As the state budget deficit grows daily and lawmakers struggle to find common ground on a solution, a new budget plan demonstrates how California’s $26 billion budget deficit can be turned into a surplus by 2005 without raising taxes or cutting vital services.
On Wednesday 30 April, Reason Foundation released “Citizens’ Budget,” a plan that calls for the permanent adoption of a two-year state budget process, currently used by 23 states, and includes a line-by-line analysis of the state budget that reveals nearly $16 billion in potential cost savings in state programs. Another $1.1 billion could be saved with a 5 percent reduction in state personnel costs through attrition, renegotiation of employee contracts, limits on overtime, and reduction in staff levels to compensate for excessive growth in recent years. The report uses cost and savings benchmarks from other states and the federal government to offer a total of more than $18 billion in possible savings. But, by balancing the budget over two years, the plan requires that only $11.7 billion in spending reductions be made.
The full report, Citizens’ Budget 2003-2005: A 10-Point Plan to Balance the California Budget, a summary, and related documents are available online at RPPI.org.
Reason’s plan rejects the false notion that the only way to balance the budget is through massive tax increases or draconian cuts in education and state services to those who need them the most. The real challenge is how to provide the same or better services at a lower cost to the state.
Our plan offers a menu of more than $18 billion in spending reductions that state lawmakers can pick and choose from to balance the budget. Californians pay more in taxes, but get less services than taxpayers in other states. We have to confront the state’s inefficiency and prevent a crisis like this from happening again.
Instead of implementing across-the-board budget cuts, the plan advocates evaluating the importance and effectiveness of each state program and then consolidating and streamlining state agencies accordingly. To aid in that process, a California Sunset Commission would be created to review 20 percent of the state’s agencies each year. Since its inception, a similar program in Texas has abolished 44 agencies and consolidated another 11.
To avoid comparable shortfalls in the future, the report proposes several constitutional reforms, including: a Taxpayer Bill of Rights, limiting increases in state revenue growth to population and inflation increases; a modified version of the Gann Spending Limit; and an automatic balanced budget adjustment trigger that would make proportional spending reductions to discretionary programs when revenues fall short of expectations.
We hope this helps move both sides of the debate towards a realistic budget deal.