From California Forward
Essential public programs provide a foundation for California’s long-term health, safety and prosperity, and the state’s fiscal system is the reinforcing steel in that foundation. Adequate and reliable funding, strategically allocated and professionally managed, is critical to the success of public programs and the communities they serve.
In recent decades, California’s fiscal system has evolved in ways that have made it difficult for state and local agencies to consistently provide high quality services and proficiently respond to complex problems. These changes have limited the ability of regional economies to compete in the global marketplace and be wise stewards of environmental resources, and they have frustrated efforts of neighborhoods to remedy difficult social challenges.
The fiscal system does not suffer from a single ailment, and many of its infirmities are the unintended consequences of previous efforts to “fix” the system or respond to the imperative of the moment. Changes made to the tax structure have made revenues more volatile; at the same time, the sales and use tax structure has not been adapted to a service-based economy. A slew of initiatives approved by voters has created a complex web of restrictions, and have distorted in profound and largely unforeseen ways how fiscal decisions are made. In many critical areas, such as education and economic development, the authorities over fiscal, policy and management decisions are so intertwined among state and local agencies that the ability to provide cost-effective services is compromised and accountability is lost.
For California to achieve its economic, social and environmental goals, government agencies must manage revenues to continuously improve the quality and efficiency of education, transportation, public safety and other programs. This will require comprehensive changes to the fiscal system and how key decisions are made.
The significant gap between revenues and spending is a symptom of this dysfunction. Given the size and complexity of the issues, strategic and incremental changes are more likely to succeed. A logical first step is to improve the state’s annual state budget process – the central venue for fiscal choices that then ripple though the thousands of public agencies statewide.
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