Reforming State Spending

Reforming State Spending

The enormity of California's budget problems can be measured by simple numbers that speak for themselves:
State government now spends a larger portion of personal income than at any time in its history.

General fund spending grew 36 percent in the last three years, while California's population grew 5 percent.
California now spends nearly $3,000 for every man, woman and child in the state, compared to $1,800 in Arizona.
The state is now spending over $1 million an hour more than it is taking in.

Instead of fundamentally changing the way California wastes money, legislators have proposed tripling the car tax, increasing the state sales tax by 16 percent, and boosting the upper income tax brackets to historic highs. Meanwhile, the governor proposes to borrow billions of dollars from future taxpayers to pay for this generation's profligacy.

California's budget woes are not the fault of the taxpayers for not paying enough taxes. They are the fault of years of gross mismanagement of state government.

So where to begin the reforms? Here are a few modest suggestions that would balance California's budget, improve the delivery of services and produce significant savings to one of the most heavily taxed people in America:

Restore Competition: California's constitution places severe restrictions on the ability of state government to shop around for the best service at the lowest price. Allowing the state to bypass its expensive bureaucracy when the private sector can do better could by itself save the state a fortune.

End Corporate Welfare: Public funds should not be used for the benefit of private interests, and yet state government spends hundreds of millions of dollars annually to support the state's wealthiest corporations. The promotion of trade and
commerce is the responsibility of the businesses doing the trading - not the taxpayers.

Conform State Welfare Benefits to Federal Standards: The federal government sets strict limits on the amount of time a person may collect welfare and expects that recipients actively look for work. California largely obviates the federal requirements - at the state's expense. Simply conforming to federal welfare standards would save $1 billion annually.

Performance-Based Budgeting: When units of output can be measured, it makes sense to pay based on performance. Lines would move much faster at the DMV if employees were paid on the number of applications they processed.

Consumer-level Budgeting: The average California public school student is backed by more than $9,200 from local, state and federal funds, but only a fraction actually reaches the students. If budgeting began at the classroom and every level of bureaucracy had to justify and publish the amount it extracted to support itself, the pressure to minimize non-essential spending would be enormous.

Zero-Based Budgeting: Current baseline budgeting begins with last year's budget and adds to it. Long proposed by budget-reformers, zero-based budgeting rolls all budgets back to zero each year and requires every program to be justified anew.
Restore the Gann Spending Limit: The Gann Spending Limit restrained budget growth to a combination of inflation and population, but was rendered utterly ineffective in 1990. If state spending had increased in line with the original Gann limit over the past three years, the budget would still have grown 13%, but instead of a $12 billion deficit, California would be
enjoying a $28 billion surplus.

Stop Robbing Piedmont to Pay Pasadena: California's budget has become a grab-bag for local pork projects that exclusively benefit one community at the expense of another. State funds should be reserved for projects that benefit the state as a whole. Local communities should pay for local projects.

Enact a Bureaucracy Realignment and Closure Commission: This device was extremely effective in breaking down the parochial resistance to closing obsolete military bases, and could put before the legislature an annual list of obsolete state bureaucracies for closure or consolidation.

The next time a politician tells you that there is no room to cut California's bloated bureaucracies, ask why it is that the state spends so much and delivers so little. Chances are, you'll be looking at the reason.