Business-as-usual tactics spike state taxes, debt

The California Department of Finance has confirmed that the state’s fiscal year revenues through June will be $2.2 billion short of expectations, prompting Gov. Jerry Brown to implement $1 billion in budget cuts.

These cuts include a $258 million busing subsidy, $320 million from public universities, $200 million in programs for the elderly and disabled, and $79.6 million from public schools — equal to half a day of schooling.

Most of these take effect Jan. 1 except the school cuts, which begin Feb. 1. The triggered reductions are part of a last-minute June budget deal and will now give political cover as Brown begins pushing for a round of income and sales tax increases.

This is just business-as-usual in California and provides a basis for examining the state’s irresponsible budget practices. State Budget Solutions, my organization, pointed out that the governor was assuming $4 billion more in his rosy economic forecast than the already projected $6.6 billion forecasted increase.

Budget gimmicks are relied upon because they shift blame away from politicians and onto supposedly unforeseen circumstances. Relying on a particularly optimistic revenue projection allowed Brown and his allies to avoid ownership of cuts to important state functions such as K-12 education.

Now, as Brown prepares to place a general sales tax hike on the November 2012 ballot along with higher income taxes on those earning more than $250,000, he can point to the potential for a new round of highly visible cuts as the only alternative to his tax hikes.

In a sign that little is set to change, Brown has already made clear that his 2012-13 budget proposal’s revenue forecast will include $7 billion from these extra taxes, despite the fact that their fate will not be decided until November.

Interestingly, the governor vetoed a bill just this year with the potential to reform the entire budget process. The Legislature had unanimously passed SB 14, which would have implemented “performance-based budgeting” that requires state agencies and departments to explain desired performance outcome measures for all spending programs.

Measurements then continually assess a program’s effectiveness and efficiency in achieving the department’s goals. When each allocation is viewed as one part of a revenue pie, prioritization can occur based on the successes or failures of individual programs.

The governor’s accompanying veto message complained of the bill’s one-size-fits-all approach and called it a siren song of reform. Requiring performance measurement at all levels of government, he argued, would divert resources away from policy implementation and into assessing merits.

Brown and other California officials refuse to acknowledge that a state’s budget is one whole entity.

Effective allocation of total revenues as one sum of money imposes a big-picture view of the entire budget, along with an understanding of how each expenditure stacks up against the rest in terms of actual outcomes and contribution to state priorities.

Brown refused to implement a reasonable, rational and responsible budgeting approach. Piecemeal use of effective budgeting techniques and the continued reliance on gimmicks might look like reform and austere decision-making, but they are only a cover-up for California’s irresponsible business-as-usual.

Bob Williams is president of State Budget Solutions, a nonpartisan organization advocating for fundamental reform and real solutions to state budget crises.

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