Moving California forward?

APRIL 20, 2010

By KATY GRIMES

In one of the most relevant legislative hearings held recently, the Assembly Budget Committee heard testimony from members of California Forward, the group proposing the controversial voting threshold change from the current two-thirds vote required for passing a state budget, to a simple majority.

“The most innocuous” of the groups’ provisions, described by Assembly member Mike Feurer, D-Los Angeles, the vote threshold would alter the method in which legislators enact a budget, from two-thirds vote to simple majority. Feurer says there is support from Republicans and Democrats because the change underscores who is accountable for the final product. The California Forward proposals are within ACA4 and AB2591, introduced by Feurer.

Because voters have demanded that state budgets get passed on time, Feurer explained that the California Forward package states that legislators will not be paid until a budget is passed.

The change to a simple majority vote from two-thirds however, does not apply to taxes or fees that replace existing taxes.

Fuerer addressed nonrecurring, one-time state revenues, and said that the Legislature will be required to define to what purpose these revenues will be attributed, so that California does not end up in a similar budget mess.

Testifying for California Forward was Pete Weber, a retired CEO of a publicly traded company and former vice president of a Fortune 500 company that had 8,000 employees when he was vice president. Today, there are only 300 employees with the company in California, attributable to the difficult and hostile California business environment. Weber said that the company moved most of the work and jobs out of California to other states.

A supporter of California Forward’s policy recommendations, Weber said that he was not just a proponent of the simple majority vote requirement on the budget, but that it was only effective in conjunction with all of the other elements in the California Forward package. Weber said that the quality and functioning of the state government needs to be predictable and stable in order for businesses to be attracted to California and stay in the state, issues addressed by California Forward.

Jim Mayer, California Forward executive director, explained that the vote threshold was not and still is not the highest priority for California Forward. Mayer said that when California Forward was forming, it looked at the unwillingness of the Legislature to manage the spikes in state revenue, and how to avoid mismanagement in the future. Mayer explained that California Forward seeks to help the Legislature avoid bad decisions, while encouraging it to make good decisions.

According to Mayer, the Democrats want a simple majority to pass budgets, and the Republicans want to control spending. According to Mayer, the complete package that California Forward presents will drive better results for the state, offering both parties the tools to accomplish this.

Cruz Reynoso, former California Supreme Court Justice and part of the leadership team for California Forward, explained that his longtime interest and involvement with social justice issues melds with the need for a clear path to the future for California. Reynoso said that those who are least represented suffer the most under the state’s current system. “The California budget has hurt all of us,” said Reynoso, particularly those “least organized, the poor and elderly.”

Reynoso said that the California Forward budget recommendations are a compromise, but legislators have to vote on something to get any change. Reynoso stressed, “It is important to have support from the people for everything the legislature does.”

Former California legislator and Secretary of State Bruce McPherson, also on the leadership team, told the budget committee members, “I feel your pain” in dealing with the budget process. McPherson said that California Forward is a common-sense, practical approach for budget solutions, and assured legislators that California Forward members researched the best practices in other states, recognizing that the two-thirds vote lost the ability to ensure fiscal discipline for states. “With good fiscal discipline, we can get the job done.”

McPherson acknowledged that in good times, it is hard for legislators to say “no” to spending, making the difficult times even harder.

Mayer also stressed that good times spending has lead to much tougher times when the economy slows. “Legislators need some firewalls” from spending, according to Mayer. California Forward’s plan offers the oversight, fiscal discipline, and simple majority vote in order to pass budgets on time, according to Mayer.

Some committee members were not ready to sing the praises of California Forward’s plan. Assembly member Jim Nielsen, R-Gerber, referred to the plan as “autopilot spending,” said that he had long advocated a true two-year budget, but the California Forward plan was not a true two-year budget.

Brian Nestande, R-Palm Desert said that the state of New Jersey has a simple majority vote to pass budgets and its deficit is three-times the size of California’s.

The most memorable comments came from Assemblywoman Diane Harkey, R-Dana Point, who said that the state budget is always delayed because the expenses are never matched by revenues. “Late budgets have been strictly political and are a tactic,” Harkey said. “Put it out late, and vote on it late at night,” added Harkey. She stressed that her concern is with the level of debt the state has and the inability to access credit markets without spending too much on the amount of money the state borrows.

Harkey was critical of the “mountains of debt placed on the people of California,” and the lack of legislative discipline. “The problem is not two-thirds, but the lack of discipline,” Harkey said. “This is just the path to eliminate the two-thirds tax vote,” added Harkey, calling the plan a “revenue neutral scheme to scam on votes.” Harkey said that the California Forward plan would not fix California’s budget problems.

Assembly member Kevin Jeffries, R-Lake Elsinore, offered another view of the California Forward plan, concerned that the plan would empower single party rule. “We can move forward only if the majority party wants this non-partisan. The actions of the majority party don’t indicate non-partisan action,” said Jeffries.

During public comments, the California Labor Federation stated concern with the vote threshold, the ability of the Legislature to convert taxes to fees, a cap on existing programs as well as the pay-as-you-go program’s effect on general obligation bonds.

David Wolfe with the Howard Jarvis Taxpayers Association (HJTA) said that there were some things that they liked about the plan: performance based budgeting, the two-year budgets and cutting legislators’ pay if the budget is late. However, Wolfe said that HJTA was not supportive of the majority vote for new fees. Wolfe offered an analogy about the majority vote on the budget, explaining that it’s as if two wolves and one sheep are deciding what’s for dinner. The two-thirds vote gives the sheep a slightly better chance.

To read more about California Forward’s plan: California Forward 2010 Reform Principles