The Conversation: Can California be pulled from the brink?

150 150 Nicolas Berggruen and Nathan Gardels

Reposted with permission from the Sacramento Bee

California has long been the bellwether for the United States as a whole. Indeed, as the world’s eighth-largest economy that is home to Hollywood and Google, this outpost of creativity and innovation has continent-size influence with a cultural resonance that looms large in the global imagination.

Unfortunately, of late, California’s role as a bellwether has taken on a decidedly negative cast. Where once Californians dreamed of building a society that matched the magnificence of the state’s landscape, in recent years we’ve settled instead for mountains of debt, disappearing jobs, D+ schools, greater public spending for prisons than higher education, and an outdated, crumbling infrastructure that emerging economies like China put to shame.

Every college freshman, entrepreneur, homeowner, new immigrant or retiree in California has shared the sinking feeling that the future the state was once so famously ahead of was passing them by. Facing daunting deficits after years of political gridlock, California has come in the minds of many to epitomize the crisis of democratic governance spreading across the West from Athens to Washington.

But, true to form as the land where second acts are possible, California seems to have reached the tipping point and is coming back. Once again it is ahead of the curve of the rest of the country.

Despite a recall election and the concerted efforts of political leaders in recent years, Californians have come to realize that the real challenge is not so much replacing elected officials as fixing a system that is itself broken. As a result of this experience, the public is prepared to finally embrace the path of reform.

In the past two years, Californians have voted for open primaries, redistricting by citizen commission and for a simple majority vote on budgets – all with the aim of ending partisan paralysis in the Legislature. And, by a huge margin, they voted for a clean energy future less dependent on foreign oil by protecting California’s landmark climate change law from being overturned by Proposition 23. Though Gov. Arnold Schwarzenegger was not a fan of giving up the two-thirds vote to approve budgets, these other accomplishments will be the enduring legacy of his leadership.

And this is only the beginning. Groups like the Public Policy Institute of California, California Forward and the foundations that support them have plowed the hard ground seeking bipartisan consensus on a range of reforms. That groundbreaking work is now gaining traction as others are joining in and creating a critical mass.

Recently, we added a new set of voices to this growing movement by establishing the Think Long Committee for California, a high-powered group of eminent citizens with broad experience in public affairs, labor and business. It is financed with an initial $20 million. We are working closely with PPIC and California Forward.

The nonpartisan committee ranges from two former U.S. secretaries of state, George P. Shultz and Condoleezza Rice, to Clinton economic adviser Laura Tyson; from Eric Schmidt of Google to former Yahoo and Warner Bros. chief Terry Semel; from former Assembly speakers Bob Hertzberg and Willie Brown to former state Treasurer Matt Fong, former UC Regents chair Gerry Parsky,philanthropist Eli Broad, labor leader Maria Elena Durazo and California Community Foundations head Antonia Hernandez. At the first meeting at Google headquarters in October, Schwarzenegger shared the table with Gray Davis, the governor he ousted in the 2003 recall.

The group is advised by two of the most respected minds in Sacramento, Mike Genest and Tim Gage, both former state finance directors.

The aim of the committee, as one participant at the Google meeting put it using a computer metaphor, is to “reboot” California through a series of integrated structural reforms that will help bring the state back to governability.

Onto this fertile terrain now arrives Gov.-elect Jerry Brown with his characteristic attribute of penetrating the facts and telling it like it is. He has pledged to “open up the hood and look at the good, bad and ugly” of a dysfunctional system that has evolved over the decades to lock in spending and lock out revenue, battered further by the worst recession since the Great Depression. He has promised to bluntly ask the people of California what kind of government they want, and what they are willing to pay for, or not.

The bad news is that Brown will find a lot of bad and ugly under the hood, as the state legislative analyst has already warned, with a projected $28 billion deficit next year and more shortfalls to come. The good news is that, once the gruesome realities sink in to the public, Brown has plenty of allies willing to work with him on proposals to straighten out the mess as we go forward.

It is also encouraging that, on a recent visit to Sacramento, we found a fresh mood of cooperation in the air in our conversations with numerous people ranging from Assembly Republican leader Connie Conway to Angie Wei of the state labor federation.

Everybody wants to “get to yes” instead of “no” by finding ways to pragmatically work together.

Though the Think Long Committee’s agenda remains open and evolving, and it will not decide on final recommendations until our series of task force meetings are completed in the early summer, here are some of the ideas being contemplated:

1. The best government – one that is responsive and accountable – is the government that is closest to its citizens. To that end, realignment of state and local revenue and responsibilities is key to renovating a system that has become over-centralized in the years since Proposition 13. This is a high priority of Senate leader Darrell Steinberg of Sacramento. It was also a key plank of Brown’s campaign platform.

2. With this realignment, and bearing fairness and long-term infrastructure needs in mind, the state should then simplify, broaden and flatten the tax structure in order to tame the revenue volatility of the current system. Economists agree that the most stable tax regime is one that has the broadest base with the lowest rates.

3. The counterpart of revamping the tax system is budget reform that keeps spending within fiscal constraints, including a rainy day fund, pay-go, long-term and performance-based budgeting, sunset laws and curbing mandates on spending not appropriated in a given budget cycle. Too often, bad practices have been followed in good years, depleting any reserve for the next downturn. And, clearly, pension reform is a major issue.

4. Modification of term limits to enhance the accountability, decisiveness and quality of the Legislature. Some on the committee have even proposed a nonpartisan unicameral legislature as a logical step after open primaries and redistricting.

5. Initiative reform that will curb budgeting by the ballot box and make this avenue of public recourse part of building a governing consensus instead of a tool of conflict and an alternative to the Legislature.

6. While being careful to protect our environment, streamlining regulation in order to promote a better business climate and stimulate new job creation.

7. Integrating the long-range perspective into governance though establishing a “Long Term California Strategy Council” that will focus on making California globally competitive, bolstering excellence in education – including a revolving fund for higher education – and building the smart infrastructure of the future.

Change along these lines would shift California toward a modern system of governance that has the capacity for decisive action, would reflect the complexity and diversity of its population and economy, and would be more suited to the challenges and opportunities of the 21st century than the one inherited from the time of ranches and railroad barons.

Above all, that new system of governance must be imbued with a public-interest political culture that replaces the rancor of polarization with the nonpartisan spirit of pragmatism and long-range perspective associated with the great builders of the state in the 1950s and 1960s – Earl Warren and Pat Brown – who laid the foundations in the post-World War II era for the prosperity and quality of life that California enjoyed for decades.

If Californians embrace such an approach, we could have a fiscally sound government that can weather the ups and downs of the business cycle and foster the high-wage jobs linked to California’s cutting-edge industries from biotech to information technology to clean energy. Upward mobility could be ensured through excellent schools with affordable higher education, accessible to all Californians, that can provide the innovative and highly skilled workers who are key to building competitive new industries. Environmentally friendly, livable cities that use energy and water smartly could be a model for the world.

Despite its current travails, California is rightly known for its entrepreneurial energy and can-do creativity. If that can be turned toward the task of good governance, all Californians will be empowered to get back to the future with the government we all want and deserve.

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Nicolas Berggruen is chairman of Berggruen Holdings and the Think Long Committee for California. Nathan Gardels is senior adviser to the Berggruen Institute and editor-in-chief of Tribune Media’s Global Viewpoint Network.


Nicolas Berggruen and Nathan Gardels

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