In the weekly radio addresses, we get some Governator talking points from former Secretary of State George Schultz and a frank discussion from Assembly member John Laird.
In the Governor’s address, we hear that we spend too much money, and that Ronald Reagan wanted to restrict spending. The trouble with that comparison: Ronald Reagan was also willing to look at tax increases and fixes as well. This Governor seems to be taking adjustments to the revenue stream off the table while saying that nothing is off the table. In other words, he’s devouring that cake that he’s hold onto. As George Skelton said today, Arnold “talks like FDR, but walks more like Scrooge.”
On the other hand, Assembly member John Laird talks about actually addressing how we fund our state. He points the finger squarely where it belongs, at the Governor for his full-throated assault of the VLF. Laird acknowledges that cuts seem inevitable, but does not yield to the idea of a cuts-only budget. We must adjust our revenue as well.
Check the flip for the transcripts.
The Governor’s Address, given by former Sec’y of State, George Schultz:
Hi, this is George Shultz, former Secretary of State, filling in for Governor Arnold Schwarzenegger with another California Report.
This week the Governor released his budget proposal for the next fiscal year and revealed that California is facing a projected $14 billion deficit. As expected, we’re already hearing cries for higher taxes to close the gap. But the Governor is absolutely right to say we can’t tax our way out of this problem and as he said in his State of the State address, California has a spending problem, not a revenue problem and the people shouldn’t pay for Sacramento’s overspending. And the numbers back him up. Just a decade ago, the state’s annual budget was around $70 billion, this year taxpayers will send almost $130 billion to Sacramento. Think about that. $130 billion. That’s nearly doubling the size of government – in just 10 years.
But as I’ve learned in my 50+ years in public service, for the spending lobby, there will simply never be enough to go around.
As the Governor explained earlier this week, quoting him, “if we can’t function with that kind of money, then there is something wrong with the system rather than with the people.”
That’s why, rather than raiding the wallets of hard-working taxpayers, his budget reduces spending across the board by 10 percent. This spreads the cuts evenly and doesn’t favor one program over another.
But just as important as solving this year’s mess, is ensuring that Californians never have to go through this again. This is why I am so encouraged to see the Governor once again push for comprehensive budget reform.
Throughout my career, whether in Washington, as when I was director of the budget, or Sacramento, I have seen time and time again the inability of legislative bodies to exercise the type of fiscal discipline demanded of families and businesses. There’s always one more program, one more lobbyist, one more special interest group with their hand out and they simply can’t say “No.”
That is why the only way to permanently solve California’s budget woes is a mechanism to force legislators to live within their means. Governors as far back as Earl Warren have proposed spending controls, including Governors Reagan and Wilson, but none could break through the entrenched spending lobby.
Governor Schwarzenegger has proposed reforms twice before, but failed. And we have seen what’s happened as a result. Unchecked spending binges, chronic deficits, and the same budget fights year after year in the Capitol.
Under the Governor’s plan, the legislature would be required to set aside surplus money in the good years, to cover shortfalls in the bad years. Any business or family does that, and so should the government.
This promises to be a tough year, but the Governor’s budget has laid out a great foundation. Reducing spending, along with long term budget reform, is exactly what California needs and taxpayers deserve.
This is former Secretary of State George Shultz, thank you for listening.
Democratic Address by Assembly Budget Chair John Laird:
During this week’s State of the State address, the Governor invoked the name of President Franklin Roosevelt when he said that we need to be visionary in tough times.And with California facing a $14 billion budget deficit, these are tough times indeed. But the difference between Roosevelt and the Governor is that FDR leveled with the people in times of crisis. For five years now, the state has been spending at a level that’s higher than the amount of cash we’ve been taking in. The people of California have been getting a higher level of education, parks maintenance and access, and prison services than they have been paying for. We either have to cut these popular services dramatically or pay more ~ one or the other, or a combination of the two. It’s as simple as that.
The Governor’s approach would have us make significant cuts to every single state service without bringing any new revenue into the system. His budget relies on higher fees and enrollment limits at UC and CSU campuses, and he supports mid-year cuts to K-12 education. He wants to close state parks and release prisoners early, and he expects low-income Social Security recipients to handle significant cuts to their aid.
And these are just the headlines.
When the Governor cut the vehicle license fee a few years back, he also supported a voter-approved measure that locked in the expenditures that the VLF used to help fund. And instead of putting the state on a pay as you go basis in 2004, the Governor supported $15 billion in debt bonds to finance the state debt over a number of years. Those two actions alone account for $8 billion of our $14 billion problem right now. And our state budget relies on sales tax and personal income tax for over 80% of its revenue. These sources swing wildly with the economy, regardless of what the state spends. We are in this crisis because our revenue dropped, not because we dramatically increased state spending.
In his speech, the Governor proposed a new formula to deal with budget problems in the future. But in 2005, the voters rejected a similar formula proposed by the Governor by a 2-1 margin.
We have to level with you, the people of California. You have voted to protect education, roads, prisons, local government and after-school care. This year, unfortunately, you can no longer get what you want without paying for it someway, somehow. As Assembly Budget Chair, I will make sure everything is on the table during our deliberations the next six months. We will eliminate inefficiencies, close tax loopholes, remove the tax write off for yacht owners, and much more. But ultimately, either we decimate our education, infrastructure, and social services programs, or new revenue will have to come from somewhere.
We face tough decisions this year, and we want your input.
Thanks for listening. This has been Assemblymember John Laird, chair of the Assembly Budget Committee.
