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Wednesday, May 20, 2009

Charitas Dictator: My Solutions to CA Financial Crisis

Even San Francisco rejected them. By a landslide the voters of California told its government, "We do not want more taxes. We do not want you raiding one account to pay others. We do not want to extend your ability to spend our money with impunity." So now what? What will our dysfunctional state government do to change its culture of spending on salaries and expanding government?

Were I placed in the role of Charitas Dictator of California I would enact the following decrees as solutions to California's budget difficulties today and fix them for future years. Someone has to stick their neck out, goodness knows our Legislature will not as evidence by their continuous use of Propositions to do their jobs.

Make it harder to get Propositions on the ballot. Too often our state Legislature shirks their responsibility in making difficult decisions by putting propositions on the ballot and letting the voters decide. The Propositions that were on the ballot on Tuesday never should have been sent to the voters. Not only did voters say "No" to tax increases and more spending, they also said "No" to the Legislature when asked to do their job. Restrict the Legislature from placing any propositions on the ballot, increase the number of signatures required for the people to place an initiative on the ballot from 5% of the turnout from previous gubernatorial election to 10%.

Eliminate term limits. Combined with the changes in the redistricting process that become effective in 2012, we should eliminate term limits for members of the Assembly and Senate. The revolving doors in Sacramento create revolving doors in elected offices throughout the state creating instability and politicians spending more time collecting donations and working for election to the next level than paying attention to their current jobs and constituents. Elections are term limits, do not limit how many an individual may win.

Spending cap mandates on the State budget. Regardless of revenue the growth of the state budget should be capped at a formula of population growth and inflation. If revenues exceed spending funds should be divided between paying down debt, funding reserve accounts, returning funds to counties and cities and returning taxes to tax payers in the form of rebates. Increased revenues over a prolonged period should not enrich those who work for the state, but rather should be returned to those who provided the excess revenue.

Budgets are made on revenues received not forecast. In conjunction with the previous item, lawmakers will not longer use budget projections to create budgets. Too often the projections are wrong, or are misleading, to allow higher spending and balancing the budget for signature only to see revisions later in the fiscal year. All budgets going forward would be based upon prior fiscal year revenues--you can't spend what you did not collect. The current budget crisis is worsening because of the spending built into the budget and a complete failure to accurately predict revenues for the current fiscal year. I realize this proposal has a one year lag time; we are already spending fiscal year 2008-09 revenue leaving none for FY 2009-10. Therefore a special bond would be floated to provide revenue for the first fiscal year of the new budgeting process. Every budget for the next fifteen years would first carve out funds to pay down the bond from revenue collect the prior year before any other spending items are placed in the budget.

Negotiate with public employees: a lot of job losses or fewer job losses. California has 235,000 employees, does anyone really feel everyone of those jobs is necessary? As charitas dictator I approach each of the public employee unions and offer them option A or option B, their choice: Option A is the elimination of 15% of the jobs represented by that collective bargaining unit. Option B is the elimination of 10% of the jobs and those who remain will have new contracts reducing benefits and limiting salary increases to be the same formula used to allow for increases in the budget. Benefits would change such that all employees would contribute on par with those contributions in the private sector to retirement accounts: the state will match 50% of your personal contributions up to a maximum amount that equals the limits imposed on private sector employees. Medical benefits would be paid based on the MediCal rates of coverage; our state is already insuring and paying for the medical benefits of millions of Californians, if this insurance is good enough for them it should be good enough for the 200,000 plus public employees. If an employee wants private insurance they will be credited the amount of the insurance premium payments equivalent to the MediCal premiums. These reforms are enacted for all state employees, not just those who are union members, but anyone who receives a check from the State of California.

No more state resources used to collect political donations. The state will not longer allow payroll deductions to collect donations made to the political units of the employee unions. The state will not pay for the accounting, collection and distribution of funds used to elect individuals to public office. Public employee unions must collect their political donations directly from the individual union members not from the state through their paychecks.

Reform MediCal so it is equal through the state. There is so much institutional dysfunction in the MediCal system that wastes so many millions of dollars that it is hard to know where to begin; so let's over simplify the program. First, all hospitals will receive the same reimbursement for the same treatments, no more tiered payouts depending on where the hospital is located or whether the hospital is contracted with MediCal--the same for payments to doctors and other health care providers. If it is mandatory that anyone walking into any hospital be treated then it should be required for the state to reimburse all health providers equally. This alone will eliminate the need for a huge amount of staff that is currently utilised to review and deny claims, process appeals, approve claims, cut the reimbursement, all on a patient by patient basis. If a hospital or health care provider is found to have engaged in fraud then immediately begin fraud prosecutions, and put in place a leadership team to ensure the hospital stays open. This single pay provision will also save hospitals and health care providers up and down the state hundreds of millions of dollars in personnel costs used for accounting the current complex MediCal system of payments. It will benefit patients in that they will not have to be transferred from non-contracted to contracted hospitals and no matter what hospital they go to in the state they can expect the same level of care.

Reform the education system. Eliminate the mandates for programs that create a one fits all mentality. Cut the State Department of Education in half and push the savings down to the local school districts. Allow the school districts to have more control over their budgets and how they wish to spend their revenues. Using standardized tests, if districts fall behind take over the district and slowly re-integrate local control; such as occurred with Compton Unified School District in recent years. Put more control closer to the parents through their local school boards and Superintendents. With increasing power in Sacramento we have decreasing opportunities and programs for our children, we need to reverse that trend.


Encourage department managers to succeed and reward success. Too much money is added to our budgets to maintain prior years' funding, whether the funds are needed or not. Reward department managers who are able to show year after year after year savings with financial incentives. Allow managers to present five year plans for projects and place into their budgets funds to save for future expenditures for capital improvements. Allow managers of our public funds to operate as their counterparts are allowed to operate in the private sector, plan for success and reward success. Our current system does not bring accountability into the management of public funds nor does it allow for long term planning; managers are operating on a year to year basis without encouragement to be innovative or creative in product delivery. Changing the culture will encourage more entrepreneurial management and will attract individuals who thrive in such an environment.

Cut taxes. Roll back the sales tax by 2.5% across the board. Roll back auto registration fees by 10%. Cut the income tax rates by 1.5% for every level and raise the income levels for each tier so they more closely match those at the Federal level. You cannot tax your way out of a recession. Study, after study, after study shows that raising taxes cuts revenue, lowering taxes raises revenue. Look at the states that have done well during our recession and you will see states that are attracting businesses and jobs because of their low tax rates. Even during the economic growth from 2002 through 2007 California's business community grew slower than most states. Taxes are killing job development and growth in this state. We need to attract wealth and investment, we do that by allowing success to accrue to those who succeed.

Drill for oil. Open the coastal oil fields for development and extraction. Follow the leadership of Governor Sarah Palin in Alaska and the deals negotiated with the oil companies to extract oil and natural gas from her state. For the Palin haters ignore who and concentrate on the results, a tremendous spike in revenue for the State of Alaska. California is sitting on hundreds of millions of dollars of revenue that could benefit our state, unfortunately a small minority has been allowed to deny those funds to the people of California. I find it appalling that the Legislature and Governor find it okay to throw a huge tax burden on the families of this state but refuse to extract the millions of dollars of revenue sitting right off our shores.

Sue the Federal government. Require providers of service receiving state funds to document whether the recipients are legal residents of the United States. If they are not then send a bill to Washington D.C. Prisons, hospitals, schools, law enforcement are all expending resources to pay for services provided to illegal aliens allowed into this country by lax federal enforcement of our borders. Take the Feds to court and recoup the billions spent by California tax payers every year as a result of the problems created by Washington's inability, or refusal, to address this problem.

Require and accounting and spending of money from Propositions. We have billions of dollars that have gone unspent because of voter passed initiatives; from stem cell research, to Rob Reiner's cigarette tax, to fixing the Delta to avoid a Katrina type collapse, to countless other propositions passed and funded but not accounted for to see if the projects have been completed or even worked upon. Every proposition that requires bond funds would also have an audit component for review every two years. If within five years at least half the funds have not been spent to accomplish the purpose of the proposition then the funds are returned to the State, the bond is paid off and the project(s) shut down. There is no accountability for any of the funding for the multitude of propositions passed by the voters, seemingly on a whim. Most of the spending propositions benefit a very narrow segment of the population, make them accountable for the funds or they lose all of them.

Keep the two-thirds majority requirement. I would not change the requirement that all budgets and tax increases require a two-third majority vote in the Assembly and Senate. One can imagine the budget problems we would be having if it were not for this rule and if the Democratic majorities in both houses had the ability to pass budgets with a simple majority. Only the hold out of Republicans have lowered the tax increases from initial Democratic proposals and lessened the spending in the proposals. Unfortunately every year the necessary two or three Republicans have eventually jumped over the line and allowed the horrendous budgets of the past decade to pass. Removing the two-thirds obstacle will remove any filter on the budgeting process.

Given the ideological bent of this state and the control the public employees have I am certain that these proposals would probably fail in any general election, which is why I would have to enact them as the Charitas Dictator, or Benevolent Dictator. For our budget problems in this state to be solved in the short and long term we will need someone, or more likely several someones, to have the courage to stand up and loudly proclaim specific solutions to our problems.







2 comments:

David said...

Libertarians for California Assembly and Senate.

Haiku Frank (D) said...

Offshore oil drilling
Is no panacea for
The Golden State's woes.