Archive for January, 2012

I can’t believe it! I just finished the manuscript for Crazifornia, wrapping up the difficult but ultimately very entertaining budget and pensions chapter.  Here’s an excerpt:

Hooting and Hollering on the Budget   

Californians witness the challenges of running a progressive state every year as the legislature struggles to develop a balanced budget in the face of fundamental fiscal imbalance.  The resulting budget is always a work of fiction, projecting more income than will come in, and promising more savings than will ever occur.  A mid-year correction is always needed to account for this, but the charade goes on in all seriousness year after year. It’s a tragedy; it’s a comedy; it’s California.

Over 50 state budgets ago, in 1966, the legislature’s top budget leaders and Governor Pat Brown fled Sacramento for Palm Springs to try to sort out yet another horrific California budget mess.  Nothing was getting done in soggy, cold Sacramento to fix chronic problem of revenues not covering ever-increasing government expenses, and since Brown would face the voters in November hoping to win a third term, the Democrat was adamant that the budget would be balanced without raising taxes.

Joining the senior legislators in Palm Springs was a young legislative staffer, David Doerr, who felt very lucky to get the chance to travel with the delegation, not so much because it involved a boondoggle trip to the desert, but because he actually hungered to see how California’s budget sausage was made.  And see it he did.  Ultimately, the budget was balanced on a number of gimmicks, including one that was unusually elegant:  a switch to accrual accounting from cash.  With the change, all the money due the state could be applied against expenses, no matter how far back it was in the pipeline.  With this trick and a few others on the books, Brown was able to face Ronald Reagan in November armed with a balanced budget and no tax increase.

There were plenty of other gimmicks that came out of the Palm Springs session, but one really stuck in Doerr’s mind.  Showing his uncanny ability to remember financial matters from the distant past in exquisite detail, Doerr told the tale in a small conference room at the California Taxpayers Association, the wall behind him lined with shelves displaying his 811-page tome, California’s Tax Machine, A History of Taxing and Spending in the Golden State.  He spoke in the light, wispy voice of a man who had heard far too many politicians argue far too loudly, and his hair was as white as snow – an expected side effect of being the single Californian who knows the most about the state’s budget-making process. 

“After not really getting much of anywhere in the negotiations,” he said, “one of the suggestions that came up, casually, just sort of a throw-away was, ‘Why don’t we just delay paying the state employees by a day so one pay period will go over into the next year?’ At first everyone was quiet and I wondered if they would really do something like that, but then they began to hoot and holler, laughing like this was the craziest thing they ever heard of.”

Doerr, who ultimately spent three decades as chief consultant for the Assembly Revenue and Taxation Committee before becoming the Chief Tax Consultant of the California Taxpayers Association, continued the story:  “Jumping forward over 50 years, no one in the legislature hooted or hollered one bit when the idea of shifting one pay period into the next fiscal year came back, this time as a way to balance the 2008-2009 fiscal year budget.  The legislature just did it, knowing full well their action would come back to haunt them a year later, when they would have to balance a budget that had one extra payroll period in it.” The subterfuge saved $1.2 billion for the moment – that’s what it cost per payday to pay the state’s bloated payroll.

The 1966 junket to the desert ended up not doing Brown any good, as Ronald Reagan drubbed him by 16 points that November, sweeping all but three counties in the state.  And the 2008 roll-over of one payday didn’t help Governor Schwarzenegger either, and he declared upon announcing the inevitable budget revise that May, “We’ve run out of Band-Aids.”

“Gimmicks and band-aids aren’t new,” Doerr said.  “There have always been battles over the budget and crazy balancing tricks as long as I’ve been here, and that’s been 50 years, more than one-quarter of the time California’s been a state.”

There’s a lot more good stuff in the chapter and in the book. If you haven’t already, be sure to fill in the box in the upper right, so I can notify you when this baby rolls off the press.

That will be a while longer, since I have four dedicated editors marking up the manuscript. They’re making some really great suggestions, so I’ll be doing a fair amount of rewriting before I can claim, finally, that it’s ready for the publisher.  I’m still on target for a May publishing date.