Notes on Brown's Big, Bluesy Budget Summit

Once- and future-Gov. Jerry Brown began his budget summit on Wednesday in Sacramento by saying he didn’t want to argue about how to fix the California budget crisis. He just wanted to get agreement on the facts.

That may have been too ambitious a goal. Speakers at the summit couldn’t even seem to agree on the exact size of the budget problem. Brown began by declaring that the state faced a budget deficit of $28 billion. But Brown himself later described the budget problem, over 18 months, as a $25 billion problem. At other points, the number $22 billion was used. (Brown also overstated the size of the California economy by $100 billion, but hey, that’s close enough for government work).

Nevertheless, the session was worthwhile and fascinating, at least if you care about the budget. Here are a few highlights:

  • The best thing about the event was that it provided a real education for any Californian in how badly broken the process is. Brown’s central message was: the state’s fiscal distress is unprecedented, and there are no good ways to get out. Let’s hope that Brown repeats the events – with a little more focus and clearer explanations of the problems – around the state. The public knows precious little about how bad the budget is and the limited choices the state faces.
  • Sacramento Showbiz is dead. The stage set-up was spare. The only thing in the background when Brown spoke was a black stage railing. The current governor of California would never appear in such a determinedly ugly setting.
  • Only Darrell Steinberg, the top Democrat in the State Senate, gets it. Among the main speakers, only Steinberg argued for systemic reform to fix the broken budget system. Assembly Speaker John Perez and other Democrats mentioned spending cuts. Republican legislators in the audience talked about spending and the evils of taxes. Brown was somewhere in the middle. But Steinberg talked – too briefly – about changing the game. He’s right. And the difficulty of getting agreement on the budget is more proof that before the budget may be fixed, the state’s governing system – its elections, its legislature, its budget process and its initiative process – must be fixed.
  • Republicans don’t like to talk about the deficit. At a budget summit, it was striking to watch the new Assembly Republican leader, Connie Conway, talk about everything but the budget itself. She talked about the economy and taxes over and over again.
  • Mac Taylor and Bill Lockyer were so sober they could get work as funeral directors. Taylor, the state’s legislative analyst, delivered some of the most sobering news of the event, pointing out how the state’s failure to build budget reserves had left California in an especially weak position because of the recession. Lockyer, the state treasurer, noted that California is paying 1.1 percent more in interest when it borrows because of its low credit rating.
  • Borrowing our way to budgets has to end. Debt service as a percentage of the general fund nearly doubled during the Schwarzenegger era (from roughly 3 to 6 percent). It could go above 10 percent in two years, Lockyer said. Brown tried to sound tough on borrowing, noting that it's not free.
  • The schools are going to get whacked. The Prop 98 minimum-funding guarantee has declined by $9 billion over the past three years, participants said. And Mac Taylor said the terrible budget picture (pick your own number for its size, since everyone else did) for next year already assumes another $2 billion in cuts to schools.
  • Maybe just maybe, there may be a “zone of agreement” (a Brown phrase) on local government reform. If Brown is going to build a consensus, the one glimmer of hope has to do with couching budget cutting in the language of local government reform. What would this look like? The event offered few clues. Where is Brown going with this? He didn’t say, but here’s my guess. He’s building a case for raising taxes for specific pieces of the budget – school funding for sure, and maybe to pay down debt. It wouldn’t be surprising if Gov. Brown were to call a special election sometime next year to have voters ratify ballot measures that would raise taxes specifically for pieces of the budget. If voters turn down the tax increases, then they’ll know exactly what cuts they’ll be seeing in the budget. 
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