Cavala: Panetta ‘Reform’ Commission Rehashes Old Issues, Provides No Realistic New Ideas

[courtesy of California Progress Report]

By Bill Cavala
A veteran of over 30 years in Sacramento

Well, now we have it: the solution to California’s budget deadlock as provided by an elite class of “bipartisan” gurus lead by former Clinton Chief of Staff Leon Panetta.

Editorial approbation will soon follow. Then, when the advice of this group of elders falls upon deaf ears and a harsh, partisan budget fight ensues, the proposals will serve their true purpose: a big stick with which the press corps can use to beat our elected officials about the head to lay the groundwork for yet another ballot measure solution.

What are the proposals and why are they silly? Let’s take them one by one.

(1) Out of control costs”. We must, says Panetta, “make sure the state doesn’t commit programs it can’t support”. Like tougher prison sentences? Of course, when a ballot measure was presented to voters just a couple of years ago to save money by reducing prison time (and expense), it was rejected decisively by voters. So the tough sentences remain, as do the costs – soon to be paid for by taxpayers at the insistence of Federal Judges.

Or the costs of public education. 40% of our general fund revenues are spent on k-12 schools by law. (the Pesky voters again). We can decline to do it in any given year, only at the expense of repaying the total cost – plus interest – in the future. Thoughts of new taxes to solve budget shortfalls must always include the fact that 40% of those new revenues must go to the school system

This fall, voters will be asked to rule on a series of ballot measures that will increase general fund expenditures on behalf of bonded indebtedness. If they pass, then lawmakers will have to deal with the consequences. Are Panetta and his colleagues prepared to recommend a blanket ‘no’ vote on all these initiatives? Are the economic dangers of initiatives even glanced at by Panetta and his colleagues?

(2) The “volatility” of our revenue system requires better management. Perhaps so. Unfortunately, the economists of the nation aren’t very good at explaining the causes of volatility except in retrospect (otherwise, they’d all be rich instead of working). The increase in income tax revenue in the late ‘90’s was not perceived as a temporary ‘spike’ at the time. The current depression in tax revenues was not predictable even a year ago.