CA Budget filled With 'Luxury' Items

To Plug State Deficit Stop Giving Poodles Luxury Gifts

DEC. 14, 2010

By WAYNE LUSVARDI

Charles Dickens’s satiric novel “A Bleak House” is perhaps more appropriate than his famous story “A Christmas Carol” for describing the bleak Christmas that California faces in 2010, and for the next several future Christmases.

The novel is about how in 1853 the Byzantine British judicial system had been unable to adjudicate the inheritance case of Jarndyce vs. Jarndyce, in which the costs of litigation had consumed the entire estate, and as there was nothing left to litigate, the case melted away.

In Chapter 12 Dickens humorously sounds like he might be writing about Gov.-elect Jerry Brown’s announcement of his new budget director:

“You can’t offer him the Presidency of the Council; that is reserved for Poodle.”

And precisely what does “Poodle” symbolize in California?  Poodle is the giant invisible poodle in the middle of the room in California that must first be recognized in order to pull back on the leash of state government spending. The giant pampered poodle is an emblem for all the luxury public goods and services that are now delivered by state government but viewed as “essential public services” that are untouchable and unmentionable in budget deficit hearings and in the media.

The choice of Poodle for California’s budget deficit mascot is inspired by Gov.-elect Jerry Brown’s recent announcement at his Budget Summit that he is going to offer a choice to voters between “fewer essential services or higher taxes.”  Brown was careful to avoid any public discussion of a choice between essential and luxury public goods and services.

Here are some examples of California’s absurd bureaucratic government that sound like they were taken out of Dickens’ novel about how dysfunctional the British court system was:

California pays $8,736 per student, or $183,456 per average classroom, in its K-12 public schools to maintain an average class size of 21 students.  With a moderate increase in class size to only 24 students $1,092 per student could be saved, or about $6.8 billion reflecting about 19 percent of the entire K-12 statewide education budget.  Are 21 students per classroom a luxury that California cannot continue to afford in what appears to be a long period of economic deflation?

California’s green power law (AB32) will at minimum result in $735 per family per year in higher electricity bills, but mainly for cleaner air in Utah, Nevada, and Arizona where California gets its imported power. Replacement wind and solar power plants in remote California desert locations will do next to nothing to reduce smog in California’s urban air basin traps. U.C. Berkeley’s Renewable and Appropriate Energy Lab says green power will only add 1,000 to 3,600 permanent jobs per year or about one sixth of one percent (0.16 percent) of the state’s 2.258 million unemployed. Is reducing air pollution in other states for a scant number of jobs a $5 billion per year luxury that California can ill afford?

Is continuation of the $3 billion in funding under Prop 71 for stem cell research, with $2 billion yet unspent, a luxury in a state where its Medi-Cal fund faces a $6 billion funding shortfall and the Worker’s Compensation Fund is $10.3 billion in the hole?

California voters have authorized five water bonds since 2000 (Propositions 12, 13, 40, 50, and 84) for a total of $18.7 billion, including interest, of which about $4.1 billion is unspent and the annual debt service is $1.028 billion per year out of about an $89 billion state general fund budget.  The overwhelming majority of this funding went for land acquisition and development of greenbelts in wealthy urban enclaves to enhance surrounding property values, and hence to buy the votes of those constituencies.  No substantial water resources were developed with the bonds.  These bonds were spent on luxury environmental goods for the wealthy.

The State Water Quality Control Board has ordered 19 coastal power plants to stop using ocean water for cooling systems, in order to protect ocean marine life from heated water expelled by the plants.  The water board has ordered replacement with chillers (refrigerators) located on the mainland that will cost electricity customers up to $700 more on the electric bill per year, which is money that will not be available to families to pay more taxes to plug the state’s $20 billion per year structural budget deficit. In 2009, the U.S. Supreme Court ruled that a cost/benefit analysis of alternatives to ocean water-cooling is not prohibited under the Clean Water Act. Is this a luxury standard when the alternative cost of installing fish screens is only $100 million, or $19 per family per year, but was rejected by the water board?

In accord with the California Legislative Analyst’s recommendation, Assembly Bill ABX-4-2 (2009) relaxed the former categories of mandatory funding for state schools allowing local school districts more spending discretion in non-core teaching costs. Thus, local school districts could determine what was a luxury: bus drivers or music teachers, dental hygienists or Indian Education Center workers. Relaxing previously politically protected luxury job categories significantly offset a cut of about 34 percent of the “unrestricted” funds for public schools.  This de-regulation of protected job categories might save about $16 billion per year in spending in all state agencies.

When it comes to the California budget deficit, liberals say, “tax the rich” while conservatives say the rich are already “over-taxed.” But both miss the point that California has expanded into providing luxury public goods that are apparently untouchable in the state budget and un-discussable in legislative budget hearings, opinion polls and newspapers. This is because essential and luxury public services are symbiotically related as they provide the political cement that unites the political elites and non-elites in a political coalition within the Party of Government.

Contrary to claims that it is the supermajority vote under Prop. 13 that makes California dysfunctional, it is the wild growth of luxury public goods and services in the state budget that makes for a death spiral of budget deficits. Increasing taxes to plug the so-called structural budget deficit will only be like feeding filet mignon to a poodle instead of dry dog food; or designer drugs to a rich addict.

When California voters rejected Prop. 23 on Nov. 2, which would have put a stop to funding luxury environmental goods, they probably were not aware that they were voting for continued budgetary dysfunction.  For the only way to balance a budget loaded with untouchable luxury public goods is on the backs of those who need the essential public services of the state’s safety net (Unemployment, Medi-Cal, Worker’s Compensation, Cal-Works, etc.).  A budget can be balanced high or low, it works either way.  As long as luxury public goods and services remain untouched it is an assurance that the state budget can only be balanced high, not low, and that taxes must be raised.

Hugh Lofting described a situation like California’s in his child’s story The Story of Doctor Dolittle:

“As soon as the Cat’s-meat-Man had told every one that John Dolittle was going to become an animal-doctor, old ladies began to bring him their pet pugs and poodles who had eaten too much cake; and farmers came many miles to show him sick cows and sheep.”

Is it ethical for government to fund the treatment of symbolic poodles gorged on political cake while claiming that there is a budget deficit for treating sick animals that produce food and clothing?  Why are the Unemployment, Worker’s Compensation, Cal-Works, and Medi-Cal funds broke in California but the many environmental and sustainable energy projects flush with cash? Why is the religious community silent on this issue?  Or are they like the old ladies in Jerome K. Jerome’s “Idle Thoughts of an Idle Fellow” who worshiped the idol of a fat poodle that was full of fleas?

To fix California’s structural budget deficit its governmental Santas are going to have to quit giving poodles expensive luxury Christmas gifts and then charging the credit card for essentials such as food, medicine, medical care, and housing all the year long for the rest of the family and the servants.  But the budget deficit debate is deceptively being framed as a false choice between “essential services or raising taxes,” not essential versus luxury public services.

This Christmas it isn’t Scrooge who doesn’t want to pay any more taxes that is the problem in California, but all those “Constitutional poodles” who the French writer Balzac wrote about in his novel “Bureaucracy: or, a Civil Service Reformer:”

‘The Emperor of Russia would be thankful to be able to pay fifty thousand a year to one of these amiable constitutional poodles, so gentle, so nicely curled, so caressing, so docile, always spick and span — careful watch-dogs besides, and faithful to a degree.”

6 comments

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  1. Richard Rider, Chairman San Diego Tax Fighters
    Richard Rider, Chairman San Diego Tax Fighters 14 December, 2010, 15:53

    This article is excellent! But it’s not the whole story.

    The lesson of Greenhut’s book “Plunder” — which exposes our California state and local public employee aristocracy living the life of Poodle — is that the governor needs to add a third (or perhaps fourth) voter option to his false “either-or” choice. It’s not just less services or more taxes — the issue he’s dodging is how best to DELIVER desired public services.

    This third option offers at least two avenues of massive savings:

    1. Reduce the clearly excessive public employee pay and benefits — something politicians are loathe to do on their own.

    2. Don’t use public employees to provide most public services — contract every possible government function out using COMPETITIVE bidding. Contract out most of our prisons, our libraries, the DMV (as does Missouri), education (via vouchers or tax credits), parks and many other state and local functions.

    I prefer the second avenue for three reasons:

    A. Savings for taxpayers would start at 30% — and in this day and age, could easily exceed 50%.

    B. Such pressure will encourage existing public employees to accept significant cuts in their compensation.

    C. We need to gut the public employee power in CA — which is maintained through their powerful public employee labor unions. Contract out their jobs, and we’ll have smaller, less significant government labor unions.

    Reply this comment
  2. StevefromSacto
    StevefromSacto 15 December, 2010, 12:31

    Outsourcing does not guarantee less costly programs and certainly doesn’t guarantee quality services. Why is it that we should turn over our state to the private sector (which, as you recall, is primarily responsible for the financial mess our nation finds itself in today)? Why should we allow companies whose sole purpose is to make a profit to help determine the kind of care our most vulnerable citizens receive?

    Yes, in some cases, outsourcing may be the way to go. But in no way does one size fit all.

    Reply this comment
  3. Wayne Lusvardi
    Wayne Lusvardi 15 December, 2010, 15:34

    K-12 schools are 40% of the state $89 billion General Fund Budget. Of that about 42% is for categorical or ancillary programs and small class sizes. If the recommendations of the Legislative Analyst’s Office (LAO) are accepted then those ancillary school services and categorical jobs are going to have to be cut. Another way to go about cutting the state budget is not outsourcing in the conventional sense but by relying on charter schools which do not have the overhead for categorical programs. Gov.-elect Jerry Brown has no choice at this point as the money isn’t there and the quickest way to cut losses is cut the state school budget. This does not have to entail firing core classroom teachers, only ancillary personnel according to the LAO. Read about this tomorrow at CalWatchDog.com. Thanks for your comment.

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  4. Charles
    Charles 17 December, 2010, 11:30

    Richard Rider, Chairman San Diego Tax Fighters says:

    “We need to gut the public employee power in CA — which is maintained through their powerful public employee labor unions. Contract out their jobs, and we’ll have smaller, less significant government labor unions.”

    Wages in California’s private sector increased 32.73% in nominal terms for the 10 year period 2000 – 2009. Inflation during this period was a modest 25.4%. Therefore, California Private Sector Wages increased 7.33% in REAL terms for the 10 year period ending 2009.

    Wages for California Civil Service Employees increased only 6.9% in nominal terms for the 10 year period 2000 – 2009. After adjusting for inflation, California Civil Service Employees lost (18.5%) of their REAL wages for the 10 year period ending 2009.

    “powerful public employee labor unions”?

    You must be kidding, right?

    Reply this comment
  5. Wayne Lusvardi
    Wayne Lusvardi 19 December, 2010, 11:04

    Reply to “Charles”
    Dear Sir: The study you are citing is at this link: http://stateworker.wordpress.com/2010/08/22/state-workers-inflation-vs-cola-year-over-year/

    The analysis provided at the above link is an example of lying with statistics. The average salary for private sector is shown for 2000-2009 but not for the public sector. Is this because public sector average pay was higher? Evidently so or the person who conducted the study would have included it.

    Most studies I have reviewed show there is no difference between public and private sector pay when compared with large private companies of 500 or more employees. But the average pay for public employees is not the whole issue. It is the sheer number of public employees who have “non-essential” or “make work” jobs. See my analysis on this this website of how most of proposed school budget cuts are fluff. About 45% of the entire state school budget of some $44 billion is for categorical ancillary jobs (not core teaching) and overly small class sizes.

    As a public employee for most of my career I can attest to this phenomenon personally. In the military I observed how during peacetime the army had too many troops with nothing to do. When I was put into combat in a war I noticed how everyone suddenly “had a job to do,” not make work or endless training exercises.

    Many of our big water agencies are like this with whole armies of engineers with nothing to do until the next big water project comes around. Such agencies should never have hired permanent employees on this basis but should have put them on a labor contract instead.

    Most of the Federal Stimulus monies for California went to bail out public sector jobs with the exception of road improvement projects which hired some construction workers. But there are about 6 private sector employees out of work for every one government employee in California.

    Reply this comment

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