Barbara O’Connor, director of Institute for the Study of Politics and Media at Cal State Sacramento.
There will have to be cuts in education, home health-care workers and in prisons. But first, legislators should cut those little things. “I would probably start by looking at all the Little Hoover and General Services reports that have recommendations on selling surplus property,” O’Connor says. She would also eliminate many of the boards and commissions that serve as jobs for termed-out politicians and political friends. “The glass-half-full scenario is that nobody has had the political will to do these things and now they have no choice,” O’Connor says.
This is the year to finally cut, in part because the state and local governments will receive federal stimulus money to help maintain crucial services, such as police protection and education.
Keith Richman, former state assemblyman representing the north San Fernando Valley and president of California Foundation for Fiscal Responsibility.
The state’s big-ticket items are education, health and human services, and prisons - and those will all need to be cut. To minimize the pain, the state should reduce the amount of categorical or fixed spending required of school districts.
“You reduce the money in total but give them more flexibility in how they spend it,” Richman says.
The state should tighten up the eligibility requirements for Medi-Cal and reduce some of the benefits. The fastest growing component of health and human services is in-home supportive services and adult in-home care, which will have to be cut, Richman says.The cost of public employee pensions has skyrocketed for state employees, and the state’s contribution is expected to be $3.4 billion this coming year. Richman suggests getting employee unions to agree that this one year does not count as a service year for the purposes of state pensions. That would save the state $3.4 billion. This would require approval by the unions, but it might be prevent some furloughs and layoffs.
Michelle Steel, member of the California State Board of Equalization
“A recent study into consumer spending habits found that people are more likely to spend money if given smaller denominations,” Steel says. “This propensity to spend four quarters faster than a dollar bill is known as the Denomination Effect, and it explains the cause of California’s spending problems. After all, no one spends more irresponsibly than the Legislature.”
Steel offered a few changes that could cumulatively make a meaningful budget impact.
Consolidate tax agencies. Why does the state triplicate tax functions at the Board of Equalization, Employment Development Department and Franchise Tax Board?
Stop imposing state taxes on state agencies. State agencies waste thousands of hours and millions of dollars by completing use tax returns.
Use technology to monitor, update and inventory state assets. According to the California Performance Review, the Department of General Services cannot account for roughly 25 percent of the state vehicle fleet.
Robert Krol, professor of economics at California State University, Northridge
“We know cuts are coming but I rarely hear about reform,” Krol said.
Rather than just cut from the programs for the poor or from core services like law enforcement, state leaders should reprioritize how they spend money - and on what, Krol said. That means looking at noncore functions, maybe privatizing some functions and having state employees compete, and reducing state employee salaries.
And the California Performance Review, which the Governor touted as part of his plan to to “blow up the boxes” of government, can be the guide.
“Hollywood theatrics aside, there’s a lot of really useful stuff in there,” Krol said. The review, for example, identified $32 billion savings over five years. That might not be enough to backfill the deficit, but it’s surely a start.
The performance review took a particularly hard look at the state’s commissions. “The commissions thing drives me crazy,” Krol said, noting that while the many commissions might be advisory but come with staff. He said advisory commissions ought to be cut and other commissions consolidated.