Beyond pensions and prisons
November 15, 2012
How can you tell what California cares about? By examining where it spends its money. But the panelists on "Fixing CaliforniaaEUR(TM)s Finances" doubt that pensions and prisons are what matter most to state residents.

As proof, Californians raised taxes on themselves during last week's election in an effort to bring in $7 billion to $9 billion in additional revenue. While the panelists applauded the approval of Proposition 30, they said it wonaEUR(TM)t resolve California's long-term financial issues. If the state hopes to redirect funds to bigger priorities, it will have to get serious about long-term structural reforms for taxes and pensions.

The state must get its financial house in order so it can address issues such as education, infrastructure and water, said Antonia Hernandez of the California Community Foundation. Her analogy: "I'd love to go shop at Bloomingdale's. I can only afford Marshalls."

San Jose Mayor Chuck Reed and Stanford University's Michael Boskin are concerned about the financial condition of California cities. Reed pushed for and won comprehensive pension reforms in San Jose and pointed to startling data showing why it was necessary. His slide showed a 19 percent increase in general revenue, an 84 percent increase in employee costs and a 28 percent cut in staffing. Extrapolate those stats for cities statewide, and the depth of the problem becomes clear, with state taxpayers on the hook for municipal bankruptcies, Reed said.

The broad conversation covered an array of issues, from the wisdom of high-speed rail to the need for pension and tax reform, but California's ability to compete with other states and nations for jobs was a primary focus, with all the panelists arguing in favor of creating a more business-friendly environment.

"I'm tired of (Texas Gov.) Rick Perry and (Louisiana Gov.) Bobby Jindal casing our joint," said California Lt. Gov. Gavin Newsom, pointing out that even Fairfax, Va., has an office in California. But instead of waiting for state lawmakers to act, California's distinct regions should collaborate and aggressively pursue job creators, Newsom said.

Watch the video for specific solutions to many of these issues; the panelists were asked for their ideas roughly 20 minutes from the end of the session.