Bill Hauck
With another campaign season already under way and 2 million Californians out of work, it’s no surprise that the four-letter word on the lips of most politicians these days is “J-O-B-S.” Politicians on the left want to step up spending to create jobs. Their counterparts on the right want regulations scrapped in the name of – you guessed it – creating jobs.
Let’s stipulate that both approaches may have some merit. But if the folks in Sacramento are really serious about getting California’s economy on track, their first order of business – from either side of the aisle – should be reforming the state’s budget process.
That may sound strange, especially coming from the business community. But the jobs bill we need most is budget reform.
Why? Because California businesses – both large and small – can’t thrive in an atmosphere of uncertainty. And right now, our state’s budget process makes doing business in this state about as confidence-building as a trip with Alice to Wonderland:
• The ink is barely dry on major changes to the way the state calculates business losses – approved in one budget – and already there are efforts under way to change them in the next budget.
• The gas tax – a major expense for many businesses – is either going up or down, and may or may not be replaced by a fee.
• Businesses may have to start withholding taxes for independent contractors, or they may not.
It’s enough to make an accountant’s head spin, and it goes on each year as the state lurches from crisis to crisis, never thinking about the impact on those who work outside the state Capitol.
That’s why a number of business leaders, myself included, have joined the nonpartisan group California Forward to make common-sense fiscal reforms part of our state’s constitution.
Here’s what we’ve proposed:
Plan ahead on spending: Require the state to think long-term about spending priorities by reviewing a two-year spending plan and a five-year fiscal forecast before approving the budget every year. The plan also strengthens requirements for quick action when the budget goes off track.
Results and oversight: Require clear goals for every program to be spelled out in the budget and requires lawmakers to focus on reducing waste, improving oversight and providing accountability for results.
Performance review: Require the Legislature to oversee major expenditures and examine every program at least once every 10 years, looking for ways to improve efficiency and reduce waste.
Reduce debt when revenue spikes: Create a process for identifying occasional spikes in revenue for one-time uses, such as tax rebates or paying down debt.
Pay-as-you-go: Require major new or expanded programs proposed in the budget or legislation to identify a specific funding source such as savings or cuts to other programs before taking effect.
No tax-fee bait and switch: Require a two-thirds vote for any new fees that replace a tax.
No budget, no pay: All lawmakers would forfeit their pay and per diem when the budget is late.
The plan also includes – in combination with these fiscal reforms – allowing the state budget to be approved by a majority vote, while retaining the two-thirds vote requirement to increase taxes.
This last provision could prove to be a sticking point. While Democratic leaders have embraced the proposal, Republicans have objected to giving up their leverage over the budget process.
That’s understandable. There’s room for negotiation and compromise. But both sides should keep in mind that neither is playing a winning hand.
The current system doesn’t work for anyone, least of all for Californians trying to compete in a global economy.
For all its setbacks of the last few years, our state remains the envy of the world. And as the credit crisis that crippled the economy begins to thaw, many of California’s businesses are poised to capitalize on the rebound in growth.
Finally, getting our state’s finances in order would hasten that process, and put every company in the state on a more stable footing. California’s politicians have a tremendous opportunity to contribute to that process, and they should take advantage of it.
After all, the first jobs they save may be their own.