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 Governor in the 2003 recall election. His valuable
website is found at www.tommclintock.com [McClintock
Schwarzenegger 'blow up boxes'?
out and overhaul bureaucracy...
[Tom McClintock] 1/23/04
There's an old adage that comes to mind when reading the governor's
budget: "When you're up to your eyeballs in alligators,
it's hard to remember that you came to drain the swamp." The
practical application of that adage will define the success or
failure of this administration, and with it, of California. The
fatal mistake would be to believe that the most important budget
issue facing the administration is the 2004-05 budget.
It is not. A much more critical issue is whether and how fundamental
reforms enacted this year will decisively shape future budgets.
The governor is right to single out uncontrolled spending in
defining the state's deepening deficit -- but it is merely a
symptom and not the cause. The root of California's spending
problem is the way in which the state applies its resources.
Whether this administration and the Legislature will concentrate
on fundamental changes in the structure and delivery systems
of the government that will produce vast budget savings in future
years is, or at least ought to be, the central budget question
This is not to excuse
the borrowing and bookkeeping gimmickry in the 2004-05 budget.
Ironically, it doesn't meet any of the
tests of the so-called "Balanced Budget Amendment" the
administration is sponsoring as Proposition 58 -- which may explain
why that proposal contains more escape clauses than Britney Spears'
The budget is not balanced. Indeed, when the bookkeeping gimmicks
are unraveled, it spends at least $3.5 billion more than incoming
tax revenues. It does not foreswear borrowing. Indeed, it relies
on exactly the same sort of loans that Davis used to get into
this mess -- although in smaller amounts. It does not contain
the required 3 percent reserve. Indeed, the budget reserve is
less than one percent -- and half of that is borrowed.
That's just the beginning, but it's also beside the point.
The real fiscal battle is over future budgets. Every year, the
difficult, complicated, controversial long-term reforms that
are vital to restoring the state's financial health are pushed
aside in the frantic scramble to pass a quick fix, get-out-of-town-alive
budget. It is a siren song that has seduced and wrecked previous
administrations, and the governor should keep his bearings fixed
on how reforms adopted this year will affect all of his budgets
To that end, the governor has outlined a series of sweeping
changes in the fundamental structure of the government. They
have received scant attention in the pundits' race to dissect
budget numbers -- but are the most profound and far-reaching
parts of the proposal, and if adopted this year, all of the infirmities
of his 2004-05 budget will soon be forgotten.
The centerpiece of
his State of the State address was his proposal for a Performance
Review Commission. The recommendations of previous
commissions have simply been ignored, but if it is given real
teeth to effect a reorganization of the bureaucracies -- "blowing
up boxes," as he put it -- it promises to be one of the
most significant reforms in two generations.
But that's just the start. The governor has also proposed a
constitutional amendment to provide for the contracting out of
state services, he has demanded real workers' compensation reform,
and he has taken the first steps to bring California's welfare
rules into conformity with the federal Welfare Reform Act. He
is pushing to transfer funds from the sinkhole of school finance
-- categorical programs -- directly into the classroom and to
restore management of those funds to the people directly involved
in classroom instruction.
He can go even further. Replacing the Healthy Families Program
with a pre-paid, refundable tax credit would provide far broader
coverage at far lower cost than the expensive bureaucratic model
now in place. Implementing a bounty program for private auditors
to expose fraud in the Medi-Cal system would succeed where internal
audits conducted by the bureaucracies have failed.
The total savings -- and improved services -- inherent in these
reforms would make balancing future budgets much easier. But
enacting them in time for next year's budget is the most difficult
and demanding task that any California governor has faced in
nearly a century. Judging from his public comments, Governor
Schwarzenegger understands this, and judging by his actions to
date, he has the singular determination and focus to succeed.
And once the swamp is drained, the alligators will go away.
This piece first appeared in the Sacramento Bee