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Budget proposal

by Steve Poizner, published

The Poizner Budget Plan represents a new way forward for our state and reflects the basic economic lesson that increasing the size of government is not the answer to the budget problem. The first step we should take to begin to address our current deficit is to immediately issue a hiring freeze, debt freeze and spending freeze throughout state government – we cannot continue to hire, spend and accumulate debt when we don’t have our fiscal house in order.


·         Hiring Freeze: To address the budget gap, the state must put a hiring freeze into effect beginning January 2010. Unlike past hiring freezes, this freeze must be a genuine prohibition on the replacement of retiring or quitting workers. About 9,300 General Fund-supported, non-public safety employees will leave the state executive branch through the end of the 2010-2011 fiscal year. After accounting for other employee-related actions under Steve’s proposed overhaul of state government, an 18-month hiring freeze in non-public safety state personnel would save the General Fund about $406 million.

·         Debt Freeze: The state can save $906 million in General Fund costs in 2010-2011 by prohibiting the treasurer from issuing any new General Fund-backed debt starting immediately. The state should only resume issuance once the budget crisis is behind us.

·         State Spending Freeze: The state can save billions by holding spending to 2009-2010 levels, to the maximum extent consistent with existing legal obligations and requirements to obtain federal funds. A conservative estimate of General Fund savings from a spending freeze is about $2.32 billion dollars.

  To protect against future fiscal disasters, I propose the following actions:

  ·         Ironclad Spending and Debt Limits: Amend the State Constitution to impose meaningful limits on state spending and the state’s issuance of debt.

·         The Spending Limit: Annual state expenditures may not exceed either: (1) the prior year’s expenditures, adjusted for population and inflation, or (2) year-over-year real economic growth, whichever is lower. Revenues above this limit will be used only to build the Rainy-Day Fund and pay down debt.

·         The Debt Limit: The state treasurer may not issue statewide bonds if their issuance would cause the state’s General Fund debt-service ratio to exceed 6%.

·         Biennial Budgeting: Support a two-year budget cycle and giving the governor power to make needed mid-course corrections during the cycle.

·         EveryPenny.Ca.Gov: Build the most thorough, detailed, and user-friendly state spending database in the nation. The rebuilt site will be called EveryPenny.Ca.Gov to reflect the fact that taxpayers are entitled to know exactly how every penny of tax revenue is spent.

·         Legislative Waiting Period: Support a legislative waiting period—a requirement that all bills be in print and posted on the Internet for 72 hours before a final vote may be taken.

·         $10 Billion Rainy Day Fund: I will implement my spending reductions, across-the-board tax cuts, and regulatory reforms with the goal of creating a $10 billion Rainy Day Fund by the end of my first term in office. Use of the Fund will be carefully restricted to future recessionary periods.

  During these budget negotiations and in public discourse, do not settle for generalities or campaign slogans. Demand answers. I will continue to offer specific solutions to California’s fiscal problems and I hope you will demand nothing less from your public officials and candidates running for office in 2010.

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