California, hit the reset button

The state has seen this budget drama before. It’s time for a completely new script.

California isn't the only state with budget woes. Kansas is delaying income-tax refunds. Proposed cuts have prompted protests in Washington State. But locking lawmakers in the capitol until they close a whopping $42 billion deficit? That's high drama, and a sign that America's most populous state needs to rewrite its script.

Too often, the state's budget screenplay comes to the same climax: a showdown over a deficit. And it ends the same way: short-term fixes that don't solve the underlying problems.

In 2003, residents recalled Democratic Gov. Gray Davis for fiscal failure and legislative gridlock. Now they're watching Republican Arnold Schwarzenegger struggle with similar issues, magnified by the housing bust.

No wonder many are leaving the theater. Last year, 144,000 more people moved out of the state than moved in, a trend since 2005.

As the world's eighth largest economy, as a traditional source of innovation and inspiration, California can't afford fiscal and political dysfunction anymore.

In one way, Californians have the same hard lesson to learn as most other Americans. They've been overspending. In 2008, their budget totaled $144 billion. Hold your breath: 10 years earlier it was $56 billion.

They've also succumbed to a common human trait of bargainhunting: wanting Nieman Marcus service at a Kmart price. They won't cut spending, but they're loathe to raise taxes – though they've slowly inched up so that the state ranks sixth in the nation in income taxes.

Readjusting such thinking is hard enough, but the state now faces a day of reckoning of its own making. Serious structural issues must be tackled. Among them:

The two-thirds-majority rule. California is one of only three states that requires two-thirds of the legislature for budget approval – specifically, to increase the budget and taxes. The rule is intended to keep state spending in check, but that obviously has yet to happen. It is now an arena for high stakes politics between the longstanding majority Democrats and minority Republicans that often leads to budget delays and impasse.

Ballot initiatives. The state's on the verge of rule by plebiscite. Election after election, it snows ballot questions. That may feel empowering to voters, but it leaves their elected representatives with less and less maneuvering room to actually govern.

Ballot initiatives mandate how money is spent and how revenues are raised. The "three-strikes" initiative, for instance, has made California's prisons as costly as its universities.

Extreme politics. Term limits and voting-district gerrymandering exacerbate the state's political divide, which separates the liberal coast from the conservative interior.

Short-term lawmakers have no incentive to build moderate voting records, nor are they in Sacramento long enough to learn the ins and outs of budgeting. And noncompetitive voting districts add no incentive to compromise.

Californians may be waking to these issues. In November, they approved a measure to hand the drawing of voting districts to an independent commission. But it is the equivalent of opening one eye; the entire body needs rousing.

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