I won’t pretend to agree with everything that the head of the Legislative Anaylysts’ Office, Elizabeth Hill, says. Sometimes she’s right, sometimes she’s wrong. She doesn’t always present the facts in the way that I would like. But, hey, she’s supposed to be “nonpartisan” right? Well, her “alternative budget” makes some very good points, while missing on just a few points. Skelton fawns over her plan, but I’m not quite so sure.

First, I’ll address where I disagree. We should consider a complete revenue overhaul, rather than just plugging loopholes as Hill suggests. Sure, it’s a decent place to start when we need to increase the revenue stream, but we need to think big here. But these are all good points:

Key Features of the LAO Alternative. As we have done with respect to direct expenditure programs, we have reviewed the state’s tax-related programs-what are referred to as tax expenditure programs (TEPs)-and recommend changes to those that are not achieving their stated purposes or are of lower priority. These TEPs are special tax provisions in the law-such as exemptions, deductions, and credits-that attempt to encourage certain types of behavior or target relief to specific groups of people or businesses. Our proposals affect each of the state’s largest three taxes and are discussed in detail in the next piece of “Part V.” Although there are many other TEPs worthy of modification not on our current list, we have focused on changes that would not involve difficult federal conformity issues, implementation problems, or significant time lags before their fiscal benefits are realized. Figure 5 shows that our changes would generate revenues of $2.7 billion in 2008-09 and $2.5 billion in 2009-10. Our largest changes are to reduce the personal income tax dependent credit, limit the research and development credit for income taxes, and limit net operating loss deductions for corporations.

Well, $2.5 Billion doesn’t really seem enough to me, as we’d still have to cut at least that much from education alone! Under Hill’s proposal, year-to-year education expenditures would stay flat, saving the state almost $3B. Oh, and her plan still includes a 10% increase in student fees at UCs and CSUs. But again, who does this hurt? The people who can least afford it.  We need to do more than just fix loopholes. We can start with the VLF, please.

On what to cut, Hill almost chastises Arnold for just doing a 10% across the board cut, arguing that this doesn’t put a value on individual programs.  All programs are not created equal. We get better Return on Investment with some programs than others.  Over the flip  

Keep in mind that this is diplomatic-legilslative speak:

With the exception of the Governor’s proposal to shift a portion of the state’s General Fund wildland firefighting costs to a new insurance policy surcharge, the Governor’s approach for budget-balancing actions in the resources area was generally to reduce General Fund program activities by 10 percent. Under the Governor’s approach, proposed reductions include activities that the Legislature has considered to be a priority and/or face substantial unmet funding requirements. These activities, often regulatory in nature, range from the development of public health goals for the state’s drinking water standards to the review of timber harvesting and coastal development proposals. In contrast to the Governor’s budget, our alternative budget takes advantage of alternative funding sources-including fees and bond funds-to create General Fund savings (frequently at a level much higher than proposed by the Governor’s budget) without reducing the level of program activity.

The LAO’s plan is a start. It at least looks at which programs are more important, and it begins the discussions on revenues. However, it does not go far enough to realize that we are out of the “good times” and we should stop expecting the “good times” tax relief. The Republicans can either play ball and start actually looking at putting everything on the table, or they can get out of the way and let the adults fix the budget.  Go on now, go play with your yachts.

Cutting education is a short-sighted and foolhardy “plan.” Let’s get realistic here and have as Skelton puts it “the courage to follow the Budget Nun.”