Cut California state government spending

By Matthew Gilbert "Matt" Williams

State spending is out of control and must be dramatically altered if we are to restore our position as the greatest state in the nation. Fiscal responsibility will allow us to gain control of unsustainable expenditures for pensions and will help create a more favorable business climate necessary for job creation.

California has become a spendthrift state. In the past decade, our state's population grew just 5 percent, yet spending by our government increased nearly 100% (Senik). During this recession that started in 2008, most companies either stopped hiring altogether or decreased their work force, yet our state added over 13,000 employees to the government's payroll (Welch). The CHIEF EXECUTIVE of state government + the governor + now earns approximately $175,000 yearly, yet we have over 5,000 state workers earning more than $200,000 every year! (Goldman). The 33,000-member California Correctional Peace Officers Association are the best paid prison guards in the nation, with many earning over $100,000 yearly, "creating a situation in which the government's cost to house each prisoner is an astounding $45,000 per year" (Senik).

The exploding expenditures for public worker pensions are characteristic of what is happening to our state. In the 1960s, just one of every 20 California state employees received public safety pensions that were designed for firefighters and police officers; today, one of every three receives this very generous pension (Welch). There are now more than 5,000 state government retirees receiving a pension of over $100,000 yearly (Welch), resulting in the diversion of $3 billion from other programs to pension costs (Greenhut). Pension expenditures for public employees in the past 10 years have increased 2,000%, while state revenues have increased only 24% (Greenhut). The payout in pensions is expected to triple by 2020 (Welch). A 2008 state commission calculated that our state's unfunded pension liability is $63.5 billion (Greenhut). Former Governor Schwarzenegger puts that figure at more than $120 billion (Senik). In August, 2009, CalPERS chief actuary Ron Deeling stated, "We are facing decades ... of unsustainable pension costs." Prominent Democrat and State Treasurer Bill Lockyer, stated in October, 2009, that these pensions would "bankrupt" the state (Welch). In early 2010, former Speaker of the House and San Francisco Mayor Willie Brown, stated,

"Over the years, however, the civil service system has changed from one that protects jobs to one that runs the show. The deal used to be that civil servants were paid less than private sector workers in exchange for an understanding that they had job security for life. But we politicians, pushed by our friends in labor, gradually expanded pay and benefits to private-sector levels while keeping the job protections and layering on incredibly generous retirement packages that pay ex-workers almost as much as current workers. Talking about this is politically unpopular and potentially even career suicide for most officeholders. But at some point, someone is going to have to get honest about the fact that 80 percent of the state, county, and city budget deficits are due to employee costs."

With a population of 12% of the nation, California receives between 32 and 36 percent of the nation's welfare benefits (Walters). It seems that most responsible measures to address these problems are cast aside without serious consideration. A few years ago, Governor Schwarzenegger established an advisory commission, the California Performance Review (CPR), to recommend ways to make government less expensive and more effective. The bipartisan group came up with 1,200 recommendations in a 2,500-page report, yet not one recommendation was adopted, despite the fact that implementation of those changes would have saved the state $32 billion over 5 years.

SOME SOLUTIONS:

Reduce the state public workforce by 10 percent. Our state government is bloated. A meager 10 percent reduction in the state workforce would be a good start in streamlining California's bureaucracy and lowering government expenditures. A solution is to freeze hiring and reduce our government workforce through attrition by 10 percent (approximately 40,000 workers).

Cap state worker pensions to an amount that is not more than twice the state's median income. The 2010 median income in California was approximately $40,000. A maximum pension paid by the taxpayers to state retirees of $80,000 per year is not unreasonable.

Freeze public worker salaries for two years. U.S. Census Bureau data show that in 2007 the average annual salary of our state employees was $53,958, which is 32 percent greater than the average private-sector worker's salary of $40,991. State workers also receive benefits typically unmatched in the private sector. A two-year freeze would not be overly burdensome on our state workers under these austere economic times.

Reduce public worker salaries by 10 percent. A 10-percent reduction in public employee salary would amount to approximately $5,500 per worker, bringing their 2007 salary levels closer to $50,000 per state worker, which is still 20 percent more than the average worker in California earns. In light of job security and extensive job benefits accorded state workers, a 10-percent pay cut is reasonable under the circumstances.

Limit public worker salaries to no more than what the Governor earns. As the chief executive of the state government, the governor should be the highest paid public servant. There is absolutely no sound reason why other PUBLIC SERVANTS are paid a salary that exceeds the governor's. We can still maintain a highly professional and dedicated corps of public administrators and other state workers on salaries that do not exceed $200,000 per year, especially in light of job security and the generous benefits package that government workers receive.

Abolish 88 commissions and boards in accordance with the suggestions of the nonpartisan California Performance Review Commission, based upon its finding that these public entities have become obsolete or of little value to California citizens, and often do nothing more than line the pockets of board members and commissioners.

Impose a moratorium on new state regulations (at least with respect to those potential regulations that have a deleterious effect on business creation or growth).

Reform welfare and reduce welfare benefits. We've gone from 21% of the nation's welfare cases in 1996 to 32 percent, and yet we make up only 12% of the nation's population. Only 22% of welfare recipients here who are required to meet federal work minimums are in fact working. Also, we are one of the few states that does NOT enforce the federal government's 5-year lifetime limit on cash-welfare assistance. Lastly, California recipients get a welfare check almost 70% higher than the national average. Reform our welfare system by strictly enforcing the 5-year limit, requiring those who can work to in fact work, reducing welfare checks so that they are only 20% more than that of the national average (that would still offset California's higher cost of living), and investing the savings in training programs and job-placement services for welfare recipients. We should help those in need to help themselves whenever possible, rather than create a class of citizens who are not self-reliant and, instead, are dependent on

Annually, publish salaries to fully inform California taxpayers what public officials earn. Bring to the light of day what every state, county, regional, special-district, city, and town employee earns. This is the only way to avoid situations like the one that existed in Bell, California, where the city manager was being paid nearly $800,000 per year PLUS an exorbitant benefits package, with a $650,000 pension from CALPERS, in a city of about 40,000 inhabitants earning a median income of about $40,000.

References:

Goldman, Leah. "Meet the 5,355 California State Workers Who Earn More Than $200,000," Business Insider, Oct 27, 2010.

Greenhut, Steven. "Public Employee Unions are Sinking California," The Wall Street Journal, January 22, 2010.

Kotkin, Joel. "The Golden State's War on Itself," City Journal, Summer 2010.

Malanga, Steven. "The Beholden State: How Public-Sector Unions Broke California," City Journal, Spring 2010.

Senik, Troy. "Who Killed California?" National Affairs Fall 2009.

Voegeli, William. "The Big-Spending, High-Taxing, Lousy-Services Paradigm," December 23, 2009.

Walters, Dan. "California budget fix would take three steps," Sacramento Bee, December 12, 2010.

Welch, Matt, "How to Fix California's Pension Crisis," The Reason Foundation, June 3, 2010.