Calls to Action: Legislators

In 2013, then-Lieutenant-Governor Gavin Newsom published a book entitled “Citizenville” in which he argued for a government that kept pace with changes elsewhere in society. Asserting that “we must inject a more innovative, entrepreneurial mind-set into government,” Mr. Newsom wrote that “we simply cannot have a government that relies on bureaucracy and maintaining the status quo.” I hoped his vision would be realized. But a decade later, half of which Mr. Newsom has presided over as governor, California’s bureaucracy is bigger than ever, residents would be hard-pressed to point to a single innovation, and the status quo is still the status quo.

Dear Legislators,

This week the Biden Administration announced that personal income rose 0.4% in April, consumers increased spending sharply, U.S. economic activity is at its highest pace in more than a year, and the unemployment rate is at an envious 3.4 percent.

Yesterday the Legislative Analyst’s Office (LAO) released its Multiyear Budget Outlook through fiscal year 2026-27, forecasting $52 billion of deficits over that period.

Dear State Legislators,

Last year we wrote to you about the alarming $500 million per year salary increase you granted to state prison guards under a contract extension executed in June 2021 and the state’s failure to comply with Subsection (c) of Gov. Code Section 19826, which requires a study of salaries of employees in comparable occupations before awarding a new contract. Because you did not commission such a study, we did, and the results were shocking. In our note, we implored you to hold the line in the next contract, which will come into effect upon the expiration of the current contract on July 2 — just six weeks from now.

West Contra Costa County Unified School District has received a “lack of going concern” determination from its county board of education. That means the district is unable to meet its financial obligations. But 60 percent of its deficit is accounted for by spending on an unnecessary insurance subsidy for retired employees known as “OPEB” (Other Post-Employment Benefits) that drains classrooms of resources while federal subsidies go unused.

Dear Legislators,

Few services are more important than medical services yet due to efforts by the politically-active doctors’ lobby to limit supply, Californians have not always been able to get immediate access to such services. Your passage of AB 890 (Wood) in 2020 was a big step towards improving that environment but more must be done. A good review is provided by this excellent article in The Atlantic, which details the “costly, lengthy credentialing system” unique to the United States. With reforms, we can have not only more doctors but also more medical practitioners in aggregate.

Dear Legislators,

At $7.3 billion, current year salary spending on Corrections employees is 33% higher than forecast by last year’s budget and nearly 50% more than the prior year.

Earlier this week DOF released the Governor’s Proposed Budget for the fiscal year starting July 1. At 400 pages it takes time, a process we have now completed. Some initial thoughts follow:

Tomorrow the CA Department of Finance will release the “Governor’s Proposed Budget” for the 2022-23 fiscal year that commences July 1. At nearly 300 pages, it is one of two documents providing deep insight into the state government.* I’ve been reading them for nearly two decades now and offer a few tips:

Last June, the governor and legislature granted a $500 million salary increase to state correctional officers without complying with Subsection (c) of Gov. Code Section 19826, which requires the state to produce a study of salaries of employees in comparable occupations before awarding a new contract. So Govern For California commissioned such a study, an advance copy of which is being made available to you in your capacity as a member of a Budget or Public Safety Committee. Its conclusions are stark:

Whenever I use Medicare, the government pays a health provider of my choice even if the provider is not operated by the government. The same goes for Medicaid, which uses public funds to pay for the care of 15 million Californians.

In January, the 2022-23 Governor’s Budget will be made public, after which public hearings will commence, followed by public distribution of the May Revision to the Governor’s Budget and public enactment of the budget by June 30. Guess what’s not public during that period? Political donations from beneficiaries of budget spending.

Dear Legislators,

We enjoyed reading the Senate Budget Plan and Assembly Budget Blueprint for 2022-23. These items stood out to us:

Dear Legislators,

In January the Department Of Finance will issue the Governor’s Budget for 2022-23. No section will be more important than the Stress Test, which forecasts revenue losses in the event of a stock market decline such as in 2001-3 and 2008-9.

Dear Legislators,

The Legislative Analyst’s Office is filled with talented people who occasionally take on impossible tasks. Take LAO’s recent Fiscal Outlook for Schools in which it boldly predicts that “capital gains revenue [will be] strong in 2022‑23.” I can’t predict the stock market next week much less next year but unlike the state I’m not depending on it to finance schools that require stable annual funding. If I did, I’d keep loads of cash on hand. That’s because the annual performance of stock markets looks like this:

California needs at least $100 billion of reserves. Don’t take our word for it. See page 245 of the Governor’s Budget:

November 1 marked the commencement of the Open Enrollment period during which residents can purchase health insurance for the upcoming year and another opportunity to praise Covered California, the state’s healthcare exchange that’s an exemplar of government services well provided. At a time when even the New York Times is cynical about blue state performance, Covered CA is a reminder that California’s government can do its job well.

If ever you needed a reminder that our nation has always been a confederation of diverse states united only when facing a common enemy, re-read Democracy In America, Alexis de Tocqueville’s 1835 masterpiece.

When it reported a deficit last year, San Francisco Unified School District blamed Special Education. This year, SFUSD is blaming declining enrollment. Not being blamed is the real culprit.

From January through June last year, the California Legislature held hearings about a proposed budget for the 2021-22 fiscal year that allocated the majority of $300 billion of spending to healthcare corporations and government employees who — during that very same period — made political donations to lawmakers that weren’t disclosed until July 31, a month after the budget had been signed into law.

This year California will devote more than $120 billion to Medi-Cal, the state’s version of Medicaid that serves more than one of every three residents.

Dear Legislators,

We are pleased that 94% of Californians now have health coverage. We’d love to see that figure rise to 100%. Multi-payer universal coverage systems such as those that dominate continental Europe and towards which California is marching can work extremely well. But one big difference is that European systems do a better job of controlling costs and utilization. That’s one reason the US devotes so much more of its GDP to health spending without getting much better health in exchange, and also why some enterprises — including providers doing business with the state who make political donations — are so profitable.

Dear Legislators,

California’s unemployment rate (7.5 percent) is the second highest in the nation and 44 percent higher than the national rate (5.2 percent).

California’s 120 state legislators have responsibility over 29 legal codes that govern daily life:

Under SEC rules, investment advisors who do work for state and local pension funds can be disqualified if they make political contributions at certain levels to elected officials or candidates for those offices who have a say in the public pension decisions to contract with investment advisors. That’s a good thing because public pension funds such as CalPERS and CalSTRS enter into money management contracts the objectives of which should be to protect pension beneficiaries and taxpayers, not to enrich Wall Street.

Dear Legislators,

Earlier this week I easily applied online for a REAL ID and the next day smoothly completed the procedure in person at a DMV office. The process was painless and DMV staff were kind.

CA Gov. Code Section 19826 deals with “Administration of Salaries” amounting to $20 billion per year.

Dear Legislators,

If ever there was a bill that was inappropriate for rushed deliberation on a gut-and-amend basis but perfectly appropriate for un-rushed deliberation, it is AB 826. But don’t take our word for it — Ventura itself makes that case.