The Jury Talks Back

5/19/2009

How to Save California: Four Reforms

Filed under: California Politics — Kevin M @ 8:12 am

California is a mess.  Not just the fiscal mess in Sacramento, but a local mess of overcrowded cities, stalled infrastructure, unresponsive local government and litigious interest groups.

Today’s ballot proposals don’t do anything but partially paper over the problems we face.  Win or lose, the problem is still growing and the powers-that-be are still digging.  They appear unable to address the real issues, largely because their constituency isn’t the people any longer — it’s the employee unions and the various interest groups that form their political base.

Several folks here have tried to address the issue of “What to Do?”.  Here’s my take.

I have four suggestions.  Some of these I’ve mentioned before, here or there, and some are new.  I guarantee that no one will like all of them.  While I think that the end of the gerrymander will help (assuming the new reapportionment jury system works), the government still needs to break out of its dysfunction.  Here’s how I see it:

1.  Restore the Prop 4 (Gann Initiative) spending cap.

Prop 4 passed in 1979 with 74% of the vote,  limiting state government spending to increases in population and cost of living.  Period.  It was nibbled to death by several propositions over the years (e.g. 1988’s Props 98 and 99) and largely repealed by Prop 111 in 1990, which changed the formula so that the limits were mostly imaginary (much like Prop 1A today).

Prop 4 was undone when the legislature responded by not spending money on infrastructure, and the people voted the limits out to get traffic relief.  This is the typical reaction of the blob — starve the public of services while maintaining the bureaucracy until the public caves.  They always lay off librarians and teachers, seldom the back office.

If only one thing can be done, a hard spending cap is a good first choice.

2.  Defined-contribution retirement plans.

Since about 1980, private sector retirement plans have changed markedly.  Rather than having “guaranteed” retirement payouts from a company-run fund, individuals now direct portable, tax-deferred, retirement funds largely independent of their employers.  These “defined-contribution” plans have the advantage of being inheritable should the employee die early, being (largely) independent of the employer’s success (or even existence), and a predictable annual expense to the employer.  Some industries that have resisted this change, such as the auto industry, have shown that relying on company-run defined-benefit plans can be a poor idea.

But, while the public has converted to defined contribution plans (401(k), IRA, etc), state and local government employees have not.  Instead, through sweetheart negotiations with the politicians their unions finance, employee pensions are both guaranteed and excessive.  It is not uncommon for a local government employee to retire at age 50-something and take “home” more on their first day of retirement than they did on their last day of work.

Since, unlike the auto industry, government has the ability to take money directly from their “customers”, these pensions cannot fail like private ones can.  But the impact of high pensions coupled with poor fund management can leave state and local finances in complete disarray, and taxpayers may not be willing to make up the losses.

This is long-term disaster for the state.  Even if corrected overnight (and even if we get past the current funding crisis), these pensions persist for decades.  It is not clear what to do about existing pensions except suck it up and try to grow out of it.  But we must stop adding to the problem.

State and local pension plans must be converted to the defined-contribution variety as soon as possible, preferably for all workers but certainly for new ones.

3.  Critical project exemptions from EIR requirements

Nearly every construction project in the state, public or private, requires a detailed environmental impact report.  There are some very good reasons for this.  However, the system is often gamed by project opponents who use the EIR process as a delaying tactic, and the entire process ignores the fact that often there is substantial environmental cost to doing nothing.

There needs to be a mechanism to cut through the (often endless) red tape when critical infrastructure projects are concerned.  This is particularly important for transportation projects, since transportation requires energy, energy production necessitates pollution, and poor transportation infrastructure wastes energy in bulk.  If, on any given day, 5 million cars burn gasoline for 30 minutes longer each the amount of unnecessary pollutants going into the air in an urban region is enormous.  To delay a project that would mitigate that waste, simply because an opponent is able to trump everything by challenging the EIR and enjoining construction during endless appeals, is lunacy.

Yet one would not want the EIRs waived for trivial reasons, either, so a high bar needs to be set.  Whether this means public votes to define critical systems, or extra-super-majority votes in governing bodies, or a mechanism for judicial exemption isn’t important.  What is important is that it doesn’t take 23 years to build 10 miles of subway.

4.  Local election dates

The problem with local elections is that few vote, and this leaves critical local decisions in the hands of the most motivated.  Voters are more likely to be people who have a vested interest in the outcome, such as public employees.  Financial support for candidates is liekly to come from similarly interested groups, such as unions or government vendors, or those highly impacted by government decisions, such as developers.

Year after year, good-government folks try to get the public interested in these local elections in odd months of odd years.  Rarely do they succeed.  Yet it is clear that elections that control the bulk of California government spending should attract more than 10% of the voters and should be as independent as possible of vested interests.

So.  Move local elections to the state and/or federal calendar.  If you cannot bring the people to the election, bring the election to the people.  Hard on politicians trying to “move up” without giving up their day job, but tough.  Just be glad the rule isn’t “resign to run.”

Conclusion

That’s more than I think will ever be done, and I have serious doubts that the current players can do anything at all except try to kick the can down the street a while longer.  But they are running out of street and the can is getting huge.  I despair.  I suspect that the “answer” will be raise taxes a bunch, and if so I will be the last of 5 generations of my family to live in California.

20 Comments

  1. I would support #3 and #4. I would support #2 if there were a trade-off whereby the salaries of those not covered by the defined-benefit plan were raised. #1 I’m not sure of; I think the resulting limit would be too low, especially if the base year were a recession year.

    Comment by aphrael — 5/19/2009 @ 10:38 am

  2. Speaking of which, as an example of the problem in #4: the local elementary school district is having its own special election on June 2. To have us vote on a parcel tax. Which will expire after five years but is being slated to fund continuing programs.

    [I am voting ‘no'; I’m liberal enough to loathe parcel taxes as flat taxes, and I’m conservative enough to think that using a short-term tax to fund continuing programs is insane.]

    Comment by aphrael — 5/19/2009 @ 10:40 am

  3. Comment by aphrael — 5/19/2009 @ 10:40 am

    One of the few reasonable things you’ve said on politics; but, that’s just my opinion.

    Comment by AD - RtR/OS! — 5/19/2009 @ 2:17 pm

  4. Ah, AD – RtR/OS, where you and I differ on this (I suspect) is that if it were a permanent ad valorem tax to fund ongoing programs, or a short-term ad valorem tax to fund construction or renovation expenses, I’d consider it rather than dismissing it outright as I have this tax.

    Comment by aphrael — 5/19/2009 @ 2:41 pm

  5. Kevin,

    Interesting ideas, I like numbers 2 and 4, but I think you’re just nibbling around the edges here on the other 2.

    Your hard cap is a great idea, but only after trimming the government to just the functions the government should be doing ( there’s that darned libertarian talking ’bout small government again).

    Defined benefit pension is great, and it takes care of the problem of state employees retiring at 20 years of service with 100+% of their salary.

    The whole EIR process needs to be cleaned up, not just for ‘critical’ projects. Why should some nay-sayers be able to delay, delay, delay projects through bureaucratic means just because they don’t like a project, not because theres a valid reason to block it? Its been abused way too much, IMHO.

    And to add to your ideas to save the state, let’s open up the offshore areas for oil drilling, allow new refineries to be built, allow nuclear power plants to be built, and allow water desalination plant to be built. Lots of construction, infrastructure, and skilled jobs would be created in building up our infrastructure.

    Comment by Kenny — 5/19/2009 @ 4:38 pm

  6. All worthy. I would add the return to a part time legislature. We need people there who have attitudes of service, who also work real jobs. They have become little princes in charge of their little kingdoms, at great cost to us all.

    Comment by ManlyDad — 5/19/2009 @ 6:32 pm

  7. Manly…

    You stole my thunder, man!

    Actually, one of the worst things that California ever did was create a permanent political class. No state, even California, needs a “Full Time” legislature…that meets Tuesday-Thursday for eight months riddled with numerous vacations.

    Sigh…

    Comment by MunDane68 — 5/19/2009 @ 6:40 pm

  8. Comment by aphrael — 5/19/2009 @ 2:41 pm

    Since I have absolutely zero confidence in the Government at any level actually accomplishing something with my money, I vote NO on all taxes and bond issues (except CalVet Bonds, which have never required any taxpayer funds).
    On going programs should never be financed with one-time, or short-term financing. If they can’t provide an ongoing funding method, they should never consider the program.
    CA’s great political crime is to have undertaken longterm projects using the short-term windfall from, first the .com boom, and then the real-property bubble.
    Now, with crashing markets, we have deficits as far as the eye can see, and then some.
    We in CA were quite successful in the 50’s and 60’s building a fantastic series of infrastructure improvements on a pay-as-you-go basis, with minimal long-term bond issuance.
    It would be nice to return to that, but first we will have to rid ourselves of our permanent, career political-class.

    Comment by AD - RtR/OS! — 5/19/2009 @ 8:24 pm

  9. Further thought with respect to a part-time legislature: Have the legislative session last for six months per year. For five of those months, they work via telecommuting, with legislative business being conducted through conference call and a web-based interface for approximately 10 hours per week. Then, in the summer, they can get together in Sacramento for maybe three or four weeks to meet in a live session.

    I am sure there are plenty of kinks in this plan, but it could be a starting point to reconsider how we do things. I would love nothing more than to rid ourselves of career politicians who flit from one office to another with nary a diversion into the real world.

    Comment by JVW — 5/19/2009 @ 11:11 pm

  10. Let me add a few more:

    #1) Eliminate the 2/3 requirement for passing the budget BUT keep the 2/3 requirement for raising taxes. The 2/3 budget requirement always gets passed by tempting 2 or 3 of the more pork friendly Republicans with more spending in their district so it actually exacerbates our financial predicament.

    #2) Require all statewide bond measures pass with a supermajority (2/3)

    #3) BANKRUPTCY. It will kill our bond rating for years to come, but given the choice between biting the bullet and continuing to abide by the numerous public service union contracts we are otherwise locked into, it is the least bad option. It is a severe option and I’d be all for reaching a re-negotiation compromise with the unions but at the end of the day we need to be willing to bite the bullet if we can’t reach a deal.

    #4) Repeal Prop 98 and every other amendment to our state constitution that mandates a certain percentage of our budget be spent on certain issues.

    Comment by Sean P — 5/20/2009 @ 10:17 am

  11. “Welcome to California: Now go home”

    unconstitutional as all get out, but it would w*rk.

    Comment by redc1c4 — 5/20/2009 @ 11:46 am

  12. If your legislators are busy featherbedding and working solely to protect their own jobs, how about another initiative, one term limiting out all legislators for the 2010 elections; if you are in the legislature, or have ever served in the legislature, you are ineligible to serve again after 2010. The second part would be a strict one-term limit, one that included all elective state offices. That way, you’d restrict the pool of candidates to those people who really wanted to serve to get something done, because they’d be one-and-done.

    Normally, I’m not a fan of term limits, but y’all are in a crisis caused by people making the legislature their careers.

    Comment by The helpful Dana — 5/20/2009 @ 12:49 pm

  13. but, but, they have experience, and you’ll only get the single issue people…..

    /excuses i have been given for no term limits

    Comment by redc1c4 — 5/20/2009 @ 1:49 pm

  14. Kenny–

    You are likely right about the EIR overuse, but it would be WAY easier to “nibble” at it for critical transportation projects first. And, being critical, they are more important.

    Comment by Kevin Murphy — 5/20/2009 @ 2:00 pm

  15. Here’s a thought that isn’t original…
    Part-time legislature called into session once/year for 3-4months.
    Two-year Budgeting.
    The session following an election would deal with policy issues.
    The session preceeding an election would deal with fiscal issues (you have to immediately answer to the electorate for spending their money).

    Comment by AD - RtR/OS! — 5/20/2009 @ 4:46 pm

  16. Kevin,

    Agreed, it would be easier to ‘nibble’ at the EIR overuse.

    My concern for trying to save California is that with repeated deficits of over 20%, we gotta stop nibbling and break out the axe.

    An (admittedly poor) analogy: A patient with gangrene slowly killing them. At some point you have to amputate in order to save the patient. Yes, it will be brutal and painful, but the patient will survive.

    I hope California survives as well.

    Comment by Kenny — 5/20/2009 @ 4:53 pm

  17. But the “one fell swoop” attack on things almost never works. See the Libertarian Party for a case study of this.

    Comment by Kevin Murphy — 5/20/2009 @ 6:13 pm

  18. Helpful Dana #12: I like your idea, though forcing out the current crop of losers via statute would never fly. Instead, I have pretty much resolved to never vote for anyone who served in the legislature from 2000 to 2009, especially if they seek higher office. My own state assemblyman is termed out this year and wants to run for Attorney General; I am thinking of actively working against his relection. Not working for his opponent or anything, but actively working against him instead, with all the negativity that would entail.

    Comment by JVW — 5/20/2009 @ 7:57 pm

  19. I wonder what would happen if all the productive individuals moved out of CA? Would permanent parasite class tax illegals? Would welfare work? Would there be any lights to be turned out by the last taxpayer moving out?

    Comment by PCD — 5/21/2009 @ 6:28 am

  20. CA has yet to fully implement the Welfare Act changes passed by the Gingrich Congress and signed by Bill Clinton over ten years ago.
    Just another red-flag.

    Comment by AD - RtR/OS! — 5/21/2009 @ 10:43 am

RSS feed for comments on this post. TrackBack URI

Sorry, the comment form is closed at this time.


Powered by WordPress.