Governor endorses Budget Reform Package in State of the State

SACRAMENTO— Senator Lois Wolk (D-Davis) applauded Governor Arnold Schwarzenegger’s support for her proposal on performance-based budgeting and other budget reforms in his State of the State address today before the State Legislature.

“I commend the Governor’s endorsement of performance-based budget and the entire Best Practices Accountability Act as proposed by California Forward,” Wolk said. “For California to achieve long-term financial stability as well as improve confidence in government, it is critical that there be more oversight and accountability in our state budget process. That means identifying clear goals and measuring results in order to reward efficiency and penalize waste of Californians’ tax dollars.”

In his speech, the Governor asked the Legislature to “take action on the Best Practices Budget Accountability Act, which has been drafted by the reform group, California Forward.” The Act includes six key reforms that have been submitted as a ballot initiative, but may be placed on the ballot by the Legislature instead.

“I especially support (California Forward’s) proposals for performance-based budgeting and applying one-time spikes in revenues to one-time uses, such as debt reduction, infrastructure and the rainy day fund,” Schwarzenegger said. “The leaders of this body have said that the legislature should be given a chance to enact reforms before reforms go directly to the people. Here is that chance. I urge you to take it.”

Wolk agreed that the Legislature should take advantage of this opportunity.

“I urge my fellow legislators to strengthen our budget process by enacting these long-overdue reforms, some of which can be enacted this year while others will require asking voters to amend the Constitution,” she said.

Wolk’s legislation, Senate Bill 777, requires state agencies to identify goals and desired outcomes for programs as well as measurement tools for evaluating programs’ performance in achieving those goals and outcomes. The bill is sponsored by California Forward and enjoys bipartisan support. It awaits action in the Senate Budget and Fiscal Review Committee.

The following is a summary of the components of California Forward’s Best Practices Budget Accountability Act:

• Planning ahead on spending. Requires the Governor and lawmakers to think long‐term about spending priorities and revenues by reviewing a two‐year spending plan along with a five‐year fiscal forecast before approving the annual budget. The measure also strengthens requirements for quick action when the budget is out of balance.

• Results and accountability. Requires clear goals for every program to be spelled out in the Governor’s budget and improves the legislative process for developing the budget by focusing on results and greater public transparency.

• Performance review. Requires the Legislature to oversee major expenditures and examine every program at least once every 10 years, looking for ways to improve efficiency and reduce waste.

• Reduce debt when revenues spike. Creates a process for identifying and using occasional, nonrecurring spikes in revenue for one‐time uses, such as paying down debt.

• Pay-as-you-go. Requires that major new or expanded programs and tax reductions proposed in the budget or legislation identify a specific funding source such as savings, cuts to other programs or tax increases.

• Majority vote budget. As part of these comprehensive fiscal reforms, lowers the vote requirement for adopting the state budget to a majority vote of the Legislature. All lawmakers would forfeit their pay and per diem when the budget is late. The measure also requires a two-thirds vote for any new fees that replace a tax, but does not change the majority vote requirement for other fees or the two‐thirds vote requirement to raise taxes.

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