View Mobile Site
 

Ask the Expert

Signal Photos

 

Scott Thomas Wilk: Brown’s budget won’t help state pass U-Haul test

Right Here, Right Now!

Posted: February 18, 2011 1:55 a.m.
Updated: February 18, 2011 1:55 a.m.
 

How is California faring economically? Log onto U-Haul’s website and check quotes for one-way rentals. The higher the drop-off price, the less in demand that destination is.

Currently, it costs 44-percent more to rent a truck one-way from Glendale, Ariz., to the Santa Clarita Valley than vice versa. That trend is unlikely to change with Gov. Jerry Brown’s budget plan to address the $25.4 billion budget deficit.

Most families when budgeting follow a prudent, common-sense approach by reducing spending when revenues don’t align. If Sacramento politicians had done that, we would be in great shape.

According to the Senate Republican Caucus, in fiscal year 1990-91 the state took in $38 billion in general fund revenues, and by fiscal year 2008-09 revenues reached $102 billion — a 167-percent increase.

If state government had simply limited spending increases to the state’s consumer price index, plus population growth, each year since fiscal year 1990-91, the state would be swimming in black ink with a $15 billion surplus.

To put that in perspective, the National Association of State Budget Officers’ 2009 budget report shows a $15 billion budget surplus would be larger than 35 state budgets (placing our surplus in between the state budgets of Maryland and Virginia).

Recently, Brown unfurled his budget plan. According to the governor’s website, “Brown’s budget proposes $12.5 billion in spending reductions, $12 billion in revenue extensions and modifications, $1.9 billion in other solutions to close the gap and provide for a $1 billion reserve.”

I am willing to give the governor credit for producing a somewhat realistic budget. However, if we follow his plan, California will continue to fail the U-Haul test.

One of my biggest problems with the Democrats is their relentless pursuit of economic policies prioritizing income redistribution over economic growth.

The free market is a dynamic organism that can lift all. Democrats view it as a static entity where they get to pick the winners and losers in a zero-sum game.

The long-term solution to California’s woes is economic growth. Yet Brown never mentioned it once in his State of the State address.

In his speech, Brown said, “This is not a time for politics as usual.” I agree. Brown needs to stand up to the special interests and pursue policies that will generate economic growth.

One area where Republicans can work with Brown is on tort reform. According to the Institute for Legal Reform’s “Lawsuit Climate 2010: Ranking the States,” California ranked 46th out of 50 states in the fairness of its litigation environment. The poll respondents gave California low rankings for its treatment of class-action lawsuits, tort or personal injury lawsuits, damages and contract litigation. More than two-thirds of the survey respondents said a state’s lawsuit environment is likely to impact important business decisions, such as where to locate or expand.

Another area of concern is workers’ compensation. According to the California Chamber of Commerce, California dropped from the second most expensive state in the nation in 2006 to the 13th most expensive in 2008. In 2003, the average policy-holder workers’ compensation rates per $100 of payroll were $6.44. It decreased to $2.37 in 2008, but increased to $2.39 as of September 2010.

In recent years, Democratic legislators have introduced bills to strip the system of the 2003 reforms. If those bills were to become law, the result would be higher premiums for California employers. Former Gov. Arnold Schwarzenegger vetoed many of these measures. Brown should pledge to do the same and to offer to seek further ways to reduce costs.

Regulatory reform is needed to make it less costly and burdensome to California business. The independent Little Hoover Commission is currently conducting a study on regulatory reform “to learn about ways that California’s regulatory development and review process can be made more efficient, more effective and more transparent.”

Obviously, the governor can’t pledge to support reforms that he hasn’t yet seen, but a nod in the direction to regulatory reform would be helpful.

Even if the voters approve Brown’s budget plan, it will fail to address our budget problems unless there is an economic growth component.

With so many productive citizens fleeing the state, why must U-Haul rates climb before Sacramento Democrats get serious about economic growth?

Scott Thomas Wilk is a member of the California Republican Party and elected member to the Republican Party of Los Angeles County. His column reflects his own views and not necessarily those of The Signal.

Comments

Commenting not available.
Commenting is not available.

 
 

Powered By
Morris Technology
Please wait ...