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Steinberg is Right: The California Budget Process Does Need Reform

By Fred Keeley

It will come as no surprise to anyone who knows state Senator Darryl Steinberg that he would make thoughtful and serious comments about the need to avoid another failure to adopt a state budget on time.

As the next President pro Tempore of the California State Senate, Senator Steinberg knows perhaps better than anyone the importance of making several important changes to the existing budget process.

As a member of the Leadership Council of California Forward, it is my personal opinion that regardless of the people involved in the budget process, the process itself can no longer serve the contemporary needs of the State of California.

Imagine that you are driving along in your modern automobile and you notice that it is running a bit rough. You see Joe's Auto Repair, and pull in. Joe takes a look, and says, "I think I can fix your car." As he begins, you notice that his tool box consists of only tools for repairing a Model T Ford. It does not matter how honest, sincere, or hard working Joe is, he cannot fix your modern car with Model T tools. This is the same for the California budget process. Most of the tools are outdated, and need to be replaced with contemporary tools to meet contemporary challenges.

As a former member of the California Assembly, I am convinced that both parties, both houses, and both the legislative and executive branches of the government all want to have a balanced, on-time budget. While there is, certainly, some partisanship that prevents this from taking place, it is too simple and inaccurate to blame partisan bickering for the lack of budgets being adopted on time year after year.

The reasons for late budgets are many.

First, the two major sources of the General Fund (the state's share of sales tax and the state's personal income tax) tend to over-perform the economy in good times, and under-perform the economy in bad times. Together with the budget being largely caseload driven, this causes the budget to be in surplus or deficit most of the time. Cures for this particular budget sickness are many. A broader application of the sales tax, together with a reduction in the rate would likely bake a bigger revenue pie. Requiring a portion of any surplus to be placed in a reserve account for the eventual downturn in the economy or early payment of bonded indebtedness is also a valuable idea worthy of consideration. Other ideas should be considered as well.

Second, the cumulative impact of ballot-box budgeting takes an annual toll on the ability of any governor or any legislature to respond to contemporary needs of Californians. Whether it is Proposition 13, Proposition 98, Governor Schwarzenegger’s after school ballot proposition before he became governor, or any other, cause tremendous tightening of the fiscal latitude to build and adopt a responsive budget. Real reform the budget process would demand that both Proposition 13 and 98 be reconsidered for modernization, but not repeal.

Third, California's nearly unique (on Rhode Island and Arkansas have similar provisions) requirement that a two-thirds vote in both houses of the legislature must be obtained in order for a budget to be adopted, substantially relieves the majority party from the appropriate responsibility for governance. This requirement has been in existence for more than half a century, but was not part of the founding constitution of the state. This provision, without completely relegating the minority party to irrelevance, should be carefully examined, and a thoughtful alternative adopted.

Fourth, the existing budget process, to a great extent, separates revenue generation from spending. That is, there is little coherence between revenue and responsibility, with local governments in general and local schools in particular being the clearest examples. Thoughtful revenue realignment with program responsibility is essential for a modern budget process.

It is the hope of many that the Speaker of the Assembly, the President pro Tempore of the Senate, the Governor, and the Republican Leaders of both houses will agree very soon to establish a serious working group of legislators, senior executive branch personnel, and members of the public to work out a good faith modernization of the current and dysfunctional budget process.

Fred Keeley is the elected Treasurer of the County of Santa Cruz. He is a former member of the California State Assembly. He is a member of the Leadership Council of California Forward.

Posted on September 03, 2008

Comments

I am just hoping that the budget agreement will happen soon. WE are going on 63 days now without a budget and no one is budging on a an agreement at all. It looks like we have a bunch of a democrats and republicans that do not know how to agree on anything at all. In the meantime, businesses are suffering, healthcare units are shutting down and medical expenses are short-lived because there is no money to pay their employees. Contract workers are laying off their employees are getting laid off and the job market is horrible. Lets hope for a ray of light that a budget will get passed.

Posted by: Erik Leon at September 3, 2008 10:10 AM

Lets also consider the impact of the budget stalemate on real people, on children.
Schools across California are e opening. Over 6 million children will be returning to school. Some 477,000 will be entering first grade in over 5,000 schools. Each of these schools have a budget and each of these budgets are in confusion while the state decides what to do about their budget crisis. At least 25% of the schools will not be ready for the students because the school doesn’t know what its budget will be.
Will the school have an ELL teacher or two?
Will there be a reading coach?
Will class size be 24 or 32? Which really means we will have to re-organize each of the classes and the teachers.
What will happen to the new programs established last year under the Quality Investment in Education Act?
Shall the district hire a new teacher or only a 30 day substitute ?
Do we have the money for an ELL specialist or will the money be for an algebra teacher? And when we finally hear if we have the money, will the well qualified algebra teacher have moved to another state where this annual disruption of their lives does not occur? Really, would you wait 2-3 months each year to see if you had a job?
And, even in mainstreamed classes, will there be two English Learners or eight?
These are but the start of the many decisions that need to be made. Rather than beginning school in late August, far too many classrooms will have to wait until October while the budget gets decided and allocations are made.

This is a state that ranks 47th. in math and about 48th in reading. A state budget impasse each year creates 4-6 weeks of school disruption, confusion, and disorganization.
And then the legislature calls for accountability?
The impasse is also about the annual disruption of education for thousands of California students, and the disruptions of health care payments, and the disruptions of state worker pay, etc.

Posted by: Duane Campbell at September 3, 2008 10:20 PM

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