California Insider

Folks. Here is another installment of my project to describe a potential bipartisan budget reform. Thanks for the several dozen suggestions I have received so far. Keep them coming. Below I have laid out a proposal that I think Republicans and Democrats should be able to support, even if nobody would like all of it.

I don’t even like it all. I would give more power to the governor to trim spending mid-year than this proposal allows, and I would repeal Proposition 98 completely. But for the sake of compromise, I have given up those positions here.

Compromise budget reform.

Smoothing.

Limit general fund spending growth each year to the average revenue growth of the past five years. Limit special fund spending the same way, by fund, but don’t apply the general fund limit to all the special funds uniformly. Place half of any general fund revenue in excess of the limit in a reserve until it reaches 10 percent of the general fund budget, and spend or save the other half for infrastructure. When the reserve reaches 10 percent of the general fund budget, dedicate all of any excess revenues to infrastructure. Draw down the general fund reserve only when revenue growth falls below the three-year running average.

Summer stalemates.

Allow the Legislature to approve the budget with a majority vote. Retain the two-thirds vote requirement for tax increases.

Require two-year budget plans, with the first year being a traditional line-by-line budget and the second year consisting of projections for each department.

Mid-year cut authority.

Establish forecasting commission made up of designees of the director of finance, legislative analyst and state auditor. Require quarterly fiscal check-ups. If, after the budget is adopted, a gap of more than 2 percent is forecast for the year, allow the governor to propose spending cuts to rebalance the budget. Cuts take effect in 30 days unless rejected by a majority vote of the Legislature.

Proposition 98

Allow the state to give schools more than the minimum requirement in any year without the additional money being built into the funding base for future years.

Stretch out repayment of $4 billion now owed, over 15 years, but build the money back into the base as it is repaid.

The Bear Flag League of bloggers, which I will feature in my column on Tuesday, has kicked off a meta-blog focused on the Nov. 8 special election. You can find it here.