Blog / The Business Perspective
California Needs A Sound Budget ... Today
February 1, 2011
by Gary Toebben
Time is ticking down on California's budget clock. In his State of the State address yesterday, Gov. Jerry Brown made it clear that "job number one — make no mistake about it — is fixing our state budget and getting our spending in line with our revenue." The governor's laser-like focus on the budget is absolutely correct. The real test is whether the California Legislature can move the ball forward and give voters a sound package to consider in June.Gov. Brown called on the legislature and the public to "tackle our budget deficit head on and deal with it honestly and without purpose of evasion." The governor's honest but brutal budget proposal makes deep, long-lasting cuts to social services, education and health care programs. It extends the 2008 temporary tax increases for another five years in a state that is already regarded as having high taxes. Education and social service advocates are dismayed and angry. Cities have recoiled at the governor's proposed elimination of Community Redevelopment Agencies, while the business community questions the logic of doing away with Enterprise Zones — one of the few job creating incentives that California has. There are no sacred cows, nor should there be at this point in the crisis.
The legislature must decide within the next few weeks whether to move forward with the governor's budget proposal, including a special election in June. Many Republican lawmakers signed a "no tax" pledge, while many Democrats have difficulty stomaching the tough cuts to services. Leaders of both parties are weary of how voters will respond to a special election. At the end of the day, California must endure major spending cuts and some temporary tax increases. We are so far down the deficit rabbit hole that doing one without the other simply won't get us out of this mess.
California's long-term financial outlook could be significantly impacted by a June ballot initiative that includes reforms that would reduce budget expenses in future years. Pension reforms made today would pay dividends in the future. So would changes in policy regarding health care for retirees. Education reforms made today would give school districts more flexibility in managing their costs in the future.
Voters will be more likely to bite the bullet in June if they believe that a painful choice today will help solve the problem in the long-term. They do not want a proposal that will simply delay our fiscal problems for five years because no real reforms were included.
Gov. Brown made it clear that California's future begins with balancing the budget in a painful, but pragmatic way. It's time for lawmakers, local officials, labor, environmentalists, business and California's 38 million residents to accept the truth and move forward. It's the only way to turn our state golden again.
And that's The Business Perspective.
Comments
Gary, this is very simple for Gov. Brown, and for California: cut the spending, no new taxes.
Posted by: Patrick Rooney @ 5:10:00 pm
I don't believe protecting the pensions of the Teachers Union and other Teamster unions who all supported Governor Brown's election will get California whole. You can't tax your way out of this spending problem. Deep cuts need to be made. You have to run this state like a business, we would have been out of business long ago, the money tree has limits. Stop spending. It will be unpopular but it will work. Look at what New Jersey is doing to fix their problem. Follow the lead, and get rid of the politicians that got California in this mess in the first place by spending like there was no limit.
Posted by: Mike @ 4:52:00 pm
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