Pubdate: Sun, 21 Mar 2010 Source: Orange County Register, The (CA) Copyright: 2010 The Orange County Register Contact: http://www.ocregister.com/ Details: http://www.mapinc.org/media/321 Authors: Alan W. Bock, Brian Calle and Mark Landsbaum, Register columnists Bookmark: http://www.mapinc.org/opinion.htm (Opinion) GETTING CALIFORNIA'S HOUSE IN ORDER As campaigns begin in earnest for the June primary and November election, the editorial writers offer nine ways to put California on a sound financial footing, yet at the same time protect and enhance individual liberty. We'll be sizing up the candidates for their approaches. Spending Limit The state Legislature operates on the apparent notion that it should spend as much money as politicians want to spend, or at least as much as their constituents desire to have spent on them. That is a bankrupting philosophy, rooted in the idea that government is the granter of wishes, instead of the protector of rights. Ideally, government would never spend a dime on anything except those things that protect the peoples' God-given rights from those who would abuse them. Alas, we don't live in an ideal world. That's why it's necessary, at the very least, to impose restrictions on government spending. Otherwise, the foxes are in the chicken coop. In the 1980s, California enjoyed such a cap on spending, provided by the Gann initiative, a constitutional amendment approved by voters in 1979. Unfortunately, some chaffed at the idea spending should be limited. Transportation interests promising to end freeway congestion buried in a subsequent ballot measure a reconfiguration of how the limit was calculated, essentially rendering the limitation toothless. It's past time to revisit the idea of capping government spending. A new, bullet-proof Gann-type limitation based on inflation and population growth might do the trick. Change Government Pensions One of the consequences of an ever-expanding state government is that the ever-greater workforce to sustain it is always growing in influence over it. In a nutshell, that explains how government employees enjoy retirement benefits that in many cases put to shame nearly all private-sector systems. As public employees' numbers increase, their political clout has, too. Consequently, state legislators elected by this powerful lobby return the favor by lavishing benefits on the government workforce. These benefits are legally locked in as contractual rights, and most likely cannot be undone or even scaled down, even in the event of looming fiscal insolvency. So, the state is sitting on a ticking time bomb of unfunded benefits due tens of thousands of government employees once they retire. To perpetuate this system is fiscal suicide. We recognize the legal and moral constraints that prohibit Californians from reneging on agreed-to terms for existing and retired government workers. But there's nothing written in stone that every newly hired government worker should receive similarly plush benefits. To disarm the time bomb, California should switch to a defined-contribution system of retirement benefits for new hires, similar to 401(k)s in the private sector. Guaranteeing a fixed level of retirement benefits, as is the case for current employees, ultimately will only be an explosive disaster. End Preferential Tax Treatment When you see an advertisement promising "20 percent off" at a local store, does it cross your mind that the merchant may have marked the item up 20 percent before he marked it down? That's something like what politicians do to trick taxpayers with "tax credits" and other selective tax reductions. Ask yourself: "If they want to give me some of my tax money back, why'd they take it in the first place?" The answer is, so they can use your own money to bribe you. Nevertheless, gullible taxpayers see tax credits and the like as government being gracious, even generous. These preferential tax treatments only tighten government's grip on private pocketbooks. Selectively "rewarding" certain taxpayers, usually for certain government-approved behavior, is nothing more than bribing them with their own money. Buy a "green," car and get some of your taxes back. You want an ungreen car? Sorry, no tax credit. Operate a business the government prefers, like selling windmill blades, and get a tax credit. Operate a gasoline station? Sorry. Taxpayers not favored with such treatment should be hopping mad. Here's the solution. If government intends to return tax money to taxpayers, don't take it in the first place. Add up the value of all tax write-offs and credits, then reduce taxes by that much. Align State, Federal Labor Laws California labor laws need to be updated, which should be one of the first priorities for state lawmakers. If businesses are increasingly taxed out of the state, the job market will look bleaker and the state jobless rate, already at 12.5 percent, will increase. A commonsense reform would be to bring California labor standards in line with federal standards. That would make California more competitive with other states and give businesses the breathing room they need to hire more people. For example, state overtime requirements require companies to pay overtime to workers who work over eight hours a day while the federal standards require overtime to be paid to workers who work 40 hours a week. The federal rule gives companies the flexibility of allowing workers to work 10 hours a day for four days a week without paying overtime, a tactic needed in globally competitive career fields like technology. California likes jobs but its current labor laws punish employers. Repeal AB32, Global Warming Solutions Act Out-of-control state government has spread to places government has no business going, funded with money government has no business taking and has led to a government by administration, in place of government by representation. The epitome of the administrative state is the hubris that gave California the 2006 Global Warming Solutions Act, a monstrosity of government regulation and taxation that literally seeks to regulate the very stuff people exhale: carbon dioxide. Operating on the arrogant assumption that they can change the global climate, which has had no trouble changing itself for countless years, state bureaucrats are using this nearly boundless legislation to justify writing countless rules for everything from what kinds of products can be sold to what kinds of businesses can operate. The enabling legislation, Assembly Bill 32, is the forerunner of touted federal cap-and-trade legislation, the implications of which so far have scared members of Congress enough that they are afraid to implement a national version. But where Congress fears to tread Gov. Arnold Schwarzenegger, the Legislature the state Air Resources Board plunge ahead full-speed. Repeal of this utterly intrusive, economy-retarding administrative power grab is necessary to reverse decades of creeping regulatory control over more and more of Californians' lives. Otherwise, we're in for much more of the same. Fix Education Meg Whitman says one of her three goals if elected governor is to fix California's schools but, beyond making it easier to form charter schools, she offers few specifics. A real fix would recognize that any effective monopoly inevitably leads to lower quality and higher costs (recognizing that even now some schools and many teachers are quite good) and seek to induce more competition. Making it easier to form more government-funded charter schools (though recent research suggests they're no panacea), merit pay for teachers (though some subjective judgment will always be involved), and transfers at will would provide marginal improvement within the context of the current system. But the current system deserves a more thorough shaking-up. We need to think first of the needs of the individual student, recognizing that they have different aptitudes and enthusiasms and progress at different speeds. The most obvious reform would be a voucher system, where parents would have control of the money appropriated for each student, and not just for a handful of poor and minority students but for everyone. This would encourage more intense parental involvement and intelligent "shopping" among government and private schools. Philanthropists should also be empowered to contribute to a voucher fund to increase the range of choices. The competition would tend to improve quality over time. Separation of school and state, the preferred solution, may not be politically feasible anytime soon. But consider: An institution funded by the state is hardly in a position to encourage independent inquiry into whether taxpayer subsidization is the best way to provide goods and services in any area, but such independent thought is vital to the health of any polity. Privatize Prisons Although some philosophical questions arise about whether it is appropriate for the state to subcontract its power to punish people for crimes and violations of laws, at a practical level more privatization of prisons is virtually a no-brainer. With some exceptions, private prisons are run less expensively and more humanely than government prisons, and with more experience we should learn from mistakes and fashion contracts more carefully to make sure quality is enhanced. Privatizing prisons would also break the political strength of the prison guards union, which has generally lobbied for criminalizing more acts, longer sentences, and higher pay and more job security for guards. Prison reform, however, should be accompanied by sentencing and probation reform. Attitudes toward crime tend to swing back and forth, pendulum-like, and since the 1980s we have been in a "tough on crime" phase that has increased prison populations inordinately. California's Three Strikes law, the harshest in the nation, is in need of modification. More fundamentally, it's time to reconsider whether some acts should really be treated as criminal (see below) and whether longer sentences are always the answer. Drill, Baby, Drill Complete energy independence - no more reliance on foreign suppliers - - is probably a pipe dream and might not be as desirable as some people think anyway. But for the U.S., and particularly for California, with its budget crisis and high unemployment, to keep certain energy supplies off-limits to any utilization is simply unconscionable. California has large reserves of petroleum in offshore fields, and extraction methods have been improving steadily. Opposition to exploiting them is almost entirely emotional and esthetic people remember the 1969 Santa Barbara oil spill and the 1989 Alaska oil-tanker spill and think a few drilling platforms just over the horizon will spoil the sacred beach experience. It's time to extract as much homegrown oil as is possible within firm environmental guidelines. More alternative sources of energy should hardly be discouraged. The temptation to subsidize wind power, solar power - or nuclear power - even with the promise that it's just a temporary program to give them a foothold, however, should be resisted. Subsidies must come from tax dollars, which means narrowing choices in other areas for consumers, and in the long run they are not economically sustainable. So take a look at various regulations that hinder the development of nuclear and other forms of energy and clear away those that are not absolutely essential. Let the market consumers decide which forms of energy production (it might be radically decentralized power stations) will predominate. Tax Marijuana One of the most sensible ways to mitigate the government's budget crunch is unlikely to come through the legislative process, though a bill has been introduced and passed by one committee. But California voters will have a chance to get ahead of their leaders in November by approving an initiative to tax, regulate and legalize marijuana use for adults. Doing so would also help our neighbor Mexico, given that some 60 percent of the revenue of the Mexican cartels involved in the current tragically deadly drug war are said to come from marijuana. Legalizing marijuana in California would dry up a significant part of that illicit revenue. Although marijuana is not without its potential dangers, scientific studies validate that it is less organically dangerous to human beings - as in no documented overdose deaths over thousands of years of use than the legal drugs alcohol and nicotine. In the form of hemp, it is also valuable for food, fiber and fuel. Legalizing it would invigorate California's agricultural sector. The benefit to California's budget would be twofold. Police focusing on the hopeless task of eradicating marijuana could focus on real crimes, and enforcement costs would decline. Fewer lives would be ruined by people being arrested for marijuana use, and the jail and prison population would decline. And if marijuana were taxed it would bring in considerable revenue. The state Board of Equalization estimates that a $50-per-ounce excise tax would bring in $1.4 billion to the state, and decreased costs of investigation, prosecution and incarceration would be at least several billion. That wouldn't close the budget deficit but it wouldn't hurt. - --- MAP posted-by: Richard Lake