of these approaches really solves the problem they just change the scene of the next battle.

There is one simple “fix” that would restore the People’s confidence that there is adult supervision and leadership in Sacramento and stop the budget stalemate game.  Here’s my proposal:

Proposition #911: California Budget Reform Act.  Amend the California State Constitution to require the Governor to file a balanced budget with the State Legislature by April 1st of each year for its consideration.  (Yes, I chose April fool’s Day deliberately.) The Governor’s proposed budget shall automatically go into effect and have the full force of law on July 1st, but the Legislature may amend the Governor’s budget by a 2/3 vote.

This won’t solve California’s structural problems or political divisions but it does provide leadership, impose accountability and forces the fringes in both parties to either work together or become irrelevant and powerless—-a fate worse than death for any politician.