With Calif. Government Floundering, One Reform Effort Grinds to a Halt

BY Spencer Michels  February 26, 2010 at 1:00 PM EST

With California hurting across the board, a host of thinkers, academics, business groups and journalists had some big ideas on how to fix the state government’s myriad problems. They wanted to make basic changes to the constitution, not just the piecemeal fixes that take place every time there’s an election. But big fixes don’t come easily, and they threaten a lot of interests. Here’s how one reform effort played out – and how the state, and, in fact, the NewsHour, lost out on something pretty interesting:

With a $20 billion budget deficit, most people know that the state is in bad shape. For the third straight year, the California faces huge financial problems – worse in scale than any other state in the nation.

The recession hit the state hard: Silicon Valley lost 90,000 jobs just since 2008. State budgets have been late and unbalanced, except for some gimmicks used to make revenues appear to match expenses. The Republicans in the Legislature refuse to vote for anything that sounds like new taxes. The Democrats are reluctant to make cuts, though they have had to. And each year it seems to get worse. Schools, universities, health programs, welfare and much more … all are facing budget trouble. Meanwhile, the anger and antagonism between the parties has grown bitter, reflecting the partisan divides on the national scene.

So what’s the next step? Newspapers, academics and even some business groups have called for basic fixes, including changing a rule that requires a two-thirds vote of the Legislature to pass a budget, effectively letting one-third of lawmakers hold veto power over the massive budget. Many would like to see fewer budget changes made through ballot initiatives, which have become a common alternative to the gridlocked Legislature, but which are rife with special-interest money, often draw out of the state’s general fund and are harder to change when the economy does.

Another impediment to efficient government: Proposition 13, which keeps property taxes on homes so low that my children are paying more taxes on their modest home than I am on my much bigger house because I bought mine 40 years ago. The assessed valuation — and therefore property taxes — can rise only 1 percent a year. Term limits are another problem for state government: legislators have barely learned the ropes when they are termed out, so many rely on ideological dogma rather than legislative skills. Pensions for state workers are high, and can’t be touched.

To fix some of what’s wrong, a group called Repair California was formed, spearheaded by the Bay Area Council, a business association in San Francisco. Its CEO, Jim Wunderman, who used to work for Dianne Feinstein when she was mayor, came up with the idea of a constitutional convention to explore what changes were needed. Repair California got its own office, held town hall meetings around the state and started circulating petitions to put the constitutional convention on the ballot as an initiative. They started raising money since it costs $3 million to $4 million to gather signatures in this vast state.

From a journalist’s or a policy wonk’s perspective, this movement’s impact could be huge, heralding major potential changes in state government with national implications. We pitched it to The NewsHour and got the green light to do the story. We had a long on-camera chat with Wunderman about how he got the idea, and what he wanted to change. We traveled to Sacramento and spoke with several legislators (who mostly didn’t like the idea of voters changing the rules they play by, though all admitted things were really in bad shape) and a representative of the Howard Jarvis Taxpayers Association, which doesn’t want any changes to Prop. 13. A constitutional convention, they argue, will be just as contentious as the legislature, and made up of the same interest groups.

My colleague and I were set to go to a kickoff event for the Repair California campaign one evening near San Jose, when I got a phone call from its executive director, John Grubb. His group had run out of money, and couldn’t afford to pay its signature gatherers any more, nor its staff. So, unless some angel came through with a gift of millions of dollars, they campaign was over. And so was our story. Fixing California will be left to the Legislature, which is certainly part of what needs fixing.