Dave Cox Senate Report: March 2008

Dave Cox Senate Report: March 2008

Budget Crisis: We Have To Reduce Expenditures

Last month California's dark budget picture grew grimmer as the state's nonpartisan budget analyst revised the projected $14.5 billion deficit to $16 billion. We are going the wrong way and it is clear that we will have to take significant measures to bring our state's financial condition back into balance.

Given that Senate Republicans were branded obstructionists and terrorists by the Democratic leadership for holding out for a budget that simply reined in the growth of spending by a fraction during last year's budget crisis; the stage is set for another protracted impasse.

At the heart of the struggle are two distinct and contrasting fiscal philosophies. While my colleagues on the other side of the aisle have an unfortunate tendency to resort to class warfare rhetoric, our differences are not quite so simplistic.

Democrats believe in big government. In the past five years, state spending has grown by $25 billion, well outpacing increases in inflation and population growth. In many instances, California provides benefits that surpass the levels of benefits provided by our neighboring states. By including such benefits as acupuncture and chiropractic care, the state has expanded health services to the poor that also surpass the private health care paid for by middle class workers and their employers.

Or consider welfare benefits, an area where we had made tangible progress - only to regress. Recently, woeful work participation rates by CalWORKS recipients have threatened to bring down huge financial penalties from the federal government. Predictably, the Governor's modest and practical solution was roundly vilified as an assault on children. His inconceivable notion? Limit recipients to 60 months - that is five whole years - of aid before removing them from a program that's intended purpose was a temporary transition from welfare to work.

While I strongly support California and the Federal government providing “safety net” services, we cannot continue providing benefits that are beyond what is needed and that provide disincentives for work and productivity. This is the perfect illustration of how my colleagues cannot bring themselves to cut any of these programs. We keep throwing good money after bad.

In contrast, I believe that California's economy will only revive itself if government creates a business friendly environment that allows the entrepreneurial spirit of job providers to flourish - something we might achieve largely by getting out of the way.

In their study “Rich States, Poor States,” economists Arthur Laffer and Stephen Moore note that more than 5,000 of the approximately 25,000 seven-figure-income families moved out of California in the early part of this decade. Though it may be in vogue to bash the wealthy for their success, this is actually problematic. The resulting loss of their would-be tax payments accounted for half of the $14 billion deficit we faced in 2003.

Since the majority party keeps spending more money than we take in, their budget “solutions” invariably consist of more borrowing, more gimmicks and calls for more taxes. The mid-year reductions taken in February put this approach in plain view. Borrowing and accounting tricks were utilized to yield $5.4 billion in new revenues. But they could come up with just $1.5 billion in reductions. Among the apparently difficult cuts they couldn't bear to make? Calling off some surveys of how state government is doing and eliminating the aforementioned acupuncture and chiropractic benefits for Medi-Cal patients.

Experience should have taught us that raising taxes would not get us out of this budget crisis. When Governor Wilson and the Legislature raised taxes in the early 1990's, revenues went down. If we expect to raise revenues we need to focus on revitalizing the economy and taking actions that stimulate job creation and economic growth, instead of adding to a tax burden that's already driving the most productive Californians to other states.

With the opening of another budget hole, it was only a matter of time before the spending lobby started pushing for more and higher taxes for the upper and middle classes. Is it really worth lightening taxpayers' paychecks to sink yet more revenues into expensive programs that grow at unsustainable rates? For me the answer is a firm 'No.'

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California Still Has A Water Crisis

Last year California's imminent water crisis was at the top of the agenda in Sacramento. While there was a fair amount of disagreement over how to remedy the problem, there was no debating the unqualified need for a real solution on water storage and delivery. Accordingly, it was a significant priority of the Governor's and of both parties in the Legislature.

Then we had a few wet storms blow through. Even more diverting than the rains was the deluge of red ink as the full scope of the state budget deficit came into focus. Sure, the weather systems resulted in a decent Sierra snowpack, and may have raised our reservoirs a water line or two.

It's imperative that we realize, however, that a few good rains have not alleviated California's water problem, nor does the fact that were grappling with a budget crisis negate the fact that we still have a water crisis to contend with as well. It's a crisis that threatens the quality of life of every Californian.

At the core of the problem is the uncertain fate of the Sacramento-San Joaquin Delta, the heart of the state's drinking water supply. This is where melted snow from the Sierras accumulates prior to serving agricultural, residential, and commercial needs for almost two-thirds of the state's population. In response to precipitous drops in the population of native fish, a federal court ruling substantially reduced the amount of water that can be exported from the Delta by as much as two million acre feet this year alone. A separate court decision invalidated the environmental permits for the Delta pumps.

In response to the Alameda Superior Court ruling which invalidated the State Water Project's permit to operate its Delta pumps, the Resources Agency and other key stakeholders have embarked on the Bay Delta Conservation Plan (BDCP). The hope is that BDCP can come up with a plan that both protects the Delta ecosystem in accordance with the state Endangered Species Act and allow for the reliable transfer of water.

Our water delivery system was tenuous enough, before judges and policy makers started making rulings and issuing reports to save the fish at the likely expense of every Californian who uses water for daily living. With the spigot being tightened on the Delta by environmental lawsuits, a continuing drought in the Colorado River Basin and an unreliable Sierra snowpack the water you expect to flow when you turn on the faucet, or program the sprinkler system, remains precarious, indeed.

Where exactly we go from here is uncertain but it is clear that we need a comprehensive water plan sooner rather than later, one that addresses our deteriorating water delivery infrastructure, expands water storage capacity, encourages conservation and restores the Delta as both a vital habitat and sustainable water source. Otherwise we'll be responding in a panic to the turmoil that will surely come if we continue to do nothing at all.

This is why I was a co-author of SB 59 last year. Senator Dave Cogdill worked long and hard with the Governor and legislative Democrats to come up with a comprehensive solution to the water supply problem. Unfortunately, we were not successful. The Governor and our U.S. Senator Diane Feinstein are continuing to work on a consensus that everyone can support this year. I look forward to seeing what they propose.

If you are interested in the water issue, the Senate Republican Caucus has resources at the following website: http://republican.sen.ca.gov/calwater/   

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Is Your Charity Politically Correct?

There are a lot of bills that when you read them you wonder what their authors could be thinking. AB 624 is one of those bills.

AB 624 would require the state's largest philanthropic foundations to disclose the race and gender of its staff and its board of directors. It would also require the foundations to disclose the number of contracts made with businesses owned by “African-Americans, Asian-Americans, Pacific Islanders, Caucasians, Latinos, Native Americans, Alaskan Natives, and lesbian, gay, bisexual and transgender people.” It would also require disclosure of the number and dollar amounts of grants awarded to this same list of people.

Even though this bill would apply to foundations with assets over $250 million, the requirements would be a bureaucratic nightmare to compile and update. But for what purpose? According to the author of the bill, Assemblymember Joe Coto:

“The failure to develop and standardize diversity best practices threatens the effectiveness and viability of foundations to achieve their missions. With a more systematic and measurable approach to diversity, foundations can better prepare themselves for the demographic changes ahead. Most importantly, foundations that embrace diversity will be able to produce a stronger impact on societal change.”

Charitable foundations are in the business of addressing the needs of those who are less fortunate. Many charities help individuals and groups who have low incomes or are temporarily in unfortunate situations with a way to lift them up. How is state mandated diversity reporting going to further these philanthropic efforts? In my opinion, not one bit. Some legislators just want to make sure charities are supporting the “correct” people and organizations.

How silly is this? If I ever get the opportunity to vote on AB 624, I will vote “no.”

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SB 867: Unionized Child Care?

Here's another interesting bill that makes me shake my head. SB 867 by Senator Gil Cedillo will allow licensed family child care providers to form “provider organizations,” which is another word for unions. The stated purpose for this bill is to ensure higher quality day care through better pay and benefits for child care workers. The Legislature's fiscal experts estimate that the cost of this idea would be $60 million annually.

Family child care providers are those homes that provide child care services for those families that need child care while they work or receive training in an effort to become less dependent on the state welfare system. This program is called CALWORKS in California and provides state payments for these child care services. In many instances, CALWORKS recipients place their children with relatives who receive payments for the service.

Think about this for a moment: Increasing the cost of subsidized child care in a state with a $16 billion deficit will cause the state to pay more for less service. For the privilege of unionizing, child care workers will receive higher payments, which will force the state to fund fewer child care placements. The bottom line will be more state spending for fewer services to families.

SB 867 allows a union that becomes the representative of all family child care providers in the state to charge “fair share” fees to all providers, even if they do not choose to join the union. Who is willing to bet that the union will take advantage of this “option?”

SB 867 is another bill that I will not be voting for.

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Quotes of the Week

In honor of the late William F. Buckley, one of the founders of modern conservatism:

“Idealism is fine, but as it approaches reality the costs become prohibitive.”
-William F. Buckley

“I mean to live my life an obedient man, but obedient to God, subservient to the wisdom of my ancestors; never to the authority of political truths arrived at yesterday at the voting booth.”
-William F. Buckley

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