New Year's Resolutions for California's Politicians
New Year's Eve has come and gone. Now it's time to figure out California's New Year's Resolutions. About 45% of Americans usually make resolutions, a popular tradition that some say dates back to the ancient Babylonians, who started each New Year making promises to the gods. According to Statistic Brain, the top five resolutions are lose weight, get organized, spend less and save more, enjoy life to the fullest, and stay fit and healthy. Sacramento could take these top resolutions to heart.
"Lose Weight" - Slim Down Those Unfunded Liabilities: California State Controller (and soon to be State Treasurer) John Chiang recently released a new assessment of California's unfunded retiree healthcare obligations, which now total almost $72 billion. Since Chiang's first report in 2007, retiree health obligations have swelled 33%. In total, the state estimates that the overall unfunded liability for all California statewide managed pension systems is north of $133 billion, while the State Budget Solutions organization pegs the number at almost $641 billion. Until these are addressed, there is no way Sacramento can claim the state's budget is fiscally secure.
"Get Organized" - Get Your Act Together California GOP: In the 2014 elections, California's Republican Party made much-needed advances. They gained four seats in the Assembly (defeating three Democrat incumbents) and flipped another in the Senate. But despite these successes, the Republican Party is still struggling. Republicans hold just 35% of the seats in both the Assembly and Senate, haven't won a statewide election since 2006, and make up just 26% of the Congressional delegation. Compare this to twenty years ago when, following the 1994 election, Republicans held 51% of the Assembly Seats, 48% of the Congressional delegation, 43% of the Senate seats, and had won 5 of the 7 partisan statewide offices. One-party rule of any sort isn't good for policy development and governance. The Republican Party needs to learn from their successes and failures and use 2014 as a launching pad for revitalization.
"Spend Less, Save More" - Well, Spend Less and Save More: On January 10, Governor Brown has to propose his Fiscal Year 2015-2016 budget. This January version will be revised in May by Brown's Department of Finance and then by midnight June 15, the legislature has to pass a balanced budget. Between Brown's first budget in Fiscal Year 2011-2012 and his last proposed budget of his (second) first term, total general and special fund expenditures grew by 22%. Even with Proposition 30 bringing in an estimated additional $6 billion per year, higher capital gains tax revenue, and Proposition 2 forcing the legislature to set more revenue aside in a rainy-day fund, California's leaders would be wise to focus on spending necessities (not pet projects), pay down California's liabilities, deal with the state's unfunded obligations, and set money aside even more than is required for the next economic downturn.
"Enjoy Life to the Fullest" - Improve the California's Business Climate: For California to enjoy life to its fullest, it requires a robust economy, which in turn needs a favorable business climate. According to Forbes' "Best State for Business and Careers," California ranks 37th overall. However, it's the underlying ranks that are most concerning for California. The state ranks 46th and 43rd for Business Costs and Regulatory Environment, respectively. When it comes to net domestic migration, California's top competitors are Washington, Nevada, Arizona, Texas, and Oregon. All of these states rank ahead of California on Forbes' list. To improve, California needs to first tackle its most underperforming metrics (business costs like taxation, energy costs, and property costs) and the regulatory environment (like CEQA reform, Proposition 65 reform, and California's overall litigious nature).
"Stay Fit and Healthy" - Deal with Californian's Aging Infrastructure: Just like it is harder to get into shape than remain in shape, it is more costly to improve infrastructure than maintain it. And California really hasn't been doing either. The ASCE California Infrastructure Report Card is overall, pretty dismal. In 2012, the state received a C (just marginally better than 2006's C-). In 2006, ASCE estimated that California needed to invest annually $37 billion to meet its infrastructure needs. By 2012, their estimate has doubled to $65 billion. The longer California waits, the more expensive it becomes. Meanwhile, California's five-year infrastructure spending plans only calls for $57 billion in spending over five years and 45% of these funds are allocated toward the high-speed rail boondoggle, which will do nothing to improve California's deteriorating transportation infrastructure. Infrastructure projects need to receive budgetary priority, but they also need to be devoid of politics or political legacy-building and projects need to receive ruthless oversight, so issues like the Bay Bridge debacle do not occur again.
Only 8% of Americans successfully achieve their New Year's Resolution, but here's to hoping that California can be a bit more like the Americans in their twenties, who have a success rate of 39%.
