Plan Won’t Fix Budget, Analyst Says

The plan to overhaul California’s bureaucracy ordered up by Gov. Arnold Schwarzenegger vastly exaggerates the amount of potential savings and would do little to reduce the state’s ongoing budget shortfall, the state nonpartisan legislative analyst’s office reported Friday.

The office, which lawmakers of both parties look to for independent advice on budget matters, says that even if all the recommendations in the governor’s California Performance Review were adopted, the savings would be less than half the projected $32 billion over five years.

It would be closer to $10 billion to $15 billion, the report says. And much of that would have to come from policy shifts that have already been proposed, failed to gain traction in the Legislature and continue to have weak support among majority Democrats.

“It is not a magic bullet that gets us out of having to make hard choices,” said Brad Williams, a co-author of the report. “We don’t think the adoption of this plan would materially reduce the size of the budget shortfall that continues to face the state government.”

As other states have found their way out of major budget shortfalls this year, California is still facing a budget gap of as much as $17 billion over the next two years.

The problem is the result of a budget approved by the Legislature and signed by Schwarzenegger last month that is defined by heavy borrowing, optimistic assumptions and one-time solutions. Republicans had expressed hope that the sweeping recommendations would go a long way in reducing that shortfall.

But that optimism began to fade after the initial plan was released Aug. 3. Many of the major cost-saving ideas have either been tried and failed or would require a substantial investment up front at a time when the state doesn’t have any money to spare.

The analyst’s office’s critique points out that a quarter of the savings that could realistically be generated come from one idea: pushing back the age at which children start kindergarten. There have been numerous efforts to push that policy through in the last several years. All of them have been defeated.

The performance review also suggests the state could get more than $8.2 billion from the federal government by pushing for new grants and other assistance. But the state has been trying to do that for years. The analyst’s office is unconvinced the performance review offers any ideas that will result in it actually happening.

“When you get down to the specific proposals in their report, we just don’t see how it translates into more money,” Williams said.

Officials with the performance review are standing by the $32-billion figure. But they declined to comment on the points raised by the analyst’s office. They said senior staff members have not had a chance to review the critique.

“We’re still analyzing their analysis,” said Ken Hunt, spokesman for the review staff. “We’re certainly open to hearing input from all groups, including the analyst’s office. We’ll be working with them to answer their questions and refine the numbers.”

Hunt said that the analyst’s office’s critique was, overall, supportive of the proposal. The report says it “provides the state with a valuable opportunity to comprehensively examine how it does business” and that many of its ideas would “move California toward a more efficient, effective and accountable government.”

Those ideas include changing the way the state determines who is eligible for food stamps and Medi-Cal, to shifting responsibility for the maintenance of some highways to local government, to contracting out various state services to private companies.

The governor has yet to embrace specific proposals in the draft report.

An independent panel is conducting a public review of the 2,500-page report at hearings across the state. The panel will make recommendations for the governor to include in his final plan. That plan would then need approval by the Legislature to take effect.

The enthusiasm for the process in the Capitol has dropped off markedly since the governor promised months ago to “blow up the boxes” of Sacramento. But Republican political consultant Dan Schnur said, “It’s too early to draw conclusions about its political viability.”

“Schwarzenegger’s greatest strength as a governor is he can push a lot harder than most politicians and get a lot more,” he said. “Once the governor’s gone out with all the weapons at his disposal to make the case for this, we will be in a much better position to judge its political viability.”

Indeed, Democrats say that there are some good ideas to be salvaged from the process and that they are eager to embrace them.

But they also argue it simply hasn’t provided any evidence to back the governor’s claim that government waste is costing taxpayers billions of dollars every year.

“There are no panaceas out there,” said Assembly Budget Committee Chairman Darrell Steinberg (D-Sacramento). “Just moving an organization around doesn’t solve the problem.”