Schwarzenegger Outlines Need for Privatization, Budget Reform in California

It’s good to see Gov. Schwarzenegger step back from the perplexing doom-n-gloom, hatchet-over-scalpel scare tactics of late and get back to the business of offering constructive ideas on budget reform in California. In a speech to the California Assembly Tuesday (transcript here), he correctly suggested that the state’s current budget crisis offers the opportunity to turn the fiscal lemons into reform lemonade.

A few worthy ideas offered by the Governator (emphasis mine):

Spending on prisons has nearly doubled in the last five years. We spend $49,000 per inmate per year; the national average is only $32,000. Now, other states have privately run correctional facilities that operate at half of the cost. Why can’t we?

We must also restructure the relationship between state and local government. We all hear from the local officials about the heavy hand of Sacramento. If we are providing fewer resources we have an obligation to cut most of the strings and mandates and to get out of the way. Right now we are cutting billions of dollars from our schools, so shouldn’t we give districts more freedom and flexibility and not tie their hands with strict rules like who is allowed to mow the lawn or fix the roof, or do the plumbing?

I’m also proposing once again to eliminate and consolidate more than a dozen state departments, boards and commissions. These include the Waste Management Board, the Court Reporters Board, the Department of Boating and Waterways and the Inspection and Maintenance Review Committee and so on.

There is absolutely no reason to hold onto those redundant boards in the crisis. We should not and I will not, cut a dollar from education or a dollar from health care or a dollar from public safety or a dollar from our state parks without first cutting the Waste Management Board and other boards like it. (Applause) Every dollar that we save from those boards and commissions is a dollar that can help vulnerable citizens.

I’m also proposing to sell off state property, because Sacramento should not be in the real estate business, especially when we are in a fiscal crisis like this. Now, I know that the money that we receive from this property won’t go directly to the general fund; it will pay off debt. But that lowers our debt payment, which then does help the general fund. Everywhere I go I hear stories about families selling off their boats and motorcycles to make ends meet. They have garage sales, they have yard sales. They know that you don’t have or keep a boat at the dock when you can’t put food on the table.

All of these proposals I have talked about for years and yet they never got done. I remember in 2004 I talked about blowing up the boxes and consolidating agencies. But now we are here in a crisis. Then we had the revenues go up and we had the economy come back in a big way, so we couldn’t get it done. Now we’re in a crisis and we are running out of excuses and we have run out of time. And the people have run out of patience. […]

Now, I know that Senator Steinberg is talking about reforming and restructuring the relationships between the state and local government and Senator Hollingsworth and the Republicans have some great ideas about performance-based budgeting. And in July, we should receive the bipartisan recommendation from our tax modernization commission. This will be a tremendous opportunity to make our revenues more reliable and less volatile and to help the state avoid the boom and the bust budgets that have brought us here today. Let’s all work together on all of those issues and make it happen.

I don’t expect every single one of those reforms to happen within the next 14 days but we can certainly get them done before this party adjourns for summer recess on July 17th.

It looks like the Governator is channeling Louisiana Gov. Bobby Jindal here, who announced a similar series of major budget reforms earlier this year and is advancing them through the state legislature today.

If the Governor and lege can could put even one or two of these reforms into action, it would be a major step forward in California. They checked off a big one earlier this year in passing workable enabling legislation to facilitate privately financed infrastructure—they just need to muster the political will to take bold action again.

Reason’s Privatization Research and Commentary
Reason’s California Research and Commentary