www.sdchamber.org

California’s Economy and Budget Crisis: 

If We Can’t Print Money, What

Do We Do Now?

By Lee Burdick, Attorney, Higgs Fletcher & Mack, LLP

It is no secret that California is in dire financial straits, looking at an approximate $24.3 billion deficit.  Some of the problem is obviously a result of the global economic downturn, but some of it is also of our own making through ballot box mandates. Earlier this year, the San Diego Regional Chamber of Commerce invited our State Legislative delegation to a meeting on the State budget crisis. It was an interesting, thought-provoking discussion with a majority of the delegation in attendance.

While there was strong consensus that California must work to remain a place where business can thrive, be profitable and continue to provide employment opportunities, there was less agreement on what needs to be done to get the State’s budget house in order. The Legislators presented a challenge to the business community to provide input on what needs to be done to rein in State spending while balancing that with the need for critical public services.

To achieve the imperative given by the legislators, Chamber Board Chairman Ben Haddad appointed a State Budget Task Group to develop recommendations on behalf of the San Diego business community.  I had the honor of chairing this Task Group, which has met several times to discuss a wide variety of options and proposals. Key considerations include:

• Significant budgetary reform, including spending caps, two-year budget periods, and penalties for failing to meet budget deadlines;
• Important tax reform, moving toward fairer, broader-based (as opposed to higher) taxes;
• Consolidation of duplicative government agencies to promote greater efficiency and lower costs; and
• Referendum reform to increase financial stability and decrease ill-advised, unfunded public mandates.

Of course, none of these proposals address federal financial disparities that are also contributing to the State budget shortfall.  Consequently, the State Budget Task Group also developed recommendations for the federal delegation, including the need to reduce California’s status as a “Donor State” subsidizing other states and forgoing our fair share of federal funds.  In addition, the Task Group proposes that our federal delegation be strongly urged to seek better reimbursement for the costs associated with protecting our borders against illegal immigration.

The Chamber review process is in the final stages and the Task Group will be developing specific recommendations, which once approved by the Chamber, will be forwarded to the San Diego Legislative delegation, State Legislative leadership and the Governor.

Please take a moment to share your suggestions for balancing the State budget.  Email Lee Burdick at lburdick@higgslaw.com

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