State Budget. State and Local Government. Initiative Constitutional Amendment and Statute.
Proposition 31 is a privately created and financed government overhaul championed by the carefully structured bipartisan think-tank California Forward. Of course the problem with engineered bipartisanship is that the easiest way to keep everyone happy is to dodge all of the tough issues; for California those would be: (1) Propositions that spend state money (through creation of unfunded programs, issuance of debt without any revenue increase, increasing prison sentences without allocating increased expenditures for prisions and the like), (2) The massive increase in state prision costs (a 1500% increase over the last 30 years – see analysis under Prop 30 and Prop Prop 36 (modifying 3-Strikes Law)), (3) The decreased funding of local services caused by the ever-popular Proposition 13, (4) Proposition 98’s forced allocation of budget funds (for an older, but still useful primer on prop 98’s benefits and detriments see here), and (5) term limits that have changed the dynamic between legislators and the executive (Governor) and shift power away from experienced elected legislators into the hands of more experienced private lobbyists. We’ve previously endorsed more limited proposals by this group, but because this broad-based proposition avoids these major issues facing the state system, the resulting proposal is a mishmash of clever ideas, half-backed compromises, and head-scratchers.
We’ve tried to organize our analysis of the proposed changes into three basic groups:
What it Does – Power Shifting
- Permits Governor to cut budget unilaterally during declared fiscal emergencies if Legislature fails to act.
Under Proposition 58 (passed in 2004), after the budget bill is approved, the Governor may declare a state fiscal emergency if he or she determines the state is facing large revenue shortfalls or spending overruns. When a fiscal emergency is declared, the Governor must call the Legislature into special session and propose actions to address the fiscal emergency. The Legislature has 45 days to consider its response. The Governor’s powers to cut state spending, however, currently are very limited even if the Legislature does not act during that 45-day period. Under this proposal, if the Legislature does not pass legislation to address a fiscal emergency within 45 days, the Governor could reduce some General Fund spending. The Governor could not reduce spending that is required by the Constitution or federal law—such as most school spending, debt service, pension contributions, and some spending for health and social services programs. (These categories currently account for a majority of General Fund spending.) The Legislature could override all or part of the reductions by a two-thirds vote in both of its houses.
What We Think: We are all frustrated with the perpetual budget problems and we have been impressed that our current governor has brought about the first surplus budget in modern history. That said, we are troubled by what is a substantial transfer of power away from the legislature to the governor proffered by this proposal. We can envision scenarios where a governor might “game” the budget process in order to create a scenario where he or she can act as “super legislator” and cut whatever non-guaranteed programs he or she sees fit. We can also envision scenarios where a legislature may avoid difficult decisions or compromises, knowing that ultimately it can foist the problem onto the governor and blame him or her for the result. With the ever-increasing focus on Governors and decreasing interest in legislators, we can see an argument for abolishing the legislature and having only an executive – but so long as our system purports to have a legislative and executive arm, we don’t think the executive should be given the power to out-legislate the legislature. We’ll take our current messy system over one that concentrates power in the executive while still purporting to rely on an emasculated legislature.
- Gives counties power to alter state statutes or regulations related to spending unless Legislature or state agency vetoes changes within 60 days.
This change allows local governments to form consortia of local governments by forming agreements at the local level (votes by the elected county officials, school district officials, and other county officials), presumably in order to achieve certain economies of scale among different government service providers. If such government consortia are formed, those local groups are permitted to circumvent state law if they can find a different way to accomplish the “functional equivalent” of the law.
What We Think: The idea of pooling resources among local schools, police, fire, and other service providers is a good one. The idea of letting some governments group together might be good or it might be bad. We can easily envision scenarios where wealthy governments are able to enter such consortia and poor ones are systematically excluded – would you invite East Palo Alto, or unincorporated Riverside to join your consortium, or would you prefer Beverly Hills or Los Altos? The idea of allowing local consortia to effectively overrule state law is also a bit more dubious – done properly it could create efficiencies; done improperly, it could create a double-standard where localities that do not form (or aren’t wealthy or connected enough to be accepted into such groups) consortia follow one set of laws, while the consortia follow another. There is also a concern by some that environmental and other state regulations could be bypassed in this way since the conclusion that something is a “functional equivalent” is certainly debatable.
- Transfers money from State control to Local control
What We Think: The amount transferred here – about 200 million – is relatively small in comparison to the overall budget. Still, we question the wisdom of moving money from a strapped State budget to fill local coffers – some of which are empty, some not. We also question the conventional wisdom that local elected officials make better decisions than state legislators. We fear that the electorate pays even less attention to the election of county and school board officals than it does to the election of legislators. There is also a correspondingly smaller amount of “watchdog” resources (press attention, independent groups, etc) at the local level, which leaves a greater likelihood of extremism and mischief at the local level. In short, we are not so sure that moving money around between state and local systems is a win.
What it Does – Budget & Legislative Changes
- Establishes two-year state budget cycle and restricts legislature’s calendar, requiring time to be allocated to oversight of state and local programs.
Instead of a current 1-year budget, the proposal would require the state to run on a 2-year budget cycle. This measure also requires the Legislature to reserve a part of its two-year session—beginning in July of the second year of the session—for oversight and review of public programs. Specifically, the measure requires the Legislature to create a process and use it to review every state-funded program—whether managed by the state or local governments—at least once every five years. While conducting this oversight, the Legislature could not pass bills except for those that (1) take effect immediately (which generally require a two-thirds vote of both houses) or (2) override a Governor’s veto (which also require a two-thirds vote of both houses).
What We Think: We can see some benefit and some drawbacks to a two-year versus a one-year budget, in large part due to the fact that passing the budget is so time-intesive. Still, its hard for us to call this out as a huge “need” for the state. (for an analysis of another state’s similar debate see here; for an analysis rejecting bi-ennial budgets at the federal level see here, for an analsys of the trend among states away from bi-ennial budgets see here). We can also see some benefits to reviewing all state-funded programs, though we hesitate to dictate that legislators do it at a particular time, for a particular duration. It is also unclear to us why legislators would be better suited to review state-funded programs (presumably pouring over reams of accounting spreadsheets) than would the State Controller who is already charged with that responsibility http://www.sco.ca.gov/.
- Prohibits Legislature from creating expenditures or revenue reductions (tax cuts) of more than $25 million unless offsetting revenues or spending cuts are identified.
What We Think: Generally we think this is a good idea. Unfortunately, the devil is again in the details. While we think the idea is a good one here, we are not totally sold on the manner in which this is implemented. We don’t feel the proposal sufficiently acknowledges funding changes over periods of time (you could have paid for the tax cut this year, but not next year), and it does nothing to address new expenditures incurred through propositions. Still, overall, we think this one proposal is better than the current system.
- Requires publication of all legislative bills at least three days prior to legislative vote.
What We Think: There seem to be sufficient safeguards (terrorism and natural disasters) to make this a workable proposal, requiring more time for legislators, press, and non-governmental groups to read and consider legislation before it is voted upon. We like this idea.
What it Does – Local and State Program Changes
- Requires performance reviews of all state programs.
What We Think: As stated under our “bi-ennial budget” analysis above, we see some benefit to this idea, but overall we don’t see it as an important “fix” or understand why the legislature is better at performing this function that the State Controller who is currently charged with the same tasks.
- Requires performance goals in state and local budgets.
Currently, state and local governments have broad flexibility in determining how to evaluate operations of their public programs. This measure imposes some general requirements for state and local governments to include new items in their budgets. Specifically, governments would have to evaluate the effectiveness of their programs and describe how their budgets meet various objectives. State and local governments would have to report on their progress in meeting those objectives.
What We Think: Even though the LAO states this would potentially impose a substantial additional administrative cost on local governments, we still feel it is a worthwhile idea. That said we doubt a constitutional amendment is justified in order to accomplish this fairly basic “performance-based” analysis tool. We could probably find a legislator to pass such a proposal in the legislature on behalf of the people – after all, that is the purpose of a representative democracy.
This proposition has some good ideas and probably some lofty goals. Overall, however, its imposes a host of beurocratic “solutions” searching for problems, and it does so in a fairly haphazard way. We find no imperical evidence that the shift form an annual to a biennial budget delivers substantial benefits and we find no justification for the major power shift away from the legislature and to the Governor and local county supervisors, school board administrators, and other locally elected officials. We see some value in some of the ideas, but as long-time readers know, we strongly urge voters not to change their constitution to implement “partially-good” legislation.