Perata Proposes Establishing California Budget Reform Panel

August 22, 2007

The Honorable Arnold Schwarzenegger
Governor
State of California
State Capitol, First Floor
Sacramento, CA 95814

Dear Governor:

This year’s budget difficulties reflect the now permanent crisis we find ourselves in. There is no debate. The state budget is fatally broken. We can no longer limp along from year to year. It’s time to fix the problem. In a phrase: We must decide the core responsibilities of state government; to wit, what services we must provide, what we can afford and where we get the money.

The problem has many causes. Unfortunately “overspending” has become political rhetoric for willfully spending more than we should; of profligate politicians unable to say no. Curiously, the word itself assumes that the governor and legislature are in control of what we spend – or how we raise and direct revenue. We are not. And we haven’t been for decades.

At the core is something unique to California: a state constitution plagued with conflicting ballot-box mandates and constraints dictating when and how much to spend, and from where. The result is a series of lockboxes and dedicated funding streams, precluding any flexibility for the state’s changing needs or revenues. Similarly, there is little discretion to make budget adjustments regardless of often substantial annual cost increases beyond our control: fast-rising energy and health care costs, chronically under-funded congressional mandates, federal court corrections mandates and unprecedented shifts in population age and demographics, just to mention the more recent. In some cases, “autopilot spending” has eclipsed funding for programs of greater priority and more pressing need.

Add a legislature that lacks experience and historical perspective – and we have a state budget in near-collapse.

We have finally reached the end of the line. Today, the past is no longer prologue to the future. The future is here, and it requires strong leadership to make the tough decisions we’ve ignored for decades. Inaction brought us here. If we don’t seize the initiative now, the same competing special interests who, in the absence of our leadership, shaped the quagmire in which we currently find ourselves, will lead us into another.

Therefore, I propose that we convene a budget revision panel that consists of the four legislative leaders, the governor’s director of finance and the legislative analyst. The panel’s objective shall be to propose changes necessary to align the state budget with contemporary fiscal and political realities, and the expectations of those we serve.

In doing so, I acknowledge that nothing can be exempt from consideration, and that we must make recommendations timely enough to balance next year’s state budget. While the problem cannot be solved in a single budget, the panel must produce a multi-year plan to restore fiscal solvency to the state. I ask your unqualified commitment to engage actively and fully with us. Thank you for your consideration.

Sincerely,
DON PERATA