A Proposed Solution for California Budget Crisis

People pointed to California's divided government and the supermajority law, which requires the legislature to adopt a budget with a two-third vote as reasons that cause the ongoing budget crisis in the Golden State over the last decade. The budget, which was passed by Arnold Schwarzenegger on July 24 of this year was said to virtually guarantee another fiscal crisis next year despite the fact that it comprises $15 billion in service cuts, including $8.1 billion in education cuts. This is not to mention that California budget shortfall is projected to top $40 billion over 2009-2010 fiscal years.

In searching for the answer to California budget crisis, two law professors, professor Chris Elmendorf of UC Davis and professor Ethan Leib of UC Hastings, recently proposed an attractive solution published in the New York Times' Op-Ed Columns. Here is how it would work.

If the Legislature and the governor fail to adopt a budget four weeks before the deadline for the new fiscal year, a group of randomly selected citizens — one from each legislative district — would be convened to resolve the stalemate. Three competing budgets would be drawn up: one by the governor, one by the Democratic caucuses in the legislative branch and one by the Republican caucuses. (These proposed budgets would have to be finalized before the citizens were selected.)

For two weeks, the citizens’ assembly would hear from and question government leaders, policy experts, interest groups and other supporters and critics of the proposed budgets. The citizens would then deliberate among themselves and vote by secret ballot on which of the budgets to adopt. The vote would take place on the budgets as originally submitted; neither the citizens nor lawmakers would be able to make amendments. The winning budget would become law.

This arrangement would have a number of virtues. First, it would ensure that states adopt budgets in a timely fashion, protecting bond ratings and freeing lawmakers to attend to other important business.

Second, it would give the three institutional actors in the budgetary process — the governor and the Democratic and Republican caucuses — strong incentives to devise budgets that appeal to middle-of-the-road voters, not political ideologues or special-interest favor seekers. Citizens who participate in the two-week assembly would also learn an awful lot about their state’s fiscal situation and competing legislative priorities. These citizen participants would not be as susceptible to sound-bite misinformation as in more traditional exercises of direct democracy.

Our scheme would also do wonders for accountability. When budgets are adopted under divided government (or supermajority requirements), it is hard for voters to figure out exactly who is responsible for the shape of the compromises. If the upside of divided government is centrist compromise, the downside is weakened retrospective accountability at the polls. Our approach to budgeting promotes accountability because the enacted budget would unequivocally belong to “the governor,” “the Republicans” or “the Democrats.” Dissatisfied voters would know exactly whom to reward or fault when they go to the polls at the next election.

Finally, our proposal honors Americans’ insistence on a strong popular voice in government, without demanding too much of citizen participants. It would require them to perform only a fairly simple task: rank your preferences among three proposed budgets, after hearing out the proponents and opponents of each.

I found the professors' proposal convincing. Nevertheless, given how fed up our voters are as showed during May 2009 special election, I am concerned if Sacramento's effort to solve the budget crisis would get the same treatment it deserves to have. Being the tenth largest economy in the world, California has been loosing its competitive advantage in the eyes of investors by being the state that can't solve its problems. The longer Californians refuse to subjectively face this dilemma, the more harmful and long-lasting the effects.

*A copy of this entry was posted on Transnational Law Blog.