Scott Pattison, executive director of the National Association of State Budget Officers, testified at a recent legislative hearing on how California might improve its bollixed budget process by emulating other states.
Pattison ticked off states that had improved their budget processes – and their fiscal stability – with such reforms as multi-year projections of income, weighing long-term impacts of spending proposals, setting aside windfall revenues for reserves or one-time expenditures, and creating "rainy day funds" to soften the impacts of recessions.
As he spoke, the irony emerged: Everything he mentioned had been proposed in California at one time or another, only to be ignored, so we do none of the things he cited as best fiscal practices – common sense, really.
The current recession has clobbered state and local finances, leaving governments at all levels with severe deficits. But even when the economy was doing well a few years ago, the state was running deficits, as were many local school districts, cities and counties.
The question is when – and if – the economy improves and tax revenues begin to rise, will our politicians adopt the kinds of procedural reforms Pattison suggests, especially the "really important" use of long-term projections to make policy, or will they return to the corrosive short-term approach?
The political pressures for expedient decisions are immense. A case in point is what happened in 2000, when the state experienced what officials knew to be a one-time, $12 billion windfall of income taxes.
Then-Gov. Gray Davis publicly pledged to resist blowing the windfall on new spending or tax cuts, but succumbed to Republican demands for the latter and Democrats' demands for the former.
Roughly two-thirds of the windfall was committed, creating a structural deficit that continues to haunt the state. And as the deficit emerged, Davis' political cowardice became a big factor in his 2003 recall by voters.
Successor Arnold Schwarzenegger has often championed budget reform, especially creation of a big reserve fund, but has seen voters reject it twice, thanks largely to opposition from those who have stakes in state spending, especially public- employee unions. And Schwarzenegger has also been a deficit enabler by pushing big tax cuts the state could ill afford.
California Forward, a bipartisan reform group, proposes reforms similar to those listed by Pattison in a new initiative, while the Bay Area Council wants voters to call a constitutional convention to clean up California's mess.
Schwarzenegger and law- makers shouldn't need outside reforms to be more responsible, just guts. Their fiscal malpractice, however, has contributed heavily to their low public standing. They are not credible on the budget, so they are mistrusted on all other matters, virtually inviting a punitive backlash.
Call The Bee's Dan Walters, (916) 321-1195. Back columns, www.sacbee.com/walters.
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