When Jerry Brown was governor, a reporter at a press conference asked him why he was trimming social programs. “Because that’s where the money is,” Brown said, repeating Willie Sutton’s answer when he was asked why he robbed banks. The Willie Sutton Rule suggests that the best way to get what you want is via the most direct path.
Since January, California’s budget deficit has been estimated from between $27.6 billion and $73 billion, depending on whose figures you trust. Whatever the exact number, the obvious explanation is the state spends too much money. The obvious answer is the state needs to cut spending. Where? Wherever the money is, including the biggest line items such as education, social services, climate change.
Until last week, Gov. Gavin Newsom has mainly focused on gimmicks that involve additional borrowing and funding delays. Finally, with his release of the May budget revise, Newsom is proposing some real (albeit insufficient) cuts. The Legislature has until June 15 to pass a final budget.
As CalMatters reported, the governor has announced “more than $30 billion in ongoing and one-time spending cuts … though he promised that ‘core programs’ providing social services to needy Californians would be mostly untouched.” It’s too bad the governor and Legislature didn’t create a more sustainable path when we had a $100 billion surplus a few years ago.
The most heartening news: Newsom is resisting efforts to raise taxes. “I’m not prepared to increase taxes,” he said at a press conference last week. “We have among the highest tax rates in the United States of America for high wage earners. … I feel strongly that we have to live within our means.” Tax hikes certainly wouldn’t help his national political aspirations, but we’ll see.
The Sacramento Bee described legislative leaders as “lukewarm” to the proposal. If lawmakers seem unhappy, that’s a good sign given their tax-and-spend preferences. The state does indeed have the nation’s highest tax rates – and ramping up taxes will only stifle the economic growth that our capital-gains dependent budget needs. Businesses continue to flee at record rates.
The administration is working from the most-optimistic $26.7-billion figure, but we’ll soon see the Legislative Analyst Office’s updated (and likely higher) figures. The Legislature has wisely begin whittling away at the shortfall, although its $17-billion in savings avoids serious cuts and “mostly relies on new revenue, internal borrowing and funding delays and shifts for savings,” per CalMatters. When those measures are considered, the deficit actually approaches $45 billion.
Newsom’s plan wisely cuts 8 percent from the state’s staffing budget, mainly through eliminating 10,000 open positions. That seems like a no-brainer given that the positions are, well, open. He’s delayed the expansion of a subsidized child-care program, might also delay an increase in the minimum wage for healthcare workers, and proposed cutting some school-facilities spending and some other programs.
Other than cutting a pointless program pushed by the bicycle lobby, the governor has largely spared most of the state’s climate programs. The state brags that its $53.9-billion multi-year commitment is “more than what most other countries are spending.” Given that the May revise is unlikely to fully close the budget gap, this seems like a good place to target next. After all, that’s where the money is.
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