The long road back from economic crisis

April 22, 2009
By: Jim Silva
Huntington Beach Independent

Earlier this year California faced a staggering $40-billion budget deficit. Years of wasteful, out-of-control spending and a failure to prioritize led our state to the brink of bankruptcy. I opposed the budget passed by the Legislature in February, which relied on short-term solutions, federal stimulus dollars and the taxpayer’s checkbook instead of the permanent spending cuts necessary to balance the books.

Predictably, after Sacramento saddled Californians with $12.8 billion in higher taxes in the midst of an economic recession, our economy has continued to deteriorate. The nonpartisan Legislative Analyst now predicts that state revenues will fall $8 billion short of projections, proving yet again that revenue from raising taxes always falls below estimates because people simply spend less. But the bad budget news doesn’t end there.

The February budget agreement assumed receipt of $10 billion in federal stimulus dollars. A few weeks ago it was revealed that the $10 billion threshold indicated in the budget would not be met. While California is due to receive an estimated $85 billion in total federal stimulus money, only $8.17 billion qualifies under the budget agreement criteria to offset General Fund expenditures. Consequently, California will sustain $948 million in welfare cuts and another $1.8 billion in higher income taxes. That brings the increased tax burden to $14.6 billion.

Finally, the February budget agreement unwisely depends on passage of three ballot measures that will be decided in an upcoming special election. One of the measures asks Californians to tax themselves another $16 billion. Should these propositions fail the current deficit will increase to $14 billion.

That’s a lot of zeros to absorb.

Several steps must be taken to address our budget situation. First and foremost, hardworking Californians should not be burdened with higher taxes while waste — such as the $321 million in planned “dental improvements” at seven prisons or the $185 million the California Lottery plans to spend on new headquarters, for example — can still be cut from the state budget. Legislators must be willing to go through the budget line-by-line and cut unnecessary spending.

Next, the Legislature must not allow any federal stimulus dollars from Washington to go toward expanding programs; auto-pilot spending and program expansion is what got us here in the first place. Stimulus funds should be targeted for one-time use for schools, hospitals, roads, and other essential economic relief. Any budget solutions to offset declining revenue must come from reducing state programs and genuine budget reform.

To that end, the Assembly Republican Caucus has created eight “working groups” tasked with exploring common-sense reforms to end the status quo in Sacramento and save billions of dollars.

The Working Group on Government Accountability is inspired by former President Ronald Reagan’s legacy of giving state government back to the people. As a member of this working group, I will work with my colleagues to identify and eliminate waste, fraud and abuse in state government. From the bloated state workforce to the estimated $10.5 billion a year spent on services for illegal immigrants, there are billions in savings to be found in the state budget, no matter how many times you may hear that there is nothing left to cut.

Another working group I am involved with, the Republican Working Group on Job Creation and Economic Recovery, seeks to identify the best policies to help get our economy back on track and to put Californians back to work. Assembly Republicans in this group will craft legislation to improve our state’s business climate and inspire more companies to invest in California and create jobs here. We will consider additional steps to lower the costs of doing business here and reduce the unnecessary bureaucracy and frivolous litigation that adds a significant burden to job creators.

With a combination of cuts, a wise allocation of federal stimulus dollars and real budget reform, California has the opportunity to emerge from this economic crisis stronger than it was before. My Republican colleagues and I stand committed to rejecting further tax increases and getting people back to work.