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The Road to Economic Recovery: What California Needs

New America Media, News Analysis, Various Authors Posted: May 20, 2009

Passage of Propositions 1A through 1E was a long-shot at the polls yesterday. And their defeat owed to a combination of low turnout, voter confusion about the measures' real impact and disgust with elected officials-- puts Californias budget crisis back in the hands of Gov. Arnold Schwarzenegger and state legislators. The state is facing a $21 billion deficit.

While the propositions promised a quick fix for the states budget shortfall, many critics believe that more systemic changes are needed in how California raises revenues, creates budgets and allocates resources. So, New America Media asked a group of policy and advocacy experts the $21 billion question:

What should Californias policy makers now do to rescue the state from budget crisis and put it back on the road to real economic recovery?

Alice Chen, medical director, Adult Medical Center, San Francisco General Hospital

The defeat of Proposition 1A is a good thing for California in the long run, but will almost certainly result in more cuts to essential services in the immediate future.

One real "fix" to the state's ongoing budget woes is to abolish the requirement for a two-thirds super-majority to pass a budget. California is one of only three states (along with Rhode Island and Arkansas) that requires a two-thirds vote in both legislative houses to pass a budget. In a state as large and diverse as ours, this just doesn't work. It allows a small minority in either house of the legislature to hold the budget process hostage.

Anthony Wright, executive director, Health Access

California voters voted down a constitutional cap on spending in Proposition 1A, as they did a few years ago with Proposition 76, with over 63 percent against. They voted down cuts to health and other vital services in Propositions 1D and 1E.

There are tough decisions to be made, including on cuts and taxes, but that's why we elect our legislators. The budgets proposed in the last few days make it clear: without significant new revenues, there will be massive cuts to health services. Hundreds of thousands of children, parents, and seniors will lose health coverage, and there will be negative impacts on the health system we all rely on. And for every dollar we cut in health as well as some other services, we will lose even more in federal matching dollars, to our health system and our economy.

We need to convince our legislators to pass the revenues needed to prevent devastating cuts to core services that we all depend on.

James Mayer, executive director, California Forward

What we have not yet done in California in response to our long-standing fiscal crisis has been to restructure government, to make sure were using the available dollars as wisely as we can.

We need to not just figure out what to cut, but how to encourage managers of state and local programs to rethink what they are doing, to use the money they do have in better ways. It requires changing laws consolidating programs, giving local government more flexibility about how they use money in exchange for them using money better.

For example, California has 50 programs for youth crime prevention in 12 different state departments. Thats an area where we can consolidate, reduce the amount of money we spend on overhead, and use the money in other ways to address crime and young people.

The steps would be to implement this over 1 to 2 years. Large corporations, they are continually thinking about how to do things better its not something you do overnight, but it doesnt take years. This is about self-examination.

Tim Carmichael, senior director of policy, Coalition for Clean Air

In January and February, the governor and Republican leaders in the legislature used budget negotiations as an opportunity to either scale back or eliminate environmental programs and protections, including the implementation of AB 32, the California Environmental Quality Act, and the diesel emissions regulations.

My first advice for this round is that no one be allowed to use budget negotiations, as a forum to change or as a shortcut to scale back environmental protections without a full discussion of the impact of the changes.

Some in the legislature have drawn a line in the sand they say they will not consider any new revenues, they only want to talk about cuts. We need a mix of both: a gas tax is one of the potential revenue streams that needs to be seriously considered.

The most significant cuts will be to education and health care. We should be very concerned about that, but its also likely there will be some cuts in environmental agencies. The environmental agencies are lean already. There may be an opportunity for [the state] to save money in operations going forward by consolidating administrative support services, computer tech support, possibly merging some of the agencies, all three of those are going to be topics of serious discussion in the legislature.

Marty Lynch, executive director, LifeLong Medical Care

Californians voted on the immediate economic future of our state. The choices were all bad, and our governor said last week that things only will get worse. I dont think many of us want to live in the society that Gov. Schwarzenegger describes, a society that cuts education and kids health insurance, as well as basic care for elders and people with disabilities, while bankers get $700 billion in bailouts and take home fat bonuses. Didnt someone say a society is judged by how it treats its youngest and oldest citizens?

To be fair, I do realize that our current problems didnt start with the economic collapse or with our governor winning his office by giving back the vehicle license fee some years ago, although that didnt help. Californias problem traces directly back to the 1978 passage of Proposition 13, the so-called taxpayer revolt.

What really came from Prop 13 was an ideology of selfishness. The rich got richer and we lost our sense of community and caring for each other. And California sank almost to the bottom of the 50 states in how much we spend on education and health care for lower-income people.

Today, most Republican legislators hold the line against taxes and hold the budget process hostage. Sacrifice? As needy kids and elders get denied care, Californians and their media look the other way and damn the politicians for not doing their job again.

It is well past time to tell our leaders that Californians want to live in a society that cares for its children and their grandparents. We dont want corporations getting wealthier at the expense of caring for each other. And its time to let our political leaders know that saving California from itself means dismantling Prop 13 and the ideology of selfishness that goes with it.

Rick Jacobs, founder and chair, Courage Campaign

The first step to fixing the states crisis is to restore democracy and accountability to our states budget by allowing the legislature to make fiscal decisions by a majority vote.

Under the current system, nobody appears responsible for the states massive crisis. Right-wing Republicans are in the minority in the state legislature, but use the 2/3rds rule to block the policies of the majority. Voters have chosen the Democrats to be in the majority, but Democrats cant enact their own policies and instead blame the Republicans for obstruction. Even worse, the two-thirds rule has led to disreputable and possibly illegal vote-trading, as exemplified by Sen. Abel Maldonados list of demands that he won in exchange for his vote during the February budget debate.

The second step is California needs to follow the tax policies of President Barack Obama and reverse three decades of giving tax breaks to the wealthy and to large corporations.

Under Republican governors Ronald Reagan and Pete Wilson, the highest income earners in this state paid taxes at a higher marginal rate than they do today. Now, an individual making $900,000 pays the same tax rate as someone making $50,000. Oil companies pay the same property tax rate as an elderly homeowner and unlike Alaska and Texas, oil companies pay no tax on the oil they extract in California.

As our third step, the Courage Campaign urges the state legislature to call a Constitutional Convention now; a modern Constitutional Convention that focuses on structural issues will restore functionality to state government. Thats why the Courage Campaign trusts the people of this state to convene a convention and effectively hit the reset button for state government to clean the slate and start over.

Related Articles:

Diverse Coalition Says NO to Prop. 1A, 1D

Primary Care Physicians - A Medical Emergency

Is a Carbon Tax Good for the Economy?

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