California's First Ever Budget Veto: A Game Changer?

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Fred Silva speaks at SPUR June 16, 2011Fred Silva spent four decades in Sacramento working on state finance and government. So he knows what he's talking about when he says Gov. Brown's veto of the state budget (the first in the history of California, Silva said) broke away from years of business-as-usual.

And despite the grim economy and the apparent gridlock in the state legislature, Silva was surprisingly upbeat during a lunchtime talk he gave at the San Francisco Planning and Urban Research Association: "I was quite optimistic when I saw the YouTube video where the governor vetoed the budget."

Why so enthusiastic? In a sit-down interview with Governing California, Silva shared his perspective:

Governors have tended to acquiesce to an old political axiom in public budgeting which says, "You get what you got in the prior year.... And if we don’t have enough resources to fund our obligations, we’ll simply borrow money to do it." Our prior governors, on a bipartisan basis, would do that.

This is the  10th year where we’ve been unable to bring fiscal balance. It’s our 10th anniversary, if you will. And here’s a governor who’s said "I'm not going to do that any more.".... We’ve spent this 10-year period just kicking the can down the road and not really facing our underlying fiscal problems.

Silva and the non-partisan government reform group he advises, California Forward, have been pushing for just the kind of change Jerry Brown is after: moving power (and tax dollars) back down to the local level where they used to be 30 years ago.

The governor didn’t simply say, let’s simply raise taxes and be done with it. What he suggested was, "Bring more resources in and put those resources at the community level where they can actually make a difference." So he's talked about realigning responsibilities at the same time. You have to do one with the other.

Okay, Mr.Silva, great concept. But the governor didn't get the Republican votes to he needed for tax extensions. Brown rejected the borrowing and the one-time fixes the Democrats just offered. And they've passed some pretty hefty cuts already. So where does that leave us?

It leaves the governor and the legislature in a decidedly awkward moment, where the legislature can’t say "We did our job; we’re finished." The governor has said, "No you haven't done your job." So the next two weeks will be important in that dialogue between the governor and Republicans as well as the governor and Democrats.

Does Silva anticipate a new budget deal that would include tax extensions? He was coy.

It’s hard to know. I’m one of those that’s always hopeful that the common interest in improving California is what’s at root here and at some point there’s an answer to that question.

Is Silva a Pollyanna? Or does he know something about politics in Sacramento that the rest of us don't? More importantly: given the situation as it stands now, is realignment dead?

It’s much harder to do. Some of it can probably be done without new taxes, because this is about realigning a responsibility that the state currently has, that it expends money on, and having that money transferred to the community level. It's much more difficult to do, but some aspects of it can be done... but not to the extent that the governor has proposed. That takes new revenue.

So what's at stake for those services he'd like to see realigned?

It's all about improving outcomes... about improving K-12 education and criminal justice, and social services like drug and alcohol and other services. It’s all about how at the beginning of this century we’re willing to rethink how we manage our public resources.... I'm hopeful that a crisis like this is able to produce an answer that can actually improve governance in California.

That's the word from someone who can take the long view. Stay tuned.

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