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Our View: Time to cure budget ailments

The Signal Editorial Board

Posted: January 22, 2012 1:55 a.m.
Updated: January 22, 2012 1:55 a.m.
 

Gov. Jerry Brown gave his annual State of the State address Wednesday, and, to no one’s surprise, the main focus was California’s massive budget deficit and plans to fix it while keeping education funding mostly untouched.

What was also not much of a shock was that Brown’s primary method to fix the annual budget shortfalls of about $10 billion is to put a temporary tax increase on the ballot for the November election, but there was no mention of how to fix the illness, only to treat the symptoms.

And his doom-and-gloom framing of a “no” vote doesn’t bode well for those hoping for alternative treatment methods.
According to Brown, his plan of an increase of state sales tax by a half-cent and an increase on income tax on individuals who make more than $250,000 a year will bring in roughly $7 billion annually through 2017. But, the Legislative Analyst’s Office states that the number will be more in the neighborhood of $4.8 billion a year.

While it is possible that the increase in taxes could balance the budget and keep our educational system from imploding, this is still just a Band-Aid fix for an underlying chronic condition of Sacramento living beyond its means and asking us, the taxpaying public, to come to the rescue.

What happens in 2017 when the proposed increases expire? Another vote for “temporary” tax increases?

Also, keep in mind, we just recently had our last round of temporary tax increases expire. And during that time of higher taxes, the state ran a $19 billion deficit.

In other words: History does not validate Brown’s proposal.

It’s also naïve and short-sighted of Brown to put all his eggs in the basket of voter-approved tax increases when people all over the state don’t have much to spare as it is.

And Brown warning that a “no” in November would cripple public education in the state if his one and only plan doesn’t pan out feels more like a threat to get voters to approve the increases than a viable, long-term remedy.

What we really need is some follow through in the effort to treat the disease.

As we’ve said in the past, one plan for how cutting, consolidating and changing things to give a long-term budget reduction has already been written out, in detail — in 2004 — ordered by then-Gov. Arnold Schwarzenegger, who did nothing with the information.

The plan, known as the California Performance Review, would streamline hundreds of duplicative, unnecessary and consumer-unfriendly departments, agencies and boards, and would save the state $32 billion over just the first five years of implementation.

If put into effect, the systemic changes and savings in the CPR would massively eclipse the revenue increase from what’s projected from another round of temporary tax hikes. And, if Sacramento can live within its means and not view the multibillion-dollar savings as room to grow, then we’ll be in great shape for the future.

Many out there say that we simply need to drop our unacceptable 11-plus percent unemployment rate, and the increased income-tax revenue and more sales tax revenue will balance the budget. While this is definitely a huge benefit for both the state economy and will help cut down the budget deficit, it’s unlikely to completely cover that gap unless the state also cuts and consolidates certain programs.

Becoming more business-friendly in a state that’s often rated in top five for worst places to do business is definitely a step in the right direction, but Sacramento has the tendency to grow its budget with each financial bubble (see: dot-com and housing) instead of keeping sane and sustainable revenue requirements.

It will take some convincing to make it stick in the Legislature, but it’s vital to keep us from being dragged back down into debt even if unemployment is brought down to zero.

All in all, there’s likely not one single fix for how to cure what ails Sacramento, but we’re hoping that Gov. Brown realizes that, too.

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