Propositions 1A Through 1F: The Right Choice for California's Future
April 14, 2009
by Webmaster
Propositions 1A Through 1F: The Right Choice for California's Future
There are moments when we are asked to make difficult
decisions that are far from perfect, but represent the smartest option
available. That's the case with the Propositions
1A-1F, the series of state ballot initiatives that will keep California from falling
off the economic cliff and begin the process of restoring the state's fiscal
sanity. The Chamber has joined a growing
coalition in support of these initiatives and we encourage the business
community to vote "yes" on all six propositions on May 19.
All of
us agree that significant reforms are necessary to restore the state's fiscal
integrity and make sure California is open for business. During the past year we watched the
budget deficit skyrocket to over $40 billion while lawmakers froze amidst a
multi-month legislative standoff. Finally,
a budget compromise was passed by incorporating both budget cuts and temporary
tax increases for a middle-of-the-road compromise that no one cheered about but
started us back on the road to recovery.
Passing
Propositions 1A, 1B, 1C, 1D, 1E and 1F is another step in the right direction. These initiatives will lock in a long-sought after
cap on state spending and create a real and effective "rainy day fund." Had these two requirements already been in
place, they would have averted nearly the entire current budget crisis. State spending will be lowered to a level not
seen since 2005-06. And Prop 1B will
assure that the $9.3 billion in funding for education which was transferred to the
general fund will be paid back through the rainy day fund and will be available to our
schools.
There
are plenty of reasons to oppose these initiatives. Some say they don't go far enough to restrict
spending and reform government bureaucracy. Others oppose the two-year extension of the temporary tax
increases. Still others object to the
temporary transfer of revenue that is being collected under Propositions 10 and
63, even those the funds will be used to cover general fund expenses for
children and health care. Those are legitimate positions supported by
reasonable people. However, the
consequence of not passing these initiatives is far, far worse.
If
Propositions 1A through 1F fail, California's budget compromise will go up in
smoke. The budget deficit will immediately
jump to more than $20 billion. There
will be no serious cap on the amount of revenue that can be spent; neither will
there be a rainy day fund with a plan to accumulate 12.5 percent of the state budget
for use during difficult times. In
other words, we will be right back to where we were when the budget crisis
began, and we will have no additional tools to solve the problem in future
years. In addition, California's credit rating will
decline and we will not be able to invest in the infrastructure improvements
that the voters strongly supported in November 2006.
Each
day the number of organizations and individuals who are supporting these
propositions is growing as citizens consider the negative results of ballot failure,
the lack of good alternatives and the future benefits of a spending cap and
rainy day fund. While these
organizations represent very diverse and often opposing interests, they share
the conclusion that passing Propositions 1A-1F as a package is in the best
interest of all of the citizens of our state and is essential if we want to
rebuild our economy and enhance our quality of life for future
generations.
And that's The Business Perspective.
Comments
"Up or Down" issues: 1) Establish a rainy day fund; 2) No NEW spending (any bills/any year) can be passed without realistic, ongoing, full revenue sources included in each vote - not simply
"rosy financial projections" based upon "the best of times;" 3) START cutting spending by requiring that "until a balanced budget is in place by a reasonable fixed date each year," NO new spending can be proposed or authorized except to handle genuine emergencies.
The current situation, although exacerbated by legislative ineptitude, certainly qualifies as a genuine "financial emergency," but that still doesn't justify voting in favor of badly written propositions (and in fact only encourages more of them). What it does require: the Legislature, pathetically, needs to reopen the budget process and address its responsibilities (instead of abrogating them once again). Yes, there are a million good arguments why the budget process simply "cannot go back to square one," but in truth, it must. The citizens of California have every right to demand the state "get it's house in order," but it's also their responsibility to make this happen (by voting intelligently and refusing to "fall prey" to propositions designed to perpetuate the endless Sacramento spending game). California is hardly "un-governable" as one suggested, it's simply been very badly governed for far too long, and it deserves better. Voting "No" on these Propositions is a first step towards forcing Sacramento to recognize: the old games cannot, and will no longer, be tolerated. Those who don't vote, and those willing to vote for lousy, compromised legislation have only themselves to blame. Face it, this Legislature is clueless enough to raise sales taxes in a "once a century economic crisis"...disproportionately penalizing those least able to afford it while making California businesses less competitive (which will inevitably lead directly to further job losses and declining tax revenues...meaning we'll be right back where we started before long until the fundamental, and difficult
cuts are finally made). If this Legislature simply cannot do its job, they should have the maturity to resign, and an independent "Financial Master" (not a political crony of either party) should
be appointed (and compensated ONLY a reasonable percentage of however much is demonstrably saved). Wise up California voters, your Legislature won't listen until you make them listen. "Almost good enough...isn't." Not any more. You deserve better.
The truth hurts but we have to rise as Californians to own up our mistakes and may be wake up to do the right thing. Is it not insanity, to be doing the same thing and expecting a different result? Until we decide to elect the right people, qualified and experienced at least in policy implementation and analysis, to the state, and other public offices, there will be no change in Sacramento and none in Los Angeles. Majority carries the vote, even when the majority lacks the appropriate knowledge of issues at stake.
We need to support these measures because in the long run, it's the only thing that will put an end to the Sacramento tax and spend cycle.
In the estimation of the Small Business Action Committee, if 1A fails that will not necessarily mean that there will be massive budget cuts to solve the state budget problem. Democrats still control strong majorities in the legislature. What might happen nobody knows for sure, but we believe instead of temporary taxes there will be a series of permanent fees. Since the across the board taxes like sales taxes will have been stopped by the failure of 1A, a good guess is that these fees will be targeted and business will be the prime target. There also may be initiatives to raise taxes. In the mean time, with the defeat of Prop 1A, no spending limit will be put in place. All the tax increases by the legislature going back to Governor Reagan and Governor Wilson have occurred not to create new programs but to fill budget holes. If the type of spending limit in Prop 1A were in place, revenues in the rainy day fund would be used to reduce the deficit and reduce or eliminate the call for tax increases. As an example, if the Prop 1A limit were in place over the last decade, instead of facing a $40 billion state deficit this year, it would have been in the $20 billion range (because of the sour economy) and there would have been $9 billion in the reserve to pay against the deficit. That means there would have been about an $11 billion hole to fill and since the cuts in the February budget deal were greater than that number the tax increase would not be needed.
Since there have been efforts to get spending limits for decades to control state spending, and since taxes were already part of the February budget deal, if Prop 1A fails we will have raised taxes for two years and received no budget reform in return. Given the circumstances of losing any chance at budget spending reform and continuing to face the threat of increased permanent fees and taxes, we decided to support the measure and suffer the short term pain of temporary taxes for the long term gain of getting the budget on track and putting in a program that will reduce the need for future taxes by evening out the budget process.
Look at our history. We spend too much and then, when we try to reduce spending, we can't, as part of the solution for cutting spending, that is, laying off government employees, is too onerous to implement. Read the LA Times, "Permanent teachers are entitled to a hearing before being laid off, a process that could have disrupted the current school year, and could cost the district an estimated $9.5 million. And if mistakes were uncovered, an administrative law judge could invalidate layoffs." By Howard Blume, April 14, 2009. Basically, it's easier for the government to raise taxes than to reduce spending through lay offs. This is wrong.
We need to take this opportunity to reform government bureaucracy/employment contracting so that we can be One California coming out of this mess.
We will go down like GM, maybe Sacramento should use the same process that GM will use! Enough already!
I am sad that the LA Chamber is not supporting change, it is time for change. Spend and tax, spend and tax must end.
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