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Saturday, December 15, 2007

How we make budget problems worse

In my 11/22/07 post on ideas for addressing California's $10 billion budget shortfall, I included reinstating the vehicle license fee (VLF). Apparently I'm not alone on that suggestion. But as Dan Walters recently reported, when the VLF was cut a few years ago, it was done in a way that prevents it from being restored. See his 12/11/07 article in the Sacramento Bee.

Lots of restrictions on budget options is a poor way to run a government. California has too many restrictions that tie the legislators' and governor's hands. These restrictions include Prop 98 that mandates that a certain percentage of the budget go to K-14. Of course, funding education is an extremely important role of government (and should include beyond grade 14!), but the restriction ignores that every year is different and ignores the role of lawmakers. Other restrictions include Prop 13 and 218 among others.

I was once on a panel that included a former California legislator. When I noted that these laws are too restrictive and prevent legislators from doing their job, this person noted something along the lines of "but we have to do that because you can't trust legislators to do the right thing." I about fell off of my seat that such a comment would be made publicly or even believed by someone who had served in the legislature. Apparently, we need to have better civics education.

Well, the VLF restriction can probably be undone, but would not be easy or politically wise so soon after going into the law. But, the state definitely needs revenue and should never have removed a tax that was working and was even progressive in that higher income people are the ones who tend to have higher value cars. We could increase the state gasoline excise tax with the additional funds going into the general fund. Unfortunately, that tax is regressive and some relief for lower income taxpayers would be needed. Or perhaps a state version of the federal gas guzzler tax could be enacted as that would primarily affect higher income taxpayers.

In the meantime, we need to stop putting "shackles" into the law so that elected officials can have more options for solving budget problems.

Your thoughts?

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