Jerry Brown's Broken Budget
The California governor betrays his promise to deliver an "honest" budget.
California Gov. Jerry Brown's "Moonbeam" shtick has long passed its expiration date, taking about as long to go from "cute" to "annoying" as it did for Arnold Schwarzenegger's Terminator references.
On Monday, in announcing that the state's budget deficit ballooned from $9.2 billion to $15.7 billion in a mere four months, the governor let loose with this Brown-ism: "The capitalist system is not coincident with your expectations of exactitude." In other words, the market system "doesn't play out like we may want it to."
That entertaining play of words might have gotten a chuckle or two in the past, but the governor—not the capitalistic system—is largely responsible for the budget mess he detailed that day. The state continues to face enormous shortfalls precisely because this governor, betrayed the promises he made to Californians.
Brown promised us an honest budget. But, according to economists who looked at a budget deficit that has grown by 70 percent since January, there was nothing in the economy that caused the tidal wave of red ink. The problem: Gov. Brown's budget was dishonest. Just like Schwarzenegger and Gray Davis before him, Brown didn't have the courage or political skill to bring state spending in line with revenues, so he relied on overly aggressive economic forecasts to paper over the enduring mess.
Brown has no interest in cutting government, even though the state's still-huge budget is filled with waste, inefficiency and redundancy. The state government meddles in just about every aspect of our lives. California's cost to provide services is far higher than most other states, thanks largely to the enormous overhead exacted from a public sector that enjoys the most lush pension and health care benefits in the nation. We're supposed to believe the government is cut to the bone?
The Legislature has refused to pursue pension reform, which would not only slice needed dollars from the deficit, but would keep the state's localities from hitting the financial wall. But legislators don't have time for it, busy as they are with such pressing matters as banning foie gras. If Brown spent a tenth of the time pushing his pension plan as he does pushing for tax hikes, he might actually get somewhere.
Brown has tried to play on his cheapskate image, honed in the 1970s, by cutting a few pennies from, say, the Commission on the Status of Women, but he has not looked at serious reforms, alternatives to the government's costly but shoddy provision of services. He recently joked that there's plenty of money "sloshing around" in California, and that the rich are doing just fine. But such words are only a reminder of what a bore the man has become.
A growing economy could surely bring in new revenues, but the state's leaders are too busy punishing the private sector to understand that message.
Like other leaders of his party, he doesn't take seriously the evidence—such as California's lowest ranking of states to do business, per Chief Executive magazine's latest survey, or the USC survey showing dramatically slowing population growth—that the rich, moderately rich, and entrepreneurial middle class are high-tailing it to other states. Yes, people are still coming to California—but taxpayers are being replaced largely with tax consumers.
The California government's war of attrition against the most productive members of its society might explain another reason that the deficit keeps getting worse. "California is suffering [a] tax drought even as most other states enjoy a revenue rebound," The Wall Street Journal opined. "State tax collections were up nationally by 8.9 percent last year, according to the Census Bureau, and this year revenues are up by double digits in many states." But California defied that trend.
I argued recently for Bloomberg that there's a case for staying in California, in that we ought to stay put and fight for our home rather than pick up roots and try to find a better place. But it's hard to imagine any new business choosing to move or expand here, despite localized growth (San Jose) and the state's appeal for those who already have made their fortune. We have tools to revive our state (i.e., the initiative process), but someone save us from the crowd that governs us these days.
Brown, who helped create the state's current mess during his last go round as governor thanks to the vast expansions of power he granted to public-sector unions and his small-is-beautiful approach to infrastructure, positioned himself as the man best able to wrestle with the state's problems. Instead of confronting tough problems, he's looking for the easy route—cobbled-together budgets and tax increases as he protects the coddled public sector from competition and reform.
Brown also is committed to spending our way out of the mess, as he promotes other dishonest schemes such as a bloated high-speed rail system based on phantasmagorical funding schemes and "green jobs" programs based on equal parts subsidy and fantasy. The cap-and-trade system embraced by Schwarzenegger and Brown alike is killing business and won't provide any cleaner air, designed as it merely to prod other states and the feds into following suit. That's California exceptionalism these days—following its own ideologically driven path right over the cliff. "You've got to try many paths because a lot of them don't work," Brown said at a March economics conference. "I'm open, I'm curious, and I like to try new things."
But Brown is open to only one idea—new taxes. He's using threats of draconian cuts to coerce the public into giving the state government and the unions that dominate it even more of their hard-earned money. Voters should understand that if they give him what he wants, we'll never get real reform and Brown and his allies will be back asking for even more money sometime soon. That's even less entertaining than the governor's boring rhetoric.
Steven Greenhut is vice president of journalism at the Franklin Center for Government and Public Integrity.