One of the most baffling things to the business community has been the failure of state leaders to balance a state budget. Businesses do it every year and make the hard choices every day to stay within their budgets or risk going under. Why can’t this state do it?
At the invitation--and challenge--of Next10 (www.Next10.org) Orange County Business Council members in August 2011 took on the task of attempting to balance California’s 2011 budget.
This Next10 Budget Challenge presents a sample of the current policies under consideration and asks the user to decide what direction he would take the state. An individual user can go online to take the challenge and also communicate his choices directly with legislators and the governor. In addition to the online tool, Next10 travels the state presenting the policy choices in the Budget Challenge to a range of audiences, and has groups vote on the choices, which is what we did at a recent OCBC Government Affairs Committee meeting.
So, how did Orange County business leaders do? The choices our folks made were very tough, but would have resulted in a balanced budget AND a surplus of $1.4 billion for the state, which we overwhelmingly decided should go to schools! For every policy option presented, there were typically between 3 and 5 choices available to us.
Here’s what we did:
With Education receiving almost 50% of the entire state budget, our business leaders had no choice but to make the hard cuts to K-12 and community colleges. The Budget Challenge didn’t address reforms, but the consensus of the group was that reforms to the state’s massive and burdensome Education Code to give more local control to educators would make funding more efficient and effective. No change was made to UC and CSU systems.
- Redevelopment: no change – use local property taxes to fund redevelopment. (received 39% of the vote) Note: at the time of this challenge, redevelopment hadn’t been abolished, but the issue was before legislators.
- Health Care: no change – continue March 2011 budget cuts but do not make any additional cuts. (received 41% of the vote)
- Criminal Justice: cut spending $500 million and transfer inmates to prisons out of state. (received 44% of the vote)
- Pensions: cut spending $300 million, negotiating even higher employee contributions and shifting new state employees to “hybrid” retirement plans, resulting in significant long-term savings. (received 67% of the vote)
- Spending Cap: cap spending so it grows no faster than the rate of inflation plus state population growth, about 3% per year. (received 58% of the vote)
- Income Tax: no change – do not raise or lower the tax on anyone. (received 36% of the vote)
- Sales Tax: no change – do not change the sales tax rate or base. (received 46% of the vote)
- Tax Credits: no change – do not change any of the state’s tax expenditure programs. (received 41% of the vote)
- Car Tax: no change – keep the .65% VLF rate in place. (received 74% of the vote)
- Property Tax: no change – keep Prop 13 rules in place for all properties. (received 56% of the vote)
- Other Taxes: no change – do not raise other taxes.
There was not a consensus vote on all the policy options and there wasn’t any politics involved per se. Next10 just released the 2012 version of the simulation at www.Next10.org. The issues haven’t changed much and the budget for 2012 still needs to be balanced. Now it’s your turn! I encourage you to check out the updated tool, and see if your ideas balance a budget to get this state back on track.
[Publisher's Note: As part of an ongoing effort to bring original, thoughtful commentary to you here at the FlashReport, I am pleased to present this column from Lucy Dunn. - Flash]