Mr. McClintock is an expert on matters of the State budget
and fiscal discipline. He is a Senator in the California State
Legislature and ran for Controller on the Republican ticket in
2002. His valuable website is found at www.tommclintock.com
to Solve the Budget Crisis in Three Easy Steps
by Senator Tom McClintock
budget crisis is not complicated and it is not intractable and
it is not mysterious. Over the last four years, population and
inflation have grown at a combined rate of 21 percent. Revenue
has grown 28 percent. Spending has grown 36 percent.
Our distress is not for lack of revenue but for lack of discipline.
And to restore that discipline, three simple acts are all that
is needed to put Californias financial crisis behind us.
First, the immediate budget shortfall requires policy makers to
abide by the first law of holes: when youre in one, stop
Most of Californias deficit is not the difference between
what it is currently spending and what it is currently taking
in. It is rather caused by the projected increases in state spending
over the next 18 months. Most of the deficit is not a matter of
cutting current spending but rather arresting the growth
in future spending.
That growth is driven by a variety of constitutional and statutory
mandates. But virtually all of them can be suspended by the legislature
at any time by the same vote that it takes to enact the budget.
The principal exception is service on the debt.
Thus, merely suspending these mandates and reducing current expenditures
by 9.5 percent and then holding at that level for 18 months
would eliminate the deficit without the tax increases,
raids on local government and pilfering of pension and special
funds that the Governor has proposed.
Could your family cut its spending by 9.5 percent in hard times?
In this recession, many families are doing exactly that. Their
state government, which is now spending a larger portion of their
earnings than at any time in our history, could profit from their
Secondly, the discomfort of frugality could be eased dramatically
if accompanied by a comprehensive review of every state agency
and program now on the books. California State government spends
roughly twice per person what Arizona spends, and yet Arizona
delivers a vastly higher level of service in every category including
academic performance, electricity generation, water delivery,
and highway and housing construction.
The difficulty in conducting such a review and acting upon
it is that every program has a highly motivated constituency
that jealously and expertly guards its budget. Faced with the
long overdue need to close obsolete military bases, the federal
government confronted the same paralysis caused by interest group
pressure. Ultimately, Congress broke the gridlock when it took
the task of reviewing bases out of the political arena and gave
it to an independent panel of management experts that returned
a comprehensive recommendation for a single up-or-down vote.
This mechanism prevented the political logrolling, mutual back-scratching
and parochial grandstanding that had long blocked the consolidation
and closure of obsolete bases. The same thing desperately needs
to be done with Californias bureaucracies.
Finally, with the states fiscal affairs back in order, a
constitutional spending limit must be restored. California had
such a provision from 1979 to 1990, commonly called the Gann Spending
Limit, restraining the growth of state expenditures to the combined
growth of population and inflation. State spending still more
than doubled during this period, but only as fast as the economy
could sustain it. In 1990, the limit was blown into the stratosphere
by Proposition 111.
If the Gann Limit had been restored at the outset of the Davis
Administration, Californias current budget would still be
21 percent larger than it was four years ago. But instead of a
$35 billion deficit, California would enjoy a $5 billion surplus
this year and $30 billion cumulatively over the last four.
These three simple acts would solve Californias current
budget crisis and prevent future recurrences. Will they be enacted?
Probably not. And thats the only reason why Californias
budget problem is intractable. It is not answers but action that