To Solve State Budget Woes, Chop From the Top

If there is a silver lining in California Gov. Jerry Brown's latest budget proposal, it is the recognition that we cannot realign state services down to county and local governments or bridge the state's almost $26 billion budget deficit without sufficient revenues.

While the continued cuts to human and social services are troubling and will only compound our present problems, it is refreshing to have a governor who can be honest with Californians about the dire condition of our state and what it will take to fix it.

What Governor Brown is effectively telling Californians with his latest budget proposal is that it's time to man up.

If we wish to avoid becoming a third world country, where education and opportunity are reserved only for the wealthy and politically connected, we must upgrade the fundamental building blocks of our social and physical infrastructure by reinvesting in our public spaces, physical works and social structures.

In other words, we must accept the requirement to pay for the things that make a civilized society possible.

Over the last 80 years, we have been enjoying the benefits of the public investments made by past generations through a higher quality of life and standard of living.

But with a jobless rate of 12 percent and two-fifths of California homeowners underwater, the time has come to renew our commitment to this legacy.

After all, a 21st century economy cannot function without the public spaces, physical works and social structures characteristic of a 21st century state.

Even business groups are coming to the same conclusion.

Joint Venture Silicon Valley, for example, is calling for “wholesale tax reform,” because today's tax code fails to capture the most dynamic parts of California's economy.

Their President and CEO Russell Hancock believes that all options need to be on the table including closing the loophole in Prop 13 that exempts commercial property owners from regular assessments.

Governor Brown's proposal to eliminate the failed enterprise zone program is a good starting point for the long overdue conversation California needs to have concerning our priorities and how to fund them.

However, we should be prepared to go further by requiring stricter oversight of all the state's subsidy programs to ensure that our tax dollars are spent wisely and only on programs that have been shown to advance the common good.

Ideally, all subsidy programs should sunset after three years, because there is currently no way to review or assess them, much less track the entities making use of them. Nobody knows where those tax dollars are going and who is receiving them.

As taxpayers, we need to know where our tax dollars are going and whether they are really being put to good use, or whether they are simply going into a black hole designed to funnel our collective wealth into the pockets of select individuals and businesses.

Moreover, if the free market is really the ideal mechanism for creating wealth, then why should taxpayers subsidize the operations of private sector companies?

To that end, we should repeal the recent corporate tax breaks given to Comcast, Swiss pharmaceutical giant Roche and Hollywood film studios, as these companies have simply been laying off people and shipping jobs out of California.

A report last year by the San Francisco Chronicle's Washington correspondent Carolyn Lochhead concluded that closing California's tax loopholes would result in years of budget surpluses.

The state should also stop paying private contractors more than $34 billion a year to do jobs that civil servants can perform for roughly half the cost.

Finally, like many Californians, the American Federation of State County & Municipal Employees (AFSCME) shares the public's concern over how our tax dollars are being spent, especially in light of the billions given to bail out the financial institutions responsible for our current economic crisis.

That's why we should institute a surcharge on financial service transactions to make sure that Wall Street, not Main Street, pays to clean up this economic mess.

That's also why we should rein in high executive salaries like those enjoyed by the 36 executives at the University of California, who threatened to sue if UC does not authorize higher pension payments.

In times like these, always chop from the top.