The American Legislative Exchange Council (ALEC) offers Governorââ?¬â??elect Schwarzenegger and California’s state legislature ‘five suggestions as a beginning step toward’ restoring the stability and vitality of the state’s budget and economy. “It’s time for Democratic and Republican state legislators to work with California’s new governor,” said Duane Parde, ALEC Executive Director. “ALEC offers these five suggestions as a beginning step toward piecing-back-together the vitality of California’s shattered economy.” The five suggestions include: 1. Reject the usual gimmicks The borrowing and short-term fixes adopted by California in the past two budgets have contributed toââ?¬â??and not solvedââ?¬â??California’s fiscal problems. The new governor must seriously address the chief underlying problems with California’s budget: an uncompetitive tax and regulatory environment and a need for efficiency in state spending. 2. Reform California’s tax and regulatory environment Only four states with a personal income tax have a higher top rate than California. To reinvigorate personal and business investment in the state, the next governor must cut California’s personal income tax rates. California also has one of the worst business-tax climates in all fifty states. If California wants to fully employ its workforce, the state has to stop treating businesses like villains and start treating them as partners. 3. Set Goals & Instill a Culture of Efficiency in Government In order to get state spending under control, the next governor needs to instill a culture of efficiency into state government. The best way to do this is to set goals for each agency, determine whether the public or private sector is best suited to meet those goals, and annually examine all government functions to see if they are meeting these goals. 4. The Yellow-Pages Test Government in Californiaââ?¬â??and all statesââ?¬â??should follow the yellow pages test: if a service can be found in the yellow pages, then it shouldn’t be directly provided by the state government. This simple maxim alone could save significant amounts of money each year. 5. Reduce Workforce Costs The next governor of California must control the costs of the public sector workforce. The pay inequity that exists between many public and private sector employees must be restored through competitive bidding, the elimination of phantom positions, public pension reform, and employment caps.