Summary of “Benefits” of 2/3 Vote Requirement

2/3 Vote Requirement Encourages Consensus:  The primary justification for the state’s 2/3 vote requirement is that it is supposed to encourage a consensus among the political parties.  The reality is that this does not happen.  Recent history has shown that the Republican Party exacts as much as it possibly can in concessions from the majority party as conditions of providing a few votes needed to achieve 2/3.  Many of these concessions have absolutely nothing to do with the budget.  For example, as a condition of gaining his vote on the 2008-09 budget then Senator Abel Maldonado required that the Legislature place an open primary measure on the ballot.  This year Republican lawmakers have made a long list of demands including significant regulatory, tax and pension changes.      

2/3 Vote Requirement Protects Taxpayer By Making It Harder to Raise Taxes:  The 2/3 vote requirement does make it more difficult, next to impossible in today’s political environment, to raise taxes in California.  But the 2/3 vote requirement also makes it impossible to close tax loopholes that cost the state of California billions of dollars every year.  Thus, the state’s tax system is in an extreme state of disrepair in which taxes are levied in the wrong places and is subject to endless manipulation, tax avoidance and tax sheltering by major corporations and wealthy individuals.  For a comprehensive list of tax loopholes and other taxes that should be raised on tax policy grounds click here.                                                        

2/3 Vote Requirement Reduces the “Size” of Government:  The 2/3 vote requirement makes it much more difficult to raise revenues which therefore keeps total government revenues lower than they would be under a majority vote requirement.   “If you have a supermajority to raise revenues in an American state, your state and local revenue burden is 8% lower than it would otherwise be,” says UC Berkeley Public Policy Professor John Ellwood, citing this as one of the conclusions reached in a 2003 study by Timothy Besley and Anne Case titled “Political Institutions and Policy Choices:  Evidence from the United States.”   

2/3 Vote Requirement Keeps California Republican Party Relevant in At Least One Aspect of California Governance:  If the 2/3 vote requirement were reduced to a majority, the California Republican Party would lose the one point of political leverage that it still has in California politics.  The Democratic majority can pass all other majority vote bills without Republican support and get them signed into law with the signature of the Governor.  

Summary of Costs or Downsides of 2/3 Vote Requirement

2/3 Vote Requirement Encourages “Hostage Taking” and Unreasonable Demands by California Republican Lawmakers:  Recent experience with the state’s 2/3 vote requirement has shown that California Republican lawmakers are becoming increasingly brazen in their demands for concessions from the Democratic Party as a condition of providing votes on the budget.  As mentioned above, this year Republican lawmakers are once again demanding a series of corporate tax breaks, pension changes, changes to environmental regulations and a long list of other demands—many of which have nothing to do with the state budget.  In 2008-09, Republican lawmakers demanded corporate tax breaks—costing more than $1 billion, growing to more than $2 billion—as a condition of passage for the 2008-09 budget.  Democratic leaders conceded in order to get the budget passed.

2/3 Vote Requirement Increases Special Interest Influence:  The 2/3 vote requirement encourages Republican lawmakers to cater to special interests, namely big business and wealthy, well-connected campaign contributors, in deciding what concessions they want to exact from the Democratic majority.  A sizeable portion of the tax breaks included in the 2008-09 budget deal went to a few dozen of California’s most powerful corporations which are major contributors to California Republican lawmakers.  California Republicans routinely request tax breaks in budget negotiations for major corporations and the rich, as opposed to small business tax breaks, middle-class tax breaks and breaks for the poor.  It appears that the best and most credible explanation for these targeted tax breaks is to appease major campaign contributors and supporters of the California Republican Party. 

2/3 Vote Requirement Ensures That the Annual State Budget Stalemate Dominates California Politics and Overshadows All Other Issues:  The annual state budget stalemate has gotten to the point where the Legislature and the Governor do little else besides posture and negotiate over the annual budget.  All other issues, including education, health care, transportation, etc. are overshadowed and cannot be sufficiently addressed due to the domination of the state’s political agenda by the annual budget stalemate.  State Legislators were sent to Sacramento to govern by legislating changes in a variety of issues areas, but the reality is that they cannot do this because of the perpetual and never-ending budget battles.

2/3 Vote Requirement Encourages the Passage of So-Called “Get Out of Town Budget” or Bad Budgets That Use “Smoke and Mirrors” To Paper Over a Budget Gap:  Anybody who has followed the passage of budgets in recent years knows that the budgets that pass the Legislature are only balanced in name only and are out of balance by billions of dollars, if not tens of billions of dollars on the day that they pass.  Perhaps the best example is the 2010-11 budget that passed in early October 2010.  By late November 10, 2010, the Legislative Analyst’s Office had found that the state will face a $25 billion budget gap for 2011-12, including a $6 billion budget gap for the current 2010-11 budget year.  Recent budgets are filled with budget gimmicks, account shifts, unrealistic assumptions, and budget reductions proposals that do not provide the savings they are keyed at or that cost the state more in future years.  A prime example of this was Governor Arnold Schwarzenegger’s proposal to sell a dozen or so state office buildings to the private sector and then lease the space back at an increased cost to the state.    

2/3 Vote Requirement Clouds and Distorts Legislative Accountability:  Recent opinion polls show that the Legislature’s approval ratings are at historic lows.  In January 2011, a survey by the California Public Policy Institute found that only 18% of likely voters approve of the way the California Legislature is handling its job, while 68% disapprove.  California voters do not understand why the parties cannot quit bickering and work together to pass a budget on time.  The 2/3 vote requirement prevents either party from being held accountable for the failure to passage a responsible budget on time.  “If we went to a simple majority to raise taxes in all likelihood the Democrats would raise taxes to solve California’s budget problems.  They would over reach.  They would get thrown out of office and the Republicans would have their best chance of gaining a majority in the Legislature,” said UC Berkeley Public Policy Professor John Ellwood.  “Now the Democrats can propose anything because they know that with the Republican veto nothing will pass.  And the Republicans know that they can get away with simply saying no,” Ellwood said, adding that “nothing gets done either way” and we are just stuck with gridlock. 

2/3 Vote Requirement Prevents the California Legislature From Reforming the State’s Tax Code in Any Meaningful Way:  The failure of Republican lawmakers to engage the tax issue in an open, honest, and forthright way has prevented the Legislature from doing anything to fix the state’s outdated and loophole-ridden tax system.  The Republican mantra goes something like this; “all tax increases are bad, will lead to job losses and devastate the California economy.”  The truth is that an excessive tax burden is bad for the economy. But closing tax loopholes should be one of the highest priorities of the Legislature.  Achieving a 2/3 vote for any tax bills that raise revenue is nearly impossible in today’s political environment.  A thorough and honest examination of all the waste and inefficiencies in the state’s tax system is the only way the state will be able to find the revenues to sustain public services without significant tax increases on the general population.  For more information on why state Republican lawmakers are wrong on taxes click here. 

2/3 Vote Requirement Prevents Democratic Majority From Adequately Funding Vital State Programs Such as Education, Health Care, Transportation, Public Safety:  Under the current system, the Democratic majority can pass bills into law that create or improve public programs but are prevented from adequately funding these programs due to the 2/3 vote requirement.  Public opinion polls routinely show strong majority voter support for an array of public programs such as health care, education, and public safety, but these same programs go significantly underfunded year after year because California Democrats cannot get a 2/3 vote to adequately fund these programs.  The result is that we have an education system, health care system, and transportation system that is ineffective and increasingly deteriorating—despite the fact that there is majority public support for providing the funding and public policy changes necessary to improve these programs. 

2/3 Vote Requirement Skews Budget Priorities Towards the Right-Wing:  Political scientists state that the 2/3 vote requirement skews tax and budget priorities towards the 66^th percentile voter, as opposed to the 50^th percentile voter under a majority vote.  California is a solidly Democratic state, yet the budget outcomes are skewed toward right leaning voters.  Essentially, the right 1/3 of the electorate has veto power over the supermajority 2/3 of the electorate. 

2/3 Vote Requirement Fuels Initiative Battles and Costly Special Elections:  The 2/3 vote requirement has increasingly led to the state budget battle being fought in initiative wars that are decided at the ballot box.  Former Governor Arnold Schwarzenegger placed a number of budget-related measures on the ballot, most of which failed.  Governor Jerry Brown has proposed a number of new measures for the June 2011 ballot related to the budget, including series of extensions to temporary tax increases.  Budgeting is best done in the Legislature and not at the ballot box.  The uncertainty created by special election measures only serves to prolong and increase the severity of the state’s budget crisis.  Moreover, voters do not necessarily have all the information they need to make informed budget decisions at the ballot box. 

Conclusion

This analysis has sought to show that the costs or downsides of the 2/3 vote requirement for tax changes that increase revenues, or a budget that increases tax revenues, far outweigh the benefits of such a vote requirement.

Moreover, reducing the 2/3 vote requirement is a crucial constitutional change that California must make to its system of governance to end the perpetual partisan gridlock, hostage taking, and special interest influence over the annual California budget.         

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Governor Jerry Brown and Democratic legislators have all done all they can to gain the votes of the handful of Republican legislators, including entertaining changes to the state’s pension system, a spending cap, altering environmental regulations, and corporate tax cuts.  Yet not a single Republican lawmaker has stepped forward to offer a vote to place Governor Brown’s tax package before voters in June. 

The partisan culture in Sacramento has gotten to a point where the California Republican Party cannot and does not govern but merely serves to obstruct the Democratic majority and exploit the key systemic flaw in California’s system of government—the 2/3 vote requirement to pass tax proposals or place such proposals before voters.

Despite a $25 billion plus budget deficit, Republican lawmakers are demanding tax cuts, which borders on insanity—the centerpiece of current political platform of the California Republican Party.  In 2008-09, Republican lawmakers demanded corporate tax breaks—costing more than $1 billion, growing to more than $2 billion—as a condition of passage for the 2008-09 budget.  Democratic leaders conceded in order to get the budget passed.     

The refusal of California Republican lawmakers to close multi-million dollar tax loopholes and make responsible changes to the state’s tax system plays itself out every year in the State Legislature.  In 2009 and 2010 alone, the Republican Party voted down bills to close tax loopholes in the commercial property tax, crack down on off-shore tax havens, and eliminate other corporate tax loopholes, among the most egregious examples, which cost the State of California billions of dollars every year.

There are various explanations for the obstructionism of the California Republican Party.  The strongest root causes are electoral incentives.  The current culture of the California Republican Party mandates that all Republican lawmakers reject all changes in the state’s tax system that raise a dime of revenue or risk defeat in the upcoming election.

The best examples of this “zero-tolerance” policy for taxes in the California Republican Party is the sacking of former Republican leader Mike Villines and the 2009 recall attempt against Assemblymember Anthony Adams after they voted for temporary tax increases as part of the 2009 budget deal.

Only Available Solution Is Lowering 2/3 Vote Requirement for Tax Proposals 

The only solution is institutional change—specifically the replacement of the 2/3 vote requirement for a budget and taxes with a majority or 55% percent vote.  In November 2010, California voters approved Proposition 25 which changes the vote requirement for passage of a budget from a 2/3 vote to a majority vote. 

This change represents an improvement over the status quo but, as the current standoff illustrates, will not solve a major underlying problem with California’s political institutions—the current system allows the Democratic majority to approve programs (i.e. education, health care) with a simple majority vote but the state’s 2/3 vote requirement for tax revenues prevents Democratic lawmakers from adequately funding them.

Polling consistently shows strong majority support for major state programs such as education, health care, public safety, and transportation.  Democratic lawmakers campaign on their ability to protect and strengthen these programs, yet cannot keep their campaign promises due to the 2/3 vote requirement. 

The result is the persistent underfunding of California’s most important public programs such as the state’s education system, health care system, infrastructure programs, and state and local public safety programs.  California among the bottom 10 states in per pupil school funding and has a multi-billion dollar backlog of public infrastructure needs, among other things. 

The primary problem with the current system is that it obscures political responsibility.  The 2/3 vote requirement allows Republican lawmakers to prevent the passage of a budget and tax changes to fund vital state programs, but the public sees the political dysfunction as the fault of both political parties, which explains why public dissatisfaction with the legislature and executive branches of government are at record highs. 

The only way out of this failed political dynamic is for California’s political leaders to articulate the problems with the existing political system and make the case for institutional change.  Specifically, the state’s 2/3 vote requirement for the passage of state taxes must be changed to enable the majority party to govern effectively.

“I have one change I want to do, I want to get rid of the 2/3 vote to raise taxes and pass a budget.  I think that it would reintroduce politics, not that it would give you nirvana…it would lead to some bad policies, but it would force both sides to actually grapple with the real issues which they don’t have to now,” says UC Berkeley professor of public policy John Ellwood.

 “If we went to a simple majority to raise taxes in all likelihood the Democrats would raise taxes to solve California’s budget problems.  They would over reach.  They would get thrown out of office and the Republicans would have their best chance of gaining a majority in the Legislature,” Ellwood said.   

“Now the Democrats can propose anything because they know that with the Republican veto nothing will pass.  And the Republicans know that they can get away with simply saying no,” Ellwood said, adding that “nothing gets done either way” and we are just stuck with gridlock.  Ellwood acknowledges that he does not believe this is something the public wants as evidenced by the resounding defeat of Prop. 56 in 2004, which proposed to lower the vote requirement for a budget, including tax increases, to a 55% vote.

Things Will Not Change Until Democratic Leaders Begin Communicating the Need to Change, and Actively Work to Change the 2/3 Vote Requirement

Perhaps the worst part about the current standoff is that Democratic leaders and politicians to do not call out the 2/3 vote requirement as being part of the problem in communicating with the media and the public.

Privately they acknowledge and desire to lower the requirement, but publicly they pretend as if everything is fine and they just need to work harder to achieve a consensus with the California Republican Party.  But the reality is that the California Republican Party has no desire to compromise and does not make reasonable demands that serve to benefit the interests of California voters.    

For example, Governor Jerry Brown did not advocate for changing the 2/3 vote requirement in his campaign for Governor.  Very few other Democratic politicians even mention it in their campaigns.   

The reason is that they believe advocating such a change is unpopular with the public, citing poll numbers showing that changing the 2/3 vote requirement does not have majority support.

Part of effective political leadership is seeing what needs to be changed and finding a way to change it.  If the public does not believe the vote requirement should be changed, they need to be educated about why it must be changed. 

UC Berkeley Professor George Lakoff believes that a majority of California voters would favor changing the vote requirement and that the issue really comes down to framing. 

“A recent poll by David Binder, perhaps the premier California pollster, showed a framing shift of deep import on the same issue, depending on the framing,” Lakoff wrote in a 2010 article in the California Journal of Politics and Policy.

In 2009, Lakoff filed an initiative that would lower the vote requirement for a budget and taxes to a majority vote.  Specifically, the measure, called “The California Democracy Act,” proposed that “all legislative actions on revenue and budget must be determined by a majority vote.”   Due to a lack of qualified signatures, the measure did not make the June 2010 ballot. 

Binder’s polling on the original initiative text found that 73% of likely voters supported the measure, while only 22% opposed it. It must be noted that support for the measure would drop significantly when a campaign was run against the measure, but usually initiatives with such high initial voter support stand a good chance of passage.       

However, when the Democracy Act came across then-Attorney General Jerry Brown’s desk, he “personally penned the following title and summary:  “Changes the legislative vote requirement necessary to pass the budget, and to raise taxes from two-thirds to a simple majority.  Unknown fiscal impact from lowering the legislative vote requirement for spending and tax increases.  In some cases, the content of the annual state budget could change and/or state revenues could increase.  Fiscal impact would depend on the composition and actions of future legislatures.” 

“Instead of the original initiative text, Brown’s wording would appear on the ballot if it qualified, and would have to appear on all petitions.  This wording uses the word “taxes” three times paired with the verbs “raise” and “increase” as well as the conservative phrase for vilifying liberals “spending and tax increases,” wrote Lakoff.  

Binder’s polling conducted on the Brown title and summary showed that only 38% of likely voters supported it, and 56% opposed.  “The Brown wording shifted the result by 69%!  The largest shift Binder had ever seen,” Lakoff wrote. 

There is no doubt that changing the 2/3 vote requirement will be difficult, but it will likely never get changed unless voter education starts on why the requirement needs to be changed. 

The above anecdotal story on the demise of Lakoff’s measure shows that it should not be assumed that a majority of the public necessarily opposes changing the vote requirement.

And even if they do, this should not deter California political leaders from making the case to the public that it needs to be changed.  After all, that is what strong and effective political leaders were elected by voters to do.    

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The lofty goals of the Think Long Committee and its founder Nicolas Berggruen are noble and appear to be well-intentioned but the composition of the committee and, its process for deliberations are ill-equipped and poorly suited to complete the tasks at hand by its mid-2011 deadline for the production of a reform package.

Berggruen has pledged $20 million of his estimated $2.2 billion fortune to finance the committee’s work, qualify the proposals for the ballot, and run a campaign in support of the measures.     

As will be examined more closely in this analysis, 11 of the 14 committee members fall into one of two cohorts—successful business executive or experienced political operator.  These members are highly unlikely to challenge the political status quo and propose bold reforms.    

The creation of the so-called “Think Long Committee,” which was announced in late October, does include three members who do not fit either the corporate executive or political operator mold and could be pivotal in the creation of the eventual package that is presented. 

Perhaps most significantly, the committee is charged with presenting “structural and constitutional changes” but its membership does not include any members with a significant background and expertise in constitutional and structural reform.

The committee also lacks a grassroots component that represents John Q. Public and has announced no plans to hold any of its meetings in public.  Furthermore, the committee has not disclosed any intention to solicit citizen input in the creation of its proposals but has noted that public input will be solicited once the proposals are made public.  But the proposals will be largely constructed behind closed doors without  input from policymakers, outside experts, or the public.    

The committee has begun meeting and is planning to submit its package of proposals for public review by mid-2011, according to Berggruen in an interview with the Sacramento Bee editorial board.    

This brief analysis seeks to examine the goals and limitations of the Think Long Committee, its primary funder Nicolas Berggruen, and its 14-members.

Who is Nicolas Berggruen? 

Nicolas Berggruen, 49, is the son of a world-renowned Picasso collector from Berlin and is worth an estimated $2.2 billion, according to Forbes Magazine.  “His business interests range from hydro-and wind power in Turkey to Spanish Media and his most recent acquisition, German retailer Karstadt,” according to Forbes.  

Berggruen founded Berggruen Holding, Inc. in 1984 to act as an investment advisor to a Berggruen family trust that has made more than 100 control and non-control investments in businesses since its inception, both public and private and focusing on building long-term value.  Also in 1988, he co-founded Alpha Investment Management, a hedge fund management company that was sold to Safra Bank in 2004, according to the Nicolas Berggruen Institute. 

Prior to founding Berggruen Holdings, Inc. he served as an analyst on the real estate side of the family-held investment firm Bass Brothers Enterprises, and was an associate of Jacobson and Co., Inc., a leverage buyout company, according to the Nicolas Berggruen Institute. 

Berggruen Holdings has operations in the U.S., Europe, and Asia, as well as real estate and financial investments globally, according to the Nicolas Berggruen Institute.  Berggruen now devotes much of his time to the Nicolas Berggruen Institute, which is an independent, non-partisan think tank that encourages the study and design of systems of good governance suited for the 21^st century.  

According to Annenberg digital news, Berggruen is an unmarried German born in Paris, France, who is based in New York City, although he spends much of his time traveling around the world in his private jet.  He has donated to Democratic candidates such as President Barack Obama and Sen. Charles Schumer, and he invests in liberal causes such as green energy companies, tech firms, and urban development.  His family’s wealth came through collecting art, a practice that he has continued.

“He is a nomad who relishes the outdoors, loves working off of his Blackberry and lives mainly in hotel rooms,” states a report by the Annenberg digital news.  The Wall Street Journal reports that Berggruen reads the works of Confucius and French philosophers Sarte and Camus. 

Berggruen studied in Paris at l’Ecole Alsacienne before attending Le Rosey in Switzerland.  He obtained a Bachelor of Science in Finance and International Business from New York University in 1981. 

What Are the Goals of the Think Long Committee?

There is a limited amount of public information about of public opinion articles about the intentions of the Think Long Committee but the committee’s website, op-eds authored by Berggruen and quotes by Berggruen and committee members provide a glimpse of what Berggruen’s intentions are for the committee. 

According to the Think Long Section of the Nicolas Berggruen Institute website, “the Think Long Committee for California aims to offer a comprehensive approach for repairing and renovating California’s broken system of governance while proposing policies and institutions vital for the state’s long term future.”

“It will make its recommendations to the Legislature and newly elected Governor and, as necessary, take issues to the public through ballot initiatives,” states the website.

“Mired in deficits and political gridlock, California today is a louder echo of the country at large.  Nearly 90% of Californians consider their government broken.  Dissatisfaction of the citizenry has never been higher.  Meanwhile, decisive and unified leadership elsewhere in today’s world, notably in China, is building for the future the way California did 50 years ago,” states the website. 

“With huge reserves, a focus on education and energy efficient infrastructure, including laying a network of the world’s fastest trains to link 80% of the population, China is even taking the lead in solar and other clean technologies that were once the province of California,” according to the website. 

“The Nicolas Berggruen Institute (NBI) is deeply concerned with where California and America as a whole will be two decades from now if we don’t find a way for democratic societies to break out of the gridlock that is leading us from an era of promise to a trajectory of demise.  If California in its bellwether role can show the way back to good governance, it will be a powerful example for the rest of the country,” according to the NBI website. 

“From the NBI perspective, good governance involves the responsive, efficient delivery of services to the public by a fiscally responsible government.  Above all, it means politics conducted in a spirit of pragmatism that does not sacrifice the long term to short-term special interest.  To that end, the NBI envisions establishing a non-partisan “Think Long Committee for California” of eminent Californians—not more than 10 or 15 people—that can apply their experience, stature and knowledge toward the goal of getting the state back to governability,” according to the NBI website.

“The recommendations of the Committee will be presented to the next governor and the legislative leadership, or, as necessary, taken to the public in ballot initiatives.  Nicolas Berggruen will provide $20 million in funds to finance the endeavor.  Unlike any other reform efforts, this fund will not support a single candidacy or a single issue but only those structural and constitutional changes that will break the present gridlock, make government more responsive and efficient while at the same time putting in place the incentives and institutions vital for California’s long-term future,” according to the NBI website.     

According to the Sacramento Bee, the Think Long Committee plans to “produce a series of proposals for public review in mid-2011.  The committee will consider changes to the initiative process, term limits, the tax structure and more.” 

Berggruen Believes China’s Economic Model Shows There is Much Room for Improvement in California and United States

In his opinion articles, Berggruen contrasts the political gridlock and lack of long term vision in America with China’s long-term economic planning.  

In a May article in Forbes Magazine, Berggruen began with the question: “Are Western democracies becoming ungovernable while an authoritarian regime like China’s races boldly and decisively into the future?” 

Berggruen writes that California’s current governance crisis is “only a louder echo of the crisis of governance in America as a whole.”  “Fifty years ago, when China was barely beyond the throes of its peasant revolution, California was looking boldly to its future.  It laid the foundation for becoming the world’s eighth-largest economy by building a world-class university system, many thousands of miles of freeways and canals bringing water from the north to the parch south.  Millions migrated from around the world to partake of the “golden dream,” Berggruen wrote. 

“Even today the California governor’s office has been actively promoting the construction of the first bullet train in America and negotiating with Chinese authorities to finance and build the system for the state, since China has both the money and technology the U.S. lacks,” Berggruen wrote. 

Berggruen goes on to write that “93% of Californians consider their state government broken, mired in debt and political gridlock…with a $20 billion deficit and no revenue options, California is factually bankrupt.” 

Berggruen acknowledges that China has serious problems and America has great strengths, and developing and mature economies have different dynamics, “but it does suggest that governance matters when it comes to whether a state or nation advances or regresses.” 

“While China’s unified leadership is highly proactive as it builds its long-term future, politics in the United State by contrast is short-term, reactive and mired by a bitter partisanship that hinders a bold response to key challenges,” Berggruen wrote. 

“While China desperately needs more democracy to curb abuses and corruption, it is also true that the democracies must develop a great capacity for decisive action and long-term policy-making free from the paralyzing special interest pressures of the moment.”

“Above all, like America as a whole, California must return to the spirit of compromise and long-term thinking that once paved the path to prosperity and quality of life,” Berggruen concludes.

Berggruen Expresses Support for Specific Structural Reforms

Berggruen says he supports adopting open primaries to mitigate extremism in politics, modifying term limits, and requiring initiatives to identify a funding source for new spending.  He continues to support a “budget cap with a rainy-day fund to avoid drastic cuts in cyclical downturns” and keeping down borrowing costs for education and infrastructure.  The open primary has already been enacted, and the term limit modification and rainy-day fund reform will be on the 2012 ballot for consideration by voters. 

Berggruen goes on to support reforming “public pension to keep liabilities in line with fiscal reality” and bringing “government closer to the people by devolving budget power to cities, counties and special districts that deliver taxpayer services.”  He writes that the state should “impose sunset laws and regular performance and productivity reviews for all government programs” and “create a revolving fund for higher education to ensure tuition remains affordable and quality institutions like the University of California remain accessible.”

Perhaps Berggruen’s most original idea is that he advocates for the creation of a “Long-Term California Council” that would be “a sort of regents for the state as a whole—that checks the short-term political impulses of the elected legislature and keeps the state focused on the challenges of the future: smart growth, smart energy grid, green jobs, information technology, biomedical innovation, pacific trade.” 

“The key challenge for reform in democracies today, as these suggested reforms illustrate, is finding a way to be responsive to the electorate while not sacrificing the long-term general interest to constituency politics of the moment.  California has long been the bellwether for the rest of America.  If we can rebalance the system there, it bodes well for the rest of the nation, and indeed, for the idea of democracy itself in a world in transition,” Berggruen concludes. 

In another Forbes report, Berggruen is said to support “longer term limits, a broader tax base and decentralizing power from Sacramento to local government.”

“The way I put it is that this country, in the past election, fought yesterday’s war…California is already ahead; they’re fighting the next war.  The next war is actual reforms.  And that’s what our work is,” Berggruen told a Forbes reporter. 

Berggruen is also creating a global committee “The NBI 21^st Century Council” to shadow the G20 and “address global challenges.”  Thus far, members include British Parliament member Chris Patten, former Brazilian President Fernando Henrique Cardoso, former Spanish Prime Minister Felipe Gonzalez, former German Chancellor Gerhard Schroeder, and former Pakistani Prime Minister Shaukat Aziz, according to Forbes Magazine.

Think Long Committee Members Provide Insight on Direction of Committee

Think Long Committee member and former California Governor Gray Davis told the Sacramento Bee that the group plans to meet four or five times in the next several months. 

“Our goal is not to reinvent the wheel and insist that every idea is original, but we’ll pick two or three and get Sacramento on track,” Davis said. 

“Nick’s pledge of $20 million is what makes this group different,” Davis said.  Other groups such as the foundation-backed California Forward and business-backed Bay Area Council have pursued structural reform measures but have not succeeded at placing any measures on the ballot. 

Davis said the $20 million should be seen more as seed money than the maximum because other members of the group or outside supporters may be willing to contribute more, Davis told the Bee.  The Think Long Committee also includes some billionaires such as Google CEO Eric Schmidt and Philanthropist Eli Broad who could possibly contribute to the effort or help raise money.

In a recent interview with the Sacramento Bee Editorial Board, Berggruen said he believes the reform effort will take years, noting “luckily we are still reasonably energetic, and so we will be at this for years.”

Berggruen said he sees the Thing Long Committee building upon proposals advanced by other groups committed to fixing the state.  He said he plans to work closely with California Forward by joining forces with the group on public education and outreach efforts in the coming year, according to the Sacramento Bee report.

“California Forward was really an effort founded by a number of foundations which was really a research effort which went very deep in terms of what are the key things that California needs…What they were not set up to do, in my mind, was really to be action oriented,” Berggruen said in his interview with the Bee. 

“If more money’s needed…I’ll put in more money,” Berggruen said about his $20 million commitment. 

Berggruen told the Bee that the Think Long Committee has started divvying up the work among several-subcommittees in hopes of advancing initial proposals in the next six months.  He said a task force on tax reform will be chaired by Willie Brown and Gerald Parsky, a Republican who chaired the Commission on the 21^st Century Economy,  according to the Bee report. 

The group’s “long term” task force, which will focus on proposals concerning global competition, investment in infrastructure and changes to the state budget process will be led by Eric Schmidt and Laura D’Andrea Tyson, former chair of President Bill Clinton’s Council of Economic Advisors, Berggruen told the Bee.

An Introduction to the Think Long Committee Members

Eleven of the 14 Think Long Committee members fall into one of two cohorts—successful business executive or experienced political operator. 

In addition to Berggruen, four of the committee members are billionaires, including Terry Semel, CEO of Windsor Media, Eric Schmidt, CEO of Google, Eli Broad, a Los Angeles developer and philanthropist, and David Bonderman, a partner at TGP Capital. 

The remaining business executive—rounding out the category of the five committee members who are successful business executives—is Gerald Parsky, a partner at Aurora Capital Group, who is a multimillionaire. 

The six experienced political operatives include:

-George P. Shultz, currently a distinguished fellow at Stanford University’s Hoover Institution and a former U.S. Secretary of State.

-Condoleezza Rice, Stanford University professor and former U.S. Secretary of State.

-Robert Hertzberg, former Speaker of the California Assembly and co-chair of California Forward.

-Gray Davis, former California Governor.

-Willie Brown, former Speaker of the California Assembly and former Mayor of San Francisco

-Matt Fong, former California State Treasurer and businessman. 

The three “wild card” members that defy being classified into either of the above two categories include Laura Tyson, a professor at the Haas School of business at UC Berkeley, Maria Elena Durazo, executive secretary-treasurer of the Los Angeles County Federation of Labor, and Antonia Hernandez, CEO of the California Community Foundation. 

The following summary seeks to provide a brief background of each committee member to help the reader for purposes of assessing how each committee member may contribute to the construction of the Think Long Committee’s reform package.

Here is an introduction to the three “wild card” members: 

Laura Tyson (DOB: June 28, 1947):  Tyson is an American economist, former chair of the U.S. President’s Council of Economic Advisers during the Clinton Administration from 1993-1995, and the President’s National Economic Advisor between 1995 and 1996.    She is currently a professor of business administration and economics at the Haas School of Business at UC Berkeley, according to the Nicolas Berggruen Institute. 

Tyson has published a wide array of books and articles on industrial competitiveness and trade on the economies of Central Europe and their transition to market systems.  Tyson writes regularly about domestic and international economic policy matters in the Washington Post, the New York Times and other nationally and internationally syndicated newspapers and magazines.  She is a member of the boards of directors of the Brookings Institution, Peter G. Peterson Institute of International Economics, Morgan Stanley, AT&T Inc., Eastman Kodak and CB Richard Ellis, according to NBI.

Antonia Hernandez (DOB: May 30, 1948):  Hernandez is currently the CEO of the California Community Foundation, a charitable foundation that serves underserved communities in the Los Angeles area.  Hernandez also has served as Director of the Local Initiatives Support Corporation since January 2007 and has been a director of Golden West Financial Corp. since 1995.

Prior to joining the California Community Foundation as president and CEO in February 2004, Hernandez served as president and general counsel of the Mexican American Legal Defense and Educational Fund (MALDEF), a national nonprofit litigation and advocacy organization, according to NBI. 

“An expert in philanthropy, civil rights and immigration issues, Hernandez began her legal career as a staff attorney with the Los Angeles Center for Law and Justice and worked as counsel to the United States Senate Committee on the Judiciary before joining MALDEF in 1981 as a regional counsel in Washington, D.C.,” according to the California Community Foundation. 

Maria Elena Durazo (DOB: unavailable):  Durazo is currently the executive secretary-treasurer of the Los Angeles County Federation of Labor, AFL-CIO.  She is the widow of the late Miguel Contreras, who formerly held the same position. 

Prior to leading the federation, Durazo was the elected president of the hotel workers union UNITE-HERE local 11, and built it into one of the most active unions in Los Angeles County, according to NBI.  She became the first Latina elected to the executive board of HERE International Union in 1996 and eventually in 2004 she became executive vice president of UNITE-HERE International. 

She currently serves as chair of the Los Angeles Alliance for a New Economy, Mayor Antonio Villargaigosa’s appointee to the Los Angeles Economy and Jobs Committee, and as a member of the board of directors for LA Inc., and the California League of Conservation Voters.

Here is an introduction to the political operator members of the Think Long Committee:

Robert Hertzberg (DOB: November 19, 1954):  Hertzberg is a lawyer, businessman and community activist who served in the California Legislature from 1999-2002, including as Speaker of the California Assembly from April 2000 to February 2002. 

Hertzberg is currently the co-chair of the California Forward organization and is reported to have played a role in the selection of the Think Long Committee members.  He is also a partner with Mayer Brown LLP, a global law firm, a position in which he focuses on strategic government affairs.

Hertzberg lost a close race for Mayor of Los Angeles in 2005. 

Hertzberg has developed an expertise in renewable energy ventures.  Upon retiring from the State Assembly due to term limits in 2002, Hertzberg co-founded Solar Integrated Technology in South Central Los Angeles, with two partners.  In 2006, Hertzberg and his longtime friend, Edward J. Stevenson, formed a new renewable energy venture in the United Kingdom called Renewable Capital LLP, an investment firm in London to help finance alternative energy ventures.

Fortune Magazine called Hertzberg “the most contrarian guy in the renewable energy business” for his dedication to promoting his products in the poorest areas of the world, including South Asia and Sub-Saharan Africa.  The Los Angeles Times has named Hertzberg as “One of the Most Influential People in Southern California.” 

Hertzberg is a board member of the Los Angeles World Affairs Council, the Center for Governmental Studies, the Rose Institute of State and Local Government, and the California Center for Regional Leadership.  He is also a member of the Council on Foreign Relations, the Assembly International Relations Foundation, the executive committee of the Los Angeles County Economic Development Corporation, the executive committee of the Los Angeles Area Chamber of Commerce, the Homeland Security Advisory Council and the Board of Counselors for the University of Southern California School of Public Policy, according to NBI.    

Willie Brown Jr. (DOB: March 20, 1934):  Brown served over thirty years in the California State Assembly, spending 15 years as its Speaker, and then served as Mayor of San Francisco.

According to the New York Times, Brown became one of the country’s most powerful state legislators.  He nicknamed himself the “Ayatollah of the Assembly.”  His long tenure and powerful position in the Assembly were used as the focal point of California’s initiative campaign to limit the terms of state legislators, which passed in 1990. 

Brown has a reputation for his ability to manage people and is also a prolific fundraiser.  The New York Times reports that Brown estimates that he raised close to $75 million to help elect and reelect state Democrats.  Critics, including the San Francisco Chronicle, have raised ethical concerns about political patronage during Brown’s tenure as Mayor of San Francisco.

Since leaving office, Brown has written a daily newspaper column for the San Francisco Chronicle, hosted a daily radio program in San Francisco, and is a regular commentator on the national cable news network MSNBC.

Gray Davis (DOB: December 26, 1942):  Davis served as California’s 37^th Governor from 1999 until being recalled in 2003.  Davis also served as California Controller and Lt. Governor.  Davis currently serves as counsel in the Los Angeles law office of Loeb and Loeb, where he provides strategic advice to clients on numerous matters. 

Davis is a former California State Assemblyman and served as executive secretary and chief of staff to Governor Edmund G. “Jerry” Brown Jr. from 1975 to 1981.

During his time as Governor, Davis made education his top priority and California spent $8 billion more than was required under Proposition 98 during his first term.  Also as Governor, Davis signed the first law in the nation to reduce global warming and greenhouse gases and was the first to establish the nation’s most ambitious commitment to renewable energy by creating the statewide Renewable Portfolio Standard, according to NBI. 

Davis began his tenure as Governor with strong approval ratings, but those ratings declined as voters blamed Davis for the California electric crisis and the California budget crisis that followed the dot-com bubble bust.

Condoleezza Rice (DOB: November 14, 1954):  Rice is a Stanford University professor and former U.S. Secretary of State.  Rice served as Secretary of State in the Bush Administration from 2005 to 2009 and was President Bush’s National Security Advisor during his first term, according to NBI. 

Prior to joining the Bush Administration, Rice was a professor of political science at Stanford University where she served as Provost from 1993 to 1999.  Rice also served as the Soviet and East European Affairs Advisor to President George H.W. Bush during the dissolution of the Soviet Union and the German reunification, according to NBI. 

In March 2009, Rice returned to Stanford University as a political science professor and the Thomas Barbara Stephenson Senior Fellow on Public Policy at the Hoover Institution.  In September 2010, Rice became a faculty member of the Stanford Graduate School of Business and a director of its Global Center for Business and the Economy, according to Stanford University. 

Rice has served as a member of the boards of directors for the Chevron Corporation, the Charles Schwab Corporation, the William and Flora Hewlett Foundation, the University of Norte Dame, Hewlett Packard, the Carnegie Corporation, and the Rand Corporation, among others, according to Stanford University. 

George P. Shultz (DOB: December 13, 1920):  Shultz currently serves as a distinguished fellow at Stanford University’s Hoover Institution and is a former U.S. Secretary of State.  Shultz is a labor and economics specialist, educator, author, businessman and international negotiator who has served under three U.S. presidents. 

He served as the U.S. Secretary of Labor from 1969 to 1970, as the U.S. Secretary of the Treasury from 1972 to 1974, and U.S. Secretary of State from 1982 to 1989.  Prior to entering politics, Shultz was a professor of economics at MIT and the University of Chicago, serving as Dean of the University of Chicago Graduate School of Business from 1962 to 1969. 

Shultz was an advisor for George W. Bush’s presidential campaign during the 2000 election, and senior member of the so-called “Vulcans,” a group of policy mentors for Bush who also included Dick Cheney, Paul Wolfowitz and Condoleezza Rice. 

Shultz was chairman of the California Governor’s Council of Economic Advisors under Governor Schwarzenegger, advisory council chair of the Precourt Institute for Energy Efficiency at Stanford University, chair of the MIT Energy Initiative External Advisory Board, and chair of the Energy Task Force at Hoover Institution, according to Stanford University. 

Matthew Kipling Fong (DOB: November 20, 1953):  Fong, a Republican and fiscal conservative, is a businessman and former California State Treasurer.     

In 1991, California Governor Pete Wilson appointed Fong to the State Board of Equalization and he served as its vice chairman.  He was elected California State Treasurer for a four year term beginning in 1995.  In 1998, Fong unsuccessfully challenged incumbent California Senator Barbara Boxer. 

Fong is currently an attorney for the international law firm of Sheppard, Mullin, Richter and Hampton, according to NBI. 

Here is an introduction to the business executive members of the Think Long Committee: 

Gerald Parsky (Born: 1943):  Parsky is a partner and the chairman at Aurora Capital Group which is a Los Angeles based investment firm that he founded in 1991.  The firm specializes in the acquisition of companies.  Parsky has a long history as a Republican operator and fundraiser and most recently served as the chair of the Committee on the 21^st Century Economy for Governor Arnold Schwarzenegger.  That committee completed an examination of the state’s tax system and recommended a series of changes. 

He is also an advisor at Jacobson Partners, according to Bloomberg.com.  Parsky also serves on the investment committee of Aurora Resurgence, a Los Angeles based private equity firm that invests in the debt and equity securities of struggling middle market companies, according to Bloomberg.com.

According to a report by the San Francisco Chronicle, Parksy “began making his connections in the 1970s, when he served as an assistant U.S. Treasury secretary for international trade under Presidents Richard Nixon and Gerald Ford.  While in Washington, Parsky befriended William Simon, then the Treasury Secretary, and future President George Bush, who at the time was chairman of the Republican Party,” states the report. 

Upon leaving Washington, Parsky spent 13 years at the Los Angeles law firm of Gibson, Dunn & Crutcher where he was a senior partner and member of the executive and management committees. 

“In 1986, he set up an investment house with Simon, his former boss and mentor at Treasury,” which was a partnership called WSGP.  The partnership was successful for a time but Simon quit in a bitter dispute.  In 1991, Parsky renamed the firm Aurora Partners and “he became a multimillionaire, buying a San Diego estate and commuting to Los Angeles in a private aircraft,” according to the San Francisco Chronicle. 

Then Parksy and his firm got more involved in GOP politics by making large political donations, including $75,000 to Governor Pete Wilson, $400,000 to various GOP soft money committees, and lesser amounts to a long list of other Republicans, including $10,000 to Texas Governor George W. Bush’s 1998 re-election campaign, according to the San Francisco Chronicle. 

“He brought in far more as a party fund-raiser.  According to published reports, as chair of the San Diego host committee, he raised $11 million to underwrite the 1996 GOP convention,” according to the Chronicle.  “In 1998, when Bush announced his California campaign team for his presidential run, he put Parsky in charge,” according to the Chronicle.   

He was appointed to a 12-year term as a Regent of the University of California by Governor Pete Wilson and was elected to serve as its chairman. 

Eric Schmidt (DOB: April 27, 1955):  Eric Schmidt is an engineer and chairman/CEO of Google.  Since joining Google in 2001, Schmidt has helped grow the company from a Silicon Valley startup to a global enterprise, according to Google.

Schmidt is a member of President Obama’s Council of Advisors on Science and Technology and chairs the board of the New America Foundation, according to Google.

Schmidt has become a billionaire based on stock options received from Google and is currently ranked the 48^th richest American on the Forbes 400 with an estimated wealth of $5.45 billion.  He has also started a foundation called the Eric Schmidt Family Foundation that seeks to address issues of sustainability and the responsible use of natural resources.   

Prior to joining Google, Schmidt was the Chairman and CEO of Novell and Chief Technology Officer at Sun Microsystems Inc., where he led the development of Java, Sun’s platform-independent programming technology.  Earlier in his career, Schmidt was a member of the research staff at Xerox Palo Alto and held positions at Bell Laboratories and Zilog.  He obtained a Ph.D. in computer science from the University of California, Berkeley, according to Google.      

Terry Semel (DOB: February 24, 1943):  Terry Semel is a business executive and the former chairman and CEO of Yahoo Incorporated.  Prior to joining Yahoo in 2001, Semel spent 24 years at Warner Brothers, where he served as chairman and co-chief executive officer. 

From the late 1970s to the late 1990s, he and his co-chair and co-CEO at Warner Brothers Robert Daly “were known as one of the most powerful duos in Hollywood, and were responsible for turning Warner Brothers from a successful movie studio into an entertainment giant,” according to the Encyclopedia of World Biography.  

In 2001, Semel was granted stock options with an SEC fair value of over $110 million as a bonus for joining Yahoo.  After joining Yahoo, Semel spearheaded a string of mergers and a creative organization to put Yahoo back in the game by 1994.  Between 2003 and 2006 he netted an estimated $450 million as a result of exercising stock options and selling stock, and another $350 million in 2007.  In June 2007, Semel resigned as CEO due in part to pressure from shareholders’ dissatisfaction over the amount of his stock options and performance. 

David Bonderman (DOB: November 27, 1942):  David Bonderman is a founding partner of TPG Capital, a private equity and venture capital firm, which was formerly Texas Pacific Group. 

In 2010, Bonderman was listed on the Forbes 400 list as the 221^st wealthiest American with a net worth of approximately $1.8 billion.  Prior to forming TPG in 1992, he was a partner in the law firm of Arnold and Porter in Washington, D.C. where he specialized in corporate, securities, bankruptcy, and antitrust litigation. 

He has previously served on the boards of directors of Washington Mutual, Inc., American Savings Bank, and Burger King Holdings Inc. Bondermann met co-founder James Coulter while working for billionaire Robert Bass.  He once worked for the U.S. Justice Department and also sits on the boards of the Grand Canyon Trust, Wilderness Society, American Himalayan Foundation and other environmental groups, according to Forbes Magazine.   

Eli Broad (DOB: June 6, 1933):  Broad is a philanthropist and art collector who lives in Los Angeles.  In 2009, Broad was ranked 93rd on the Forbes List for richest billionaires with a net worth of $5.2 billion. 

Broad founded two Fortune 500 companies, including KB Home and SunAmerica, Inc. but is not devoting his time, energy and resources to philanthropy with his wife of 54 years Edythe.  Broad got his start in homebuilding by building Kaufman and Broad homebuilding and then bought a life insurance company in 1971, SunAmerica, that was eventually transformed into a retirement savings empire, according to the Broad Foundation. 

“With the merger of SunAmerica into AIG in 1999—at the sales price of $18 billion—Eli Broad stepped down as CEO and turned his attention to full-time philanthropy,” according to the Broad Foundation.  The Broad Foundation is focused on “venture philanthropy,” according to the Broad Foundation. 

Today, the Broad Foundations, which include the Eli and Edythe Broad Foundation and the Broad Art Foundation, have assets of $2.1 billion.  “Their mission is to advance entrepreneurship for the public good in education, science and the arts,” according to the Broad Foundation.  In 2007, Eli Broad received the Carnegie Medal of Philanthropy.

Most Think Long Committee Members Are Wedded to Status Quo and Unlikely to Produce Reforms that Challenge the Political Status Quo

 The history of constitutional reform in California and other states proves that meaningful constitutional reform challenges the status quo and is inevitably opposed by the political status quo. (Source:  State Constitutions for the Twenty-First Century: The Politics of State Constitutional Reform)

As reviewed above, the Think Long Committee, on the other hand, is composed largely of members who either have benefited or currently benefit from the political status quo.  There are some exceptions to this rule such as Maria Elena Durazo, Antonia Hernandez, and Laura Tyson.

Former political leaders such as Gray Davis, Willie Brown, Matt Fong, Condoleezza Rice, Bob Hertzberg, and George Schultz, are no longer in power but still have significant ties to the political establishment which is a general proponent of the status quo.  Business executives and millionaires, such as David Bonderman, Gerald Parsky, Eric Schmidt, and Terry Semel, are also agents of the business community which supports the political status quo. 

The success of the Think Long Committee to produce meaningful and lasting constitutional reforms will be a function of its willingness to challenge the political status quo.   

Some existing political leaders may support some specific structural reforms, but as an institution, the Legislature and its political leaders would be highly unlikely to support a broad-based package of structural reforms.  To illustrate, in the mid-1990s, the California Legislature failed to approve a single recommendation of the Constitutional Revision Commission formed by Governor Pete Wilson, although a few of those proposals were approved more recently.       

“Particular interests with established legislative relationships and a stake in the constitutional status quo are likely to align with the legislature and against change,” wrote Gerald Benjamin, a political science professor at the State University of New York in his analysis of constitutional change in New York.   

The political leadership for structural reform has always come from outside groups or new candidates that champion reform, typically a candidate for Governor, because the existing political establishment only seeks to promote the status quo. (Source:  State Constitutions for the Twenty-First Century: The Politics of State Constitutional Reform)

The reason is that sweeping reform threatens the power of the existing political establishment.  Nobody has more to lose than those already in control of the existing system.  

Current political leaders have gained power by learning how to effectively manage the existing political system to their benefit.  Structural reform threatens the very roots of the system that is responsible for their rise to power and currently maintains their power. 

Reform Must Start with Reform of Political Institutions

California is suffering from a crisis in governance which results from the failure of its political institutions.  The public has lost faith in the institutions of state government, namely the executive and legislative branches of government, to effectively govern the state and effectively respond to the desires of its citizens. 

The failure of the state’s institutions to effectively govern has led to its inability to balance the state’s budget, and enact policies to reform several other areas of state government such as education finance, state-local finance, and health care, among others.  Government is perceived by the public to be inefficient and unresponsive to its citizens.            

The primary goal of the Think Long Committee and other constitutional reform efforts must to be to reform the institutions of government so that they are better able to govern and respond to the needs of its citizens.  This will inevitably require an examination of California’s institutions to produce significant structural and constitutional reforms. 

Once reformed, such institutions would presumably be more able to enact policies that effectively respond to the state’s citizens and provide for the long-term economic health of the state.  

According to its website, “The Think Long Committee for California aims to offer a comprehensive approach for repairing and renovating California’s broken system of governance while proposing policies and institutions vital for the state’s long term future.” 

“Unlike any other reform efforts, this fund will not support a single candidacy or a single issue but only those structural and constitutional changes that will break the present gridlock, make government more responsive and efficient while at the same time putting in place the incentives and institutions vital for California’s long-term future,” according to the Nicolas Berggruen Institute (NBI) website.    

The challenge of reform is made much more difficult because both California institutions and policies are in need of reform.  Moreover, many policy decisions have been written into the California Constitution in recent decades, most notably Proposition 13 and Proposition 98.  Thus, reform of California’s political institutions will be unsuccessful if it stops short of reforming the policies written into California Constitution which contribute to the gridlock in the state’s political institutions.

Most experts also agreed that some type of initiative reform is necessary to make it harder to permanently enact new policies that contribute to the dysfunction of the state’s political institutions. 

This is an enormous undertaking and past experience in California and in other states has shown that such a “comprehensive” reform effort takes a significant amount of time and resources.  Berggruen has acknowledged that he is committed over the long-term but given the enormity of the task at hand it is unlikely that the committee will produce “comprehensive” package by mid-2011. 

Think Long Committee Puts “Cart Before the Horse” on Constitutional Reform

Institutional reform and policy reform are closely intertwined due to the nature of California Constitution and political history.  A review of the 14-members of the Think Long Committee shows that the committee members were chosen for their knowledge of California’s political process and the policy outcomes that will make California competitive with other states and nations.

Unfortunately, the 14-member committee lacks the expertise in governance and constitutional issues necessary to produce a package of meaningful institutional reforms to accomplish the goals of the committee. 

Effective institutional reform should be the first and foremost goal of the committee but the committee lacks experts on institutional reform that can help it accomplish this goal.    Committee members do possess significant expertise and knowledge on many policy goals that would serve to improve the competitiveness of the California economy but this is a secondary goal that is dependent on effective institutional reform—effectively putting the “cart before the horse” on structural reform.    

The committee only has one political science professor, Stanford University Professor and former Secretary of State Condoleezza Rice, and does not have any members who are trained experts in structural reform issues.  The member with the most amount of experience in state structural reform issues is likely to be former Speaker of the California Assembly and co-chair of the California Forward effort, Robert Hertzberg. 

It is difficult to believe that the committee does not have Bruce E. Cain or Roger G. Noll as a member given that they are likely the two most seasoned and most well-published experts on constitutional reform in California.   Roger Noll, is professor of economics emeritus at Stanford University, and Bruce Cain, is a Heller Professor of Political Science at the University of California Berkeley.  Both Noll and Cain were members of the California Constitutional Revision Commission that undertook a two-year study of revision to the California Constitution from May 1994 to June 1996.  

Bill Hauck, president of the California Business Roundtable and chair of the Constitutional Revision Commission, was also not included as a member of the Think Long Committee.  

Think Long Committee Process Will Prevent Adequate Study and Creation of Necessary Constitutional Reform Package

Think Long Committee members have been quoted in the press as saying that they will meet four or five times in the next several months to put together a reform package for public review by mid-2011. 

Given that the committee held its first meeting in late October and is planning to release its proposals by mid-2011 or June 2011—that only gives the committee roughly eight months to construct its package of reforms.  This is simply not enough time to put together a comprehensive package.

It would be one thing if the committee was planning to meet several times a month but the committee is only supposed to meet four or five times.  In the mid-1990s the California Constitution Revision Commission held more than 30 public meetings over the course of two years.   

Conclusion

We hope the findings of this analysis turn out to be incorrect and the Think Long Committee is able to produce a significant package of structural and constitutional reforms to improve the governance of California. 

The goals of the committee and its founder Nicolas Berggruen are on point.  Unfortunately, the committee was not set up in such a way that is likely to facilitate the accomplishment those goals. 

The membership of the committee should include more independent experts with background and knowledge on structural reform issues and fewer members that are wedded to the existing status quo. 

The process the committee uses to produce its package of reforms also leaves much to be desired and fails to provide a significant role for the public and outside experts to impact the development of the reform package.

If nothing else, the committee will likely provide a topic of discussion on reform issues that is healthy for the state of California to undertake. However, any serious “comprehensive” reform effort will require a dramatically different approach to developing its reforms.

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The book is titled “Building A New California” and has chapter titles such as “Cleaning Up the Spending Mess in Sacramento,” “Create Jobs,” “Solve California’s Water Crisis,” and “Cut Government Spending.” 

Shortly after the primary, Whitman went on the air with a barrage of TV commercials attacking Jerry Brown for not having “a plan” to govern if elected.  Jerry Brown has since posted a series of brief memos to his website with titles such as “Education Plan,” “Clean Energy Jobs Plan,” and “Pension Reform.”  Most of Brown’s policy proposals lack depth and detail, similar to Whitman’s proposals.

With that said, the proposals offer the reader a glimpse of what each candidate proposes to try to accomplish if elected Governor in November on major issues such as job creation, pension reform, education, tax, budget, environmental, labor and immigration policy. 

This analysis seeks to compare and contrast the policy agendas of the two candidates. (Note:  Summaries of the two candidates’ policy proposals are now readily available on their campaign websites)

The reader must excuse the lack of detail and specificity in many of the proposals since the information was taken directly from materials posted online by the Whitman and Brown campaigns. 

Campaigns typically refrain from giving too much detail on policy proposals because the devil really is in the details.  Concrete policy plans are more divisive and easy to attack. 

Areas of Some Agreement: Job Creation, Public Employee Pension Reform, Death Penalty, and Abortion

Job Creation:  Both candidates have proposed job creation strategies but they differ significantly in their approach to how they advocate creating jobs.  Whitman has proposed a much more extensive, and expensive job creation to create two million new private-sector jobs by 2015.  The proposal advocates for a number of things including tax reduction, streamlining government regulations, ending lawsuit abuse, recruiting new industries, promoting green jobs, and reforming the California Environmental Quality Act (CEQA). 

In contrast, Brown’s proposal is less well developed and sweeping.  It is based on green job creation, cutting government regulations, manufacturing incentives, infrastructure development and job training.  Both candidates’ proposals lack specific details in many instances, particularly Brown’s proposals.  

Whitman proposes a number of tax reductions that are intended to increase job growth including a reduction in the capital gains tax, eliminating the sales tax on manufacturing equipment, increasing the research and development tax credit, establishing academic enterprise zones and extending the tax credit for the purchases of new homes.  For a detailed discussion of Whitman’s tax proposals click here.     

“On taking office, Meg will impose a moratorium on all new state regulations until a 90-day review of the economic impact and relevance of existing laws is completed,” states Whitman’s policy books.  Whitman proposes creating a one-stop shop for business licensing and issuing an executive order to require agencies, departments, boards and commissions to review their jurisdictional authorities to eliminate redundant functions and programs. 

Whitman proposes changing California’s workplace laws to prevent overtime from having to be paid to employees who work more than eight hours in a day and to provide for more flexible work schedules.  She also proposes extending the state’s $250,000 cap on punitive damages in medical liability lawsuits to other tort cases involving product liability and setting limits on lawyers’ contingency fees in class action lawsuits.  She also advocates reforming the “sue your boss” legislation and the California Environmental Quality Act (CEQA). 

Brown’s job creation calls for stimulating clean energy jobs and boosting renewable energy production.  “My goal is that by 2020, California should produce 20,000 new megawatts (MW) of renewable electricity, and also accelerate the development of energy storage capacity.  California can do this by aggressively developing renewable electricity at all levels: small, onsite residential and business systems; intermediate-sized energy systems close to existing consumer loads and transmission lines; and large scale wind, solar and geothermal energy systems.” 

“I will designate one person, directly accountable to the Governor, who will be responsible for ensuring that all energy jobs goals and deadlines are met,” Brown states. 

Brown advocates for the accelerated planning and construction of high-speed rail in California while increasing incentives and removing regulator/permitting hurdles for infill development near transportation and business hubs.

Brown proposes to create a “strike team” to focus on attracting, growing and retaining jobs in California.  “The team will respond to business inquiries, create incentive packages, cut through bureaucratic red tape, help facilitate business location and expansion, and act as a liaison between different state and local agencies involved in permitting.” 

Brown also proposes to “speed up regulatory processes and eliminate duplicative functions.”  He wants to speed up the permitting process for renewable energy projects and integrating new technology systems. 

Brown said he will “carefully review a range of incentives to encourage manufacturing jobs” such as accelerated depreciation and a sales tax reduction/elimination for manufacturing equipment.    

Pension Reform:  Perhaps the area of closest agreement between the two candidates is their agreement on the need to enact public employee pension reform.  Both candidates believe that pension benefits need to be reduced and the retirement age needs to be raised—which would involve moving to a two-tiered retirement system. 

Brown says that as Governor in 1982 he signed SB 1326 into law which called for a two-tiered retirement system to reduce overall pension costs.  Specifically, Brown advocates preventing pensions spiking by basing pensions on the average of the last three years of salary, not just the final year, and renegotiating the current pension formulas of public employees. 

“We should require employees to work longer and to a later age for retirement benefits,” Brown states in his pension proposal.      

Brown also proposes to increase employee contributions for all employees, prohibit pension “holidays, establish independent actuarial oversight of pension funds, and increasing pension board standards and accountability.  We must consider extending vesting periods to qualify for retiree health care and also negotiate greater employee contributions to retirement health plans,” Brown states.    

Whitman proposes keeping the existing defined benefit pension plan for current state workers but adopting a “more flexible  401 (k)-style defined contribution plan for new hires.  Whitman also proposes raising the retirement age for receiving full benefits from 55 to 65 for most state employees who work outside the public safety sector and believes in longer vesting periods and a prohibition on pension spiking. 

Death Penalty:  Both candidates support the use of the death penalty.

Abortion Rights:  Both candidates say they are pro-choice and support abortion rights for women.  The Brown Campaign questioned Whitman’s stance on abortion earlier this month for sending out a flyer saying that she “opposes federal funding of abortion and partial birth abortion” and “supports parental notification.” 

Candidates Differ of Major State Policy Issues Including Education, Budget, Tax, Environmental, Labor and Immigration Policy

Education Policy:  Both candidates agree that the quality of the state’s education system is key to the long-term growth of the state’s economy but have differing views on how to improve the state’s education system.  

Both candidates advocate collapsing the state’s categorical grants for education into fewer funding streams, which has been popular in the Legislature in recent years, and advocate for more local control but the agreement on education policy between the candidates appears to end there.

“Only 60 percent of education spending in California actually reaches the classroom,” according to the Whitman policy booklet.   

Whitman proposes to “Collapse the state’s more than 50 categorical grants, many of which are duplicative and far too prescriptive, into simplified grants for special education, rewarding outstanding teachers and schools, and other programs that contribute to greater student achievement.  The remaining state funding will flow directly to local school districts in the form of a unified block grant that can be used as local administrators, principals, teachers and parents deem best.” 

Whitman advocates eliminating California’s cap on charter schools and instituting a system that grades the state’s schools A-F so parents can easily understand how well their children’s school is performing.  “If a school receives an F grade, the parents in that school district can immediately petition to turn the school into a charter school.  It would only require a fast-track election and a simple majority vote to change the status.” 

Whitman also proposes investing $1 billion in the University of California and California University systems to be paid for from the savings in her welfare and budgetary reforms.

Brown “calls for a major overhaul of many components of the postsecondary system.  We need to convene a representative group to create a new state Master Plan.”   

“The introduction of online learning and the use of new technologies should be explored to the fullest, as well as “extended University” programs,” Brown states. 

Brown also advocates for an overhaul of the state’s testing programs.  “These tests should be reduced in scope and testing time, and the results need to be provided to educators and parents far more quickly.  These year-end tests should be supplemented by vary short assessments during the school year…Finally, state tests should be linked to college preparation and career readiness, but current tests were not designed to do this.” 

Brow proposes to “change school funding formulas and consolidate most of the 62 existing categorical programs…we should implement a simple pupil weighted formula based on specific needs of the students in the school district.” 

Brown also calls for recruiting additional teachers from the top third of our high school graduates and having local school districts play a role in alternative teacher preparation by offering apprenticeships that combine university coursework with extensive classroom experience. 

The Brown education proposal proposes to “simplify the education code and return more decision-making to local school districts” by giving school districts “more flexibility in how to best meet state standards.” 

Tax and Budget Policy:  Perhaps the greatest area of difference between Whitman and Brown is on tax and budget policy.  For 2010-11, the state faces a $20 billion budget shortfall which state lawmakers have yet to close despite a record length of negotiations. 

Whitman proposes $15 billion in state budget spending reductions, coupled with an estimated $10-13 billion in tax cuts—for an estimated 1/3 reduction in state General Fund spending (Note: state general fund spending in 2009-10 was approximately $86 billion).  Whitman has not been specific on where such massive spending reductions will come from and it is likely that education would have to bear a significant portion of the reductions given that state education spending comprises just under 50% of General Fund spending. 

Whitman proposes reducing the state workforce of 356,000 by 40,000 workers.   

Brown has not submitted a proposal on how to solve the state’s budget crisis but has said that he would not support general tax increases unless they are approved by a vote of the people.  He has not advocated for a significant downsizing of government as Whitman has proposed. 

Whitman is opposed to Proposition 25 on the November ballot which would lower the vote requirement to pass a state budget from a 2/3 vote to a majority vote.  “Meg will oppose any attempt to repeal California’s requirement to have a two-thirds majority in the Legislature to pass a budget agreement or tax increase.  Lowering the threshold to a simple majority is nothing more than a license for Sacramento to raise our taxes,” according to Whitman’s policy book.   

Whitman proposes enacting a “strict spending limit based on the state’s Gross Domestic Product.”

Brown has endorsed Proposition 25, according to the San Francisco Chronicle.  “It’s not a cure-all but I say yes, the majority rules in this country that’s the budget, not taxes,” Jerry Brown said last month on the television show “Good Day LA,” according to a San Francisco Chronicle report. 

“Even if Prop. 25 fails, Brown says he has a plan: bring all 120 legislators together the day after the election, work on the budget nonstop and if that doesn’t produce an agreement, tell both parties to present their best offer.  He’d then come up with his own budget, call a special election and submit the competing proposals to voters,” according to the Chronicle report.  Brown repeated this pledge in the September 28^th debate at UC Davis.    

Environmental Policy:  Another major area of disagreement between Whitman and Brown is on environmental policy.  Both candidates have came out in opposition to Proposition 23 which would suspend California’s landmark program (AB 32, Pavely/Nunez) to combat global warming until unemployment reaches 5.5% for a full year—a mark hit only three times in the past 30 years. 

But Whitman appears to have somewhat of a contradictory position on the measure because she officially opposed Prop. 23 last month but has extensively criticized the measure in the past. 

Specifically, Whitman proposes a one-year moratorium on the AB 32 regulations to examine the impacts of the measure on jobs and the economy.  According to the Brown campaign, Whitman stated that if she were currently governor and the bill landed on her desk, she would veto it.  Whitman has previously vowed to suspend key measures of the law and called AB 32 a “job killer.” 

Brown strongly supports AB 32 and opposes any suspension or repeal of the landmark law.  Brown also proposes reducing dangerous emissions in the air we breathe by promoting more hybrid, electric and alternative fuel vehicles, developing alternative fuels, and strengthening enforcement to get the dirtiest vehicles off the road.  Brown briefly outlines a number of other environmental initiatives without giving much detail about the specific proposals, including protecting the coastline and ocean resources, reducing dangerous toxic chemicals, protecting parks, open spaces, farmland, and wildlife and building livable communities.

Both candidates have issued proposals to promote green jobs and clean energy.  Brown’s proposal was discussed in the jobs creation section above. 

Whitman says she supports California’s 33 percent renewable portfolio standard and supports building adequate transmission infrastructure to meet the needs of these renewable resources. 

“Meg will impose tougher financial penalties and more rigorous enforcement of California’s environmental laws that are deemed to be effective by her 90-day regulatory review and sunset commission.” 

Whitman says she will “promote clean-air transportation policies…these policies will reduce traffic congestion, increase the federal government’s investment in new port infrastructure, and provide loan guarantees and tax incentives for port electrification, including electric trucks and new technologies for road and rail transportation.” 

“Meg opposes any new drilling off California’s coast until new technologies can be completely proven to minimize the environmental impact of extracting oil and gas reserves,” according to the policy booklet. 

“Meg will modernize the California Environmental Quality Act (CEQA).  While protecting California’s environmental standards, Meg will work to update the law to ensure that vital infrastructure and energy projects are not stalled due to redundant reviews and overly bureaucratic processes.” 

“As we continue to diversify our electricity supply while reducing greenhouse gas emissions, we should not shut the door on nuclear energy…Nuclear energy, which does not emit C02, should be considered,” according to Whitman’s policy book.       

Other Miscellaneous Differences Between the Candidates

“Pay Check Protection”:  Whitman supports the so-called paycheck protection measures which require union employee permission to use union dues for political purposes.  Brown is not listed as supporting such measures.    

Part-Time Legislature:  “Meg will support a constitutional amendment that would turn California’s full-time Legislature into a part-time Legislature with a greatly reduced salary,” according to Whitman’s policy book.  Brown is not listed as supporting a part-time Legislature.    

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Proposition 26 increases the legislative vote requirement from a majority to a 2/3 vote for new and increased state and local fees and charges, with specified exceptions (e.g. parks fees, some development fees).  Prop. 26 would also require a vote of the people for fees levied by local governments.  But it is difficult, if not impossible, to determine exactly what fees would remain a majority vote and what fees would become a 2/3 vote. 

What is known is Prop. 26 would require a 2/3 vote for fees that provide “public” benefits that extend beyond the regulated industry such as fees on oil companies for oil spill protection and response and fees on tobacco companies to pay for anti-smoking programs.  

Click here for a summary of the fees and charges, compiled by the Yes on Prop. 26 Campaign, that would be affected if Prop. 26 passes.  The more than $4 million raised to date in support of Prop. 26 has been raised almost exclusively from oil, tobacco and alcohol companies who would directly benefit if Prop. 26 passes. 

“Since the Air Resources Board has already adopted a small fee to pay for its administrative costs for AB 32 (although they have not started to collect it yet), I don’t think that would be repealed by 26, but 26 probably would be an insurmountable obstacle to enacting the much larger and more important charges on greenhouse gas emissions that will be necessary to pay for the transition to cleaner energy sources,” said Bill Magavern, a spokesperson for the Sierra Club California. 

Magavern said another victim would be the state’s Green Chemistry Initiative, which was enacted in 2008 with the signing of AB 1879 (Feuer) and SB 509 (Simitian) to reduce or eliminate hazardous chemicals in our products and the environment.  The program was passed into law in 2008 but “currently lacks dedicated funding and should be funded by fees on toxic chemicals,” Magavern said.  

Prop. 26 Drafting is Legally Ambiguous and Likely to Result in a Flurry of Litigation if It Passes

Several analyses of Prop. 26 have pointed out that it is difficult to assess what fees are affected and would likely result in a wave of costly litigation if the measure passes.

“There are a number of unknowns about the measure that seem certain to generate litigation,” according to an analysis by Colantuono and Levin, PC—a California law firm.  The analysis notes that it is unclear what Prop. 26 means when it says that a fee must be proportionate to the benefit from or burden on a service or program with which a fee is imposed. 

“How much of the traditional cost of a regulatory program is now permitted to be covered by regulatory fees is now in question, especially as to rule-making by regulators—such as the advance planning services of local planning agencies,” states the analysis. 

“As written, Prop. 26 could potentially increase the legislative vote requirement for a broad array of measures that are unrelated to taxes and fees,” according to an analysis by the California Budget Project.  The measure states that “any change in state statute which results in any taxpayer paying a higher tax” would require a 2/3 vote which could include minimum wage increases and changes in other state regulations seemingly unrelated to tax policy.   

“It is so broad and so poorly written that it will negatively affect virtually every area of state and local government…It would become virtually impossible to make businesses pay for the costs they impose on taxpayers,” according to an editorial by the San Francisco Chronicle.  

Prop. 26 as a Back Door Way to Curbing Effective Implementation of AB 32

AB 32 is largely funded with fee revenue and is currently at a major turning point that will require the implementation and collection of significantly higher fees to fund the implementation and enforcement of the Air Resources Board’s (ARB) scoping plan to reduce greenhouse gas (GHG) emissions to 1990 levels by 2020, as required by the landmark 2006 bill. 

Prop. 26 risks undermining the implementation and enforcement of AB 32 by requiring a 2/3 vote on all legislation which seeks to clean-up and improve the implementation of AB 32.  Republicans largely oppose AB 32 and are highly unlikely to vote for any legislation to fund the program.   

For example, AB 1405 (De Leon) is  a piece of follow-up legislation that directs a minimum of 10% of the fee revenues generated pursuant to AB 32 (Nunez) to a Community Benefits Fund (CBF) to be awarded by the Secretary for Environmental Protection to benefit disadvantaged communities.  This bill, which would be repealed if Prop. 26 passes, passed the Legislature last month and is currently awaiting action by the Governor.  There is bound to be much more follow-up legislation to AB 32 in the years to come that will be supported with fee revenue.     

Under the legislation, the ARB is required to adopt additional regulations by January 1, 2011, to be enforceable by January 1, 2012, to achieve the GHG emissions reduction goals established by AB 32, which may include “market-based” compliance mechanisms (i.e. the sale of carbon permits through a cap and trade program).

AB 32 authorized the Air Resources Board to adopt via regulation a schedule of fees to be paid by the sources of greenhouse gas emissions and deposits the revenues into the Air Pollution Control Fund. 

Thus far ARB has proposed only to use its fee authority for the limited purpose of funding its own and other state agencies’ costs to implement AB 32, and to repay loans of other state funds that have previously been approved by the Legislature for these purposes.  The fee revenue estimated for these purposes is $55 million per year. 

According to the California Legislative Analyst’s Office (LAO) “the implementation of AB 32 will soon be at a major crossroads.  Already in the fourth year of implementation, the program’s initial stage of planning, regulation development, and regulation adoption is nearly complete.  (Regulations must generally be adopted by January 1, 2011.)  The focus of the program will soon naturally shift from regulatory development to implementation and enforcement.” 

“As such, the “base budget” funding requirements for the program in future budget years could be substantially different [higher] than the program’s current funding requirements,” according to the LAO.

Prop. 26 Would Immediately Blow a Billion Dollar Plus Hole in the State Budget

The passage of Proposition 26 would also blow a $1 billion plus hole in the 2010-11 budget because it rolls back state fee increases that have been passed since January 1, 2010, of this year, including fee increases in the still yet to be passed budget proposal. 

“Any state law adopted between January 1, 2010 and November 2, 2010 that conflicts with Proposition 26 would be repealed one year after the proposition is approved.  This repeal would not take place, however, if two-thirds of each house of the Legislature passed the law again,” states an analysis of Proposition 26 by the LAO. 

The LAO states that the measure would repeal the complicated fuel tax swap approved in the spring of 2010 that would save the state’s General Fund $1 billion annually.  Prop. 26 would also repeal the myriad of hundreds of millions of dollars in new fees included in the Budget Conference Committee version of the budget including fees for in-home support services, tax collection recovery, alcohol beverage control, court and Department of Justice fees, and water and energy fees to fund government regulation.  These fees are likely to be part of any budget agreement reached in the coming weeks.         

Prop. 26 May Impact Implementation of Health Care Reform Legislation

Proposition 26 may also prevent funding for legislation recently signed by Governor Arnold Schwarzenegger and future legislative measures to implement the federal health care reform legislation because most of this legislation is funded with fee revenue.

A number of health advocates and policy advocates were asked to comment on this impact but none were able to say with certainty what fees would be included; many did not respond to the request for comment.  

On September 30 the Governor signed AB 1602 (Perez) and SB 900 (Alquist) which are complementary measures that establish a new health insurance exchange, a core element of the new federal health reform law.  In 2014, the new exchange will be the new one-stop shop for getting health coverage for individuals and small business.  The exchanges are required to be self-sustaining by 2015 and are allowed to charge assessments or user fees to participating health insurance providers or otherwise generate funding to support their operations. 

It is possible that this bill would not qualify for a 2/3 vote under Prop. 26 but it is clear that other bills related to the federal health care reform would be subject to a 2/3 vote if Prop. 26 passes.  For example, another major state health reform tax conformity bill, AB 1178 (Portantino), died in this last legislative session but is likely to resurface next year.  Prop. 26 would require a 2/3 vote for such legislation. 

AB 1178 would conform California law to certain provisions of the federal health care reform legislation (the Patient Protection and Affordable Care Act (PPACA) (Public Law 111-148, passed March 23, 2010) and the Health Care and Education Reconciliation Act of 2010 (CERA) (Public Law 111-152, March 30, 2010).  The bill also would conform California law to the federal treatment of health savings accounts, grant additional medical-related tax exclusions for health benefits, increase the adjusted gross income threshold for itemized deductions for medical expenses and disallow a deduction of an annual fee on branded pharmaceutical manufacturers, among other things.

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Political scientists on the right, on the other hand, support the 2/3 vote requirement because it restrains the size of government.  

University of California Berkeley professor of public policy John Ellwood said one school, of which he is a believer, believes that the immediate governance crisis–characterized by perpetual partisan gridlock over the passage of a state budget–can largely be solved by eliminating the 2/3 vote requirement to pass a budget and raise taxes and replacing it with a simple majority vote requirement.

A second school of thought believes that California’s governance problems cannot be solved by solving one problem and that a number of things must be addressed including the lowering of the 2/3 vote requirement, reform of the direct initiative process, term limit reform, and reapportionment reform.  Ellwood said Roger Noll, professor of economics emeritus at Stanford University, and Bruce Cain, Heller Professor of Political Science at the University of California Berkeley, are believers of the second school. 

All of the academics interviewed for this article are widely accepted to be among the foremost experts in California politics.  Ellwood specializes in financial management and public sector budgeting at Goldman School of Public Policy at the University of California, Berkeley.  Ellwood has served as a staff member of the U.S. Senate Budget Committee and was a member of the original management team of the Congressional Budget Office (CBO).

Noll is a Senior Fellow at the Stanford Institute for Economic Policy Research, where he directs the program in regulatory policy.  Cain is the director of the Institute of Governmental Studies and director of the University of California Washington Center, based in Washington, DC.     

Proposition 25 on the November ballot would lower the legislative vote requirement to pass a state budget from 2/3 to a simple majority, but retain the state’s 2/3 vote requirement to increase taxes. 

Left-Leaning Political Scientists Agree that California’s 2/3 Vote Requirement is “Backwards”, Political Scientists on the Right Support the 2/3 Vote Requirement

Roger Noll said “the problem is that John [Ellwood], Bruce [Cain] and I represent the range of views on the left 55% of the political spectrum.  The right 45% loves the 2/3 vote requirement because, they believe, it reduces the size of government.”

Cain said a consensus of conservative political scientists would likely “agree in principle that a majority vote is best but do not trust the legislature, and so are reluctant in this instance to favor the majority vote.”

A number of conservative academics were contacted to submit comments for this article but none of them submitted comments prior to the article deadline. 

“I think that most academics believe that the process of amending the constitution through the initiative is too easy, but some of these do not oppose the 2/3 vote requirement.  The standard position for moderate Republicans is that the initiative process should have tougher standards, but the 2/3 requirement is desirable,” Noll said, noting that he was answering the question as an economist who does some work in political science.      

“You are correct to note that there is a consensus among academics that the 2/3 rule is “backwards,” while conservatives (including conservative academics) oppose this change because it might lead to bigger government,” said Thad Kousser, an associate professor of political science who is spending the 2009-10 year at Stanford University working on California constitutional reform. 

“But I think it is important to note that us lefties don’t support shifting to a majority rule on the budget because it will lead to bigger government—in fact, most of us doubt that it will lead to much higher spending.  I think the major justification is that it allows budget deals to happen more quickly, and for the final deal to represent what the median voter wants.  It’s about representation and the lack of gridlock, rather than a preference for larger government,” Kousser said. 

At a budget forum hosted by the University of California Berkeley last year, Henry E. Brady, professor of public policy and Dean of the Goldman School of Public Policy at the University of California at Berkeley, says we have it backwards in California because the state constitution requires a 2/3 vote for budgets and taxes, which are every day business for the Legislature, but allows major constitutional changes such as Prop. 13 to be passed on a majority vote of the people (click here for a link to the budget forum). 

“Right now you can change the rules of the game, as Proposition 13 did, with only 50% plus one person.  Most political scientist say if you are going to change the rules of the game that should be hard, you should not make that too easy because that is going to mess things up often,” Brady said. 

“Most political scientists, including all that I know, say this is just backwards.  We got it backwards,” Brady said. 

Kousser agrees that California has the vote requirement backward, noting that “another way to make the argument the current system is backward is to compare it to the federal system, where the filibuster puts a supermajority hurdle in front of policy legislation but the budget resolution and reconciliation are passed on a simple majority vote, because it is so important that the nation has a spending plan.”

Brady said that the California Republican party represents vanishing demographics and Republican lawmakers can only survive by playing to their base and standing tough on taxes.  “I think they are doing the right thing from their perspective.  It is a short term strategy.  In the short term it is going to keep them in office for a while longer.  So they have every incentive to keep doing what they are doing,” Brady said. 

Brady said the solution is to repeal portions of Proposition 13, especially the 2/3 vote requirement for taxes and budget.  “Perhaps going to something like a 60% vote would at least make it possible to get decisions made and to move forward,” Brady said.  

First School:  Replace 2/3 Vote Requirement for Budget and Taxes With a Majority Vote         

“I have one change I want to do, I want to get rid of the 2/3 vote to raise taxes and pass a budget.  I think that it would reintroduce politics, not that it would give you nirvana…it would lead to some bad policies, but it would force both sides to actually grapple with the real issues which they don’t have to now,” said Ellwood.

Ellwood believes that getting rid of the 2/3 vote requirement would largely fix the partisan gridlock that paralyzes the state legislature every year over the budget and taxes. 

Ellwood said that if California gets rid of the 2/3 rule, the state would go back to rules had in 1977, prior to the passage of Prop. 13, when California was a big government state.  “Prior to Prop. 13 California was a very high tax, very high service state.  Its tax burden was third highest in the county.  Now California is a high tax burden, high service state.   Its state and local tax burden (measured as a percent of personal income) is somewhere between 15^th and 20^th among the states,” Ellwood said.  Click here for a CA Budget Project chart about how CA’s tax burden compares to other states. 

“If we went to a simple majority to raise taxes in all likelihood the Democrats would raise taxes to solve California’s budget problems.  They would over reach.  They would get thrown out of office and the Republicans would have their best chance of gaining a majority in the Legislature,” Ellwood said.   

“Now the Democrats can propose anything because they know that with the Republican veto nothing will pass.  And the Republicans know that they can get away with simply saying no,” Ellwood said, adding that “nothing gets done either way” and we are just stuck with gridlock. 

“The problem is, I’m not sure the voters want it,” Ellwood said, noting that Proposition 56, which proposed a 55% vote for a budget and taxes was handily defeated in the early 2000s. 

 “If you have a supermajority to raise revenues in an American state, your state and local revenue burden is 8% points lower than it would otherwise be,” Ellwood said, citing this as one of the conclusions reached in a 2003 study by Timothy Besley and Anne Case titled “Political Institutions and Policy Choices:  Evidence from the United States.”    

“For those of you who are conservatives you should love the 2/3 vote because it leads to smaller government.  It might lead to inefficiencies but it is effective and that is the problem.  People are acting rationally.  We have to figure out a way of breaking out of this or live with the consequences that we have now,” Ellwood said.

Eliminating 2/3 Vote Would Empower Governor

“Eliminating the 2/3 vote requirement mainly empowers the Governor (by bringing back the veto as something that matters—it does not matter now because by the time the budget passes the legislature has a veto-proof majority,” said Professor Noll.

“California’s normal state of affairs is to have a Democratic legislature and a Republican Governor.  Under a simple majority, the most likely result is that a budget bill is passed on time, then vetoed, then a failed veto override, and then the gridlock we know and love,” Noll continued. 

“At present the Democrats in the Legislature probably could make a deal with the Governor that he would not veto and that would not get Republican votes in the Legislature, but I would not rely on this as a normal state of affairs,” Noll said.        

Second School of Thought:  Broader Series of Reforms Needed to Restore California Governance

Ellwood said a second school of thought exists that believes California’s governance problems cannot be solved by solving one issue and that a multitude of things must be addressed including the lowering of the 2/3 vote requirement, term limit reform, initiative process reform, pay as you go budgeting, and redistricting reform, among others. 

Professor Bruce Cain said he is a member of the second school but would “qualify this by saying that all of these things that are easy to do (e.g. pay-go, majority vote on budget) are less important than the things that are politically harder to do (e.g. initiative reform, term limits reform).  

“First, changing the budget vote to a majority is better than doing nothing but it would be far, far better to change the tax vote to a simple majority as well,” Cain says. 

Cain said the state needs to fix the fiscal problems and adopt measures to restore legislative competence.  Specifically, he says the six most important things to do are: 1) ballot box budgeting reform which only allows statutory fiscal measures to be passed by initiative and allow the legislature to amend the measures after a time, 2) take existing fiscal policy measures out of the constitution, 3) make all budget decisions that violate the pay-go automatic referendas, 4) end the statewide 2/3 vote provisions on local expenditures, and make every local jurisdiction responsible for adopting its own taxing rules, 5) provide for 12 year term limits to be served in either house, and 6) mandate serious oversight activity by the legislature.   

“I agree that I’m in the second school.  I think the larger series of comprehensive changes that you list me as supporting are important to address the range of problems in California today.  I also think that pushing multiple changes at once—especially paired changed in an area that attempts to strike an ideological balance—is important both for the political prospects of reform and for their policy consequences,” Kousser said.  Kousser recently wrote a paper that pitches a change that could help conservatives, eliminating majority party control over the suspense file, that could be paired with eliminating the 2/3 rule, with both united by the principal of majority rule.   

At budget forum held at UC Berkeley last year titled “What Ails California?, Kousser suggested a series of reforms that include initiative reform, term limit reform, and changing the 2/3 vote requirement to a simple majority or 55% vote. 

Kousser said California should end “ballot box budgeting” in the initiative process by requiring initiatives to identify a funding source.  He said Arizona does this and that 75% of Californians support this idea, according to a recent Field Poll. 

Kousser said term limits needs to be changed so that legislative leaders in charge of the budget in boom years will have to face the consequences in the bust years.  He suggested that term limits be set at 12 years overall, which could be served in the Senate, Assembly or combination of both houses. 

Lastly, the state’s 2/3 vote requirement to pass a budget should be reduced to a simple majority or 55% vote to reduce gridlock. 

“The only revision that I’d suggest is that I don’t see many academics pushing for redistricting reform, because I think the literature is very clear that redistrictings are not what have made districts so much safer in recent decades, and that states with commissions do not have more competitive elections,” Kousser said. 

USC Professor Roger Noll, said political scientists on the right “also love the initiative because the ideological distribution of people who vote is right-skewed compared to the distribution of the total population and the Democratic majority in the state legislature (whose districts are based on population and not just voter turnout).”

“I believe that the initiative process is the fundamental problem, partly because it creates inflexible budgets and partly because it creates bad institutions.  The problems that Thad listed are all products of initiatives,” Noll said.

“I also believe that the recent reforms of the primary process will help some, but they are not a cure.  The 2/3 vote requirement would not be such a hurdle if the parties were less polarized,” Noll said.

“More fundamentally, the initiative has created inflexibility in both revenues and expenditures beyond the 2/3 vote requirement.  These also typically require a 2/3 vote to overcome.  These 2/3 vote requirements also could be eliminated, but that amounts to either repealing these initiatives or letting the Legislature override constitutional amendments by a simple majority, both of which do not seem plausible to me,” Noll said.

Alternative View:  California is Too Large and Too Diverse to Be Governable

“Although I am not of this persuasion, another view is that California is too large and too diverse to be governable.  The mix of taxes and policies that make the Bay Area happy will never be acceptable in the Central Valley, and vice versa,” Noll said.

“In addition, unless one wants to have a huge Legislature, Legislative districts are too large, which leads to a greater emphasis on name recognition and causes campaign finance to be more important—meaning that Legislators will be excessively responsive to organized interests in their districts.  To these people, the only real solution is to divide the state,” Noll said.