You don’t have to listen to Governor Newsom when he talks about the state’s massive budget deficit, you can ignore the Democrats who control the Legislature, and you can turn your voice down and listen when lobby groups complain about proposed budget cuts.
California’s ballooning budget deficit is not a crisis. It is normal and predictable.
Because they are based on our Constitution, and on a reality so contradictory that it would make Kafka blush.
Our Constitution requires the state to balance its budget, but to balance the state budget, we would have to violate our state Constitution.
What does that mean? When it comes to fiscal issues, our Constitution is a ratchet. It’s loaded with guarantees and formulas that increase spending on preferential programs, and limits on taxes and fees that reduce revenue during economic downturns.
Californians may have forgotten about Ratchet. The past decade has been an unusual one for the state budget, with stock market growth and federal pandemic relief generating budget surpluses.
But as those revenue sources disappear or decline, California’s constitution has come back into play, creating a deficit recently projected to range from $27 billion to $70 billion.
This has stalled Governor Newsom and forced him to do what all California Governors must do.
It violates the Constitution.
First, he has not proposed a balanced budget, and his proposed deferrals, reserve drawdowns and cuts would only eliminate about half of the deficit.
Second, he is violating the state’s education funding guarantee, voter-approved Proposition 98.
Proposition 98, as we all know, is so complicated that no one understands it. (It involves three complicated formulas to determine the state’s budget, and it’s not at all clear which formula applies to which year.) The main effect of Proposition 98 is to continue to drive up education spending, one of the biggest spending ratchets in the constitution.
Newsom’s ploy is a clever ploy to mitigate the ratchet effect of Proposition 98 by changing the inputs into the formula. Newsom’s budget proposal proposes going back in time and reclassifying certain funds previously spent on education as non-education expenses.
The strategy is intended to lower funding bases and reduce budget imbalances. The problem is that lower funding bases mean tens of billions of dollars less school funding in the future.
That’s right, Californians, “We Don’t Care About the Kids” remains the true, if unofficial, state motto.
The powerful education lobby has accused the administration of improprieties, as have some Democrats and local governments. Newsom has defended himself by saying he has a duty to balance the budget.
The problem with this finger-pointing, and demands that Governor Newsom reverse his budget cuts, is that it defines the debate as being about the budget. The real problem is that the California Constitution is broken.
It’s hard to cut tens of billions of dollars for anything. Health care programs have all kinds of protections through court orders, laws and sometimes the Constitution. Cuts to prisons or state agencies require concessions from politically influential labor unions. Tax hikes run afoul of Proposition 13 and other state revenue limits.
None of this is to say I’m letting Governor Newsom, the Democratic supermajority in the Legislature, and other powerful interests in Sacramento off the hook for our state’s budget problems. Quite the opposite: The Governor, the Democrats, and the interests themselves are to blame for our budget mess, because they had plenty of time to amend the Constitution and never even tried.
Gavin Newsom has held statewide office since 2011. California Democrats have had complete control of the city of Sacramento since that year, and powerful labor unions and other lobbying groups have held power for much longer than that.
All of these politicians and lobbying groups know very well that the California Constitution is broken, and they have long had the power to rally together and write a new constitution for the state that it needs, one that increases spending and eliminates all of the financial constraints that limit revenue.
But they were not willing to lead and change the system. Instead, they focused on building their own power within this broken system. Jerry Brown and other California leaders have been pushing for constitutional reform for the past few decades (as outlined in my book, ” The collapse of California) is unrealistic.
But it’s state leaders who are losing sight of reality. They say they can fix the budget, but they can’t because the Constitution won’t allow it. And they won’t fix the Constitution because they say it’s politically impossible. How long will they keep saying this and pretending they’re doing their job?
The Governor and legislators say they are trying to fix the problem, but that’s not true. This disastrous budget, riddled with cuts to education, is the product of a budget system and constitution they themselves chose.
Joe Matthews writes the “Connecting California” column for Zócalo Public Square, an Arizona State University media enterprise.
