Early in my tenure in the Schwarzenegger Administration I learned about a 60+ person group inside a Cabinet agency that was responsible for handing out program grants. After a review, I concluded that the group’s work could be done by 10 people. I raised the matter with the Cabinet officer in charge of that department who told me not to be concerned because that staff was paid out of “Special Funds,” not the General Fund, so no one would care. Later I tried to import competition into the state’s Information Technology department only to be met by vigorous opposition from staffers who seemed awfully close to the incumbent supplier. This is why I admire DOGE’s efforts to trim staffing and scrutinize suppliers. (For the record, by no means should I be viewed as an Elon Musk acolyte — in fact, I rejected Tesla’s request for incentives to build a factory and when he called me to complain I told him I did so because government shouldn’t pick winners.)
The same trim-and-scrutinize effort is needed in Sacramento where inefficiency and cronyism have grown so much under Gavin Newsom that he raided the Rainy Day Fund despite healthy tax revenues. Among the dirty little secrets in Sacramento is that the state’s 600+ Special Funds are sources for featherbedding and loans to cover up General Fund deficits. Most recently, a state employee who writes a blog about the budget has been pointing out that, despite current and projected General Fund deficits, the state has “breathtaking” cash balances of which 70% is in non-General Funds. It’s hard not to conclude that the message he is conveying to elected officials is “don’t worry about deficits in the General Fund, we can always borrow from Special Funds.” That’s the sort of attitude that prevails among Sacramento insiders and one reason GFC will back a gubernatorial candidate in 2026 who will take them on.
Trimming staff and scrutinizing suppliers won’t mark the end of poor governance in Sacramento. Other problems include poor oversight (eg, $32 billion of unemployment insurance fraud), ineffective policy (eg, $24 billion of spending on homelessness), and capitulation to public employee unions (eg, extended school shutdowns and alarming student performance). But money will be saved, faith in government will rise, and examples will be set.
