A taxing issue
For years, we taxpayers have watched in amazement and frustration as our state legislators have run California deep into bankruptcy. By the end of next year, California will be $40 billion in the hole, and that is in addition to the $15 billion that we already borrowed to bail us out of the Gov. Gray Davis era.
Rather than be financially responsible, our state politicians now seek salvation by asking the federal government, which is also bankrupt, to bail us out. The logic that everybody else in the country should sacrifice and send us their tax dollars to get California out of bankruptcy is stunning but is typical of the wrong-headed thinking that is rampant in Sacramento these days.
If our elected representatives cannot or will not come to grips with the reality of our financial situation, we taxpayers must take charge and structurally change our government to prevent this ridiculous situation from ever happening again. At a minimum, two things definitely need changing now -- the state Legislature and the state budgeting process.
To change our Legislature, we should look to other states, like Texas, that are in good financial condition and see how they did it. At the end of the 2009, Texas had a budget surplus, something it accomplished without a state income tax and with a part-time Legislature that meets only a few months every other year.
Since the late 1960s, California has suffered under a full-time Legislature, ironically something that was supported by then-Gov. Ronald Reagan. The argument given then for trashing our part-time Legislature was, "We need full-time politicians to manage a complex enterprise like California." Boy, were they ever wrong! It is precisely the last 40-plus years of "professional politicians" that has bankrupted California. It is now time to go back to something we know will work.
As a first step, we should use the initiative process to modify the California Constitution and reorganize the California Legislature as follows:
The Legislature shall be limited to a single five-month session in each fiscal year, and that five months shall be the last five months of each fiscal year. The principal responsibility of the Legislature during this five-month session shall be to produce a budget for the state for the subsequent fiscal year.
In lieu of salaries, legislators shall be paid on a special legislator per diem basis. A legislative per diem day shall be defined as a minimum of five hours of work in a single day -- i.e., no work, no pay. Additional legislative per diem pay shall be authorized only if the governor calls an emergency session of the Legislature at any other time during a fiscal year. The special legislator per diem pay shall be established by an ad hoc commission of taxpayers that is appointed by the governor. Legislative per diem pay shall be reviewed every two years by the same commission for adequacy and appropriateness.
Legislators shall be responsible for their own transportation and health care expenses, and there shall be no taxpayer-funded retirement system for legislators.
Once the Legislature has been fixed, the legislative budget process must also be changed. This should start with an initiative change to the state Constitution that would prohibit deficit budgets. Then the state budget process should be changed as follows:
Six months prior to the start of a fiscal year, the California State Controller shall estimate expected revenues for the coming fiscal year and shall forward that estimate to the governor.
No later than five months prior to the start of the fiscal year, the governor shall select a baseline budget amount for the coming fiscal year from three options (10 percent less that the CSC estimate; the CSC estimate; or 10 percent more than the CSC estimate) and shall send that budget decision to the Legislature.
In the four months prior to the start of the fiscal year, the Legislature shall create a budget for the coming fiscal year, and the Legislature shall be prohibited by law from exceeding the baseline budget amount selected by the governor. The budget defined by the Legislature shall reserve or hold back 20 percent of all appropriations for all budget items as a hedge against unforeseen revenue shortfalls during the fiscal year.
Before this reserve can be spent, the CSC shall review actual state revenue income at six months into the fiscal year and shall make a recommendation to the governor on what part of the remaining 20 percent reserve should be spent or what further budget cuts are required. No later than seven months into the fiscal year, the governor shall decide what part, if any, of the 20 percent budget reserve shall be spent or what further cuts in the existing budget are necessary to maintain a balanced budget as required by the amended California Constitution.
If the Legislature does not deliver a finished budget to the governor's office for signature by the first day of the new fiscal year, all per diem pay for all members of the Legislature shall be canceled and shall remain canceled until a final budget is delivered. No canceled legislative pay shall be repaid after the completion of the fiscal year budget.
All surplus revenue collected during a fiscal year shall be dedicated exclusively to retiring the existing state debt. After the existing state debt has been fully repaid, all surplus revenue collected during any fiscal year shall be refunded to taxpayers in direct proportion to the taxes they paid for that fiscal year. These refunds shall be disbursed directly to taxpayers no later than three months into the subsequent fiscal year.
With a new part-time Legislature, a constitutional amendment to prohibit deficit budgets, and a new budgeting process, we taxpayers can finally inject some sanity into the management of our state financial resources. The politicians in Sacramento continue to fiddle and diddle and do nothing while the situation worsens, so the time to make these changes is now. Let's get on with it!
Wilbur W. Wells of Tehachapi is a retired mechanical engineer.
