Forget the Alligators –
Drain the Swamp
The remedy for California's budget mess
by Senator Tom
There’s an old adage that comes to mind when reading the Governor’s
budget: “When you’re up to your eyeballs in alligators, it’s hard to
remember that you came to drain the swamp.”
The practical application of that adage will define the success or failure of
this administration, and with it, of California. The fatal mistake would be to
believe that the most important budget issue facing the administration is the
2004-05 budget. It is not. A much more critical issue is whether and how
fundamental reforms enacted this year will decisively shape future budgets.
The Governor is right to single out uncontrolled spending
in defining the state’s deepening deficit – but it is merely a symptom and
not the cause. The root of California’s spending problem is the way in which
the state applies its resources. Whether this administration and the legislature
will concentrate on fundamental changes in the structure and delivery systems of
the government that will produce vast budget savings in future years is, or at
least ought to be, the central budget question this year.
This is not to excuse the borrowing and bookkeeping gimmickry in the 2004-05
budget. Ironically, it doesn’t meet any of the tests of the so-called
“Balanced Budget Amendment” the administration is sponsoring as Proposition
58 – which may explain why that proposal contains more escape clauses than
Britney Spears’ wedding vows.
The budget is not balanced. Indeed, when the bookkeeping gimmicks are unraveled,
it spends at least $3.5 billion more than incoming tax revenues. It does not
foreswear borrowing. Indeed, it relies on exactly the same sort of loans that
Davis used to get into this mess – although in smaller amounts. It does not
contain the required three percent reserve. Indeed, the budget reserve is less
than one percent – and half of that is borrowed.
That’s just the beginning, but it’s also beside the point.
The real fiscal battle is over future budgets. Every year, the difficult,
complicated, controversial long-term reforms that are vital to restoring the
state’s financial health are pushed aside in the frantic scramble to pass a
quick fix, get-out-of-town-alive budget. It is a Siren’s song that has seduced
and wrecked previous administrations, and the Governor should keep his bearings
fixed on how reforms adopted this year will affect all of his budgets to come.
To that end, the Governor has outlined a series of sweeping changes in the
fundamental structure of the government. They have received scant attention in
the pundits’ race to dissect budget numbers – but are the most profound and
far-reaching parts of the proposal, and if adopted this year, all of the
infirmities of his 2004-05 budget will soon be forgotten.
The centerpiece of his State of the State address was his proposal for a
Performance Review Commission. The recommendations of previous commissions have
simply been ignored, but if it is given real teeth to effect a reorganization of
the bureaucracies – “blowing up boxes,” as he put it – it promises to be
one of the most significant reforms in two generations.
But that’s just the start. The Governor has also proposed a constitutional
amendment to provide for the contracting out of state services, he has demanded
real workers’ compensation reform, and he has taken the first steps to bring
California’s welfare rules into conformity with the federal welfare reform
act. He is pushing to transfer funds from the sink-hole of school finance –
categorical programs – directly into the classroom and to restore management
of those funds to the people directly involved in classroom instruction.
He can go even further. Replacing the Healthy Families Program with a pre-paid,
refundable tax credit would provide far broader coverage at far lower cost than
the expensive bureaucratic model now in place. Implementing a bounty program for
private auditors to expose fraud in the Medi-Cal system would succeed where
internal audits conducted by the bureaucracies have failed.
The total savings – and improved services -- inherent in these reforms would
make balancing future budgets much easier. But enacting them in time for next
year’s budget is the most difficult and demanding task that any California
governor has faced in nearly a century. Judging from his public comments, Gov.
Schwarzenegger understands this and judging by his actions to date, he has the
singular determination and focus to succeed.
And once the swamp is drained, the alligators will go away.