Columns

Annie Rosa

Billionaires’ Blueprint
Creating Big Buzz

January 16, 2012

Here’s what’s going on in a land far away but not so far apart from the Mitten …

It sounds like a great set-up for a punch line: What do you get when you put former Secretary of State Condi Rice, Google’s Eric Schmidt, former Governor Gray Davis, statesman George Shultz and homebuilding tycoon Eli Broad in a room together?

While I’m sure the Occupy Wall Street folks could come up with some zingers, the actual result of this bizarre collaboration is a bold new vision designed to fix California’s broken state government. The elite group has been dubbed the Think Long Committee for California, and they’re the latest lot of bipartisan, would-be reformers to stir up buzz in the Golden State.

Billionaire investor Nicolas Berggruen founded the Think Long Committee. Famous for working on constitutional reform and for being technically homeless (he eschews home ownership in favor of traveling the world and staying in hotels), Berggruen has plenty of connections in Sacramento yet maintains an outsider status. He has committed $20 million toward the committee and its aims.

The assembled panel of insiders conducted exhaustive meetings with experts to address a litany of issues plaguing the state. Then in November it released its much-anticipated A Blueprint to Renew California, a package of some of the most provocative reform ideas in years.

A fundamental goal is to get a $10 billion tax hike initiative on the state’s 2012 ballot. Needless to say, it has gotten people talking.

The report offers three core prescriptions for the state:

1. Empower Local Governments and Regions – “While the committee embraces
   the principles of decentralization, devolution and realignment of revenues and
   responsibilities, we have not endeavored to propose precisely how that should be
   accomplished.”

Hmm…that last part is a bit troubling. Not the strongest start. What else?

2. Strengthen Accountability – “The Citizens Council For Government
   Accountability — an independent, impartial and non-partisan body — would be
   established to develop a vision encompassing long-term goals for California’s
   future.”

The Committee likens this new council to an independent citizen’s watchdog group, a “non-political quality-control body” that “will ensure that California taxpayers get their ‘return on investment.’” The council would be tasked with both developing a long-term vision and providing oversight and standards for all levels of government. That’s a tall order!

The council would have subpoena power and be able to put initiatives directly on the ballot without going through the hassle of collecting signatures. It would function as a check against the short-term politics that rule Sacramento. That sounds good in theory, but critics are objecting on the grounds that it’s essentially just another government agency/super committee with an overly broad mandate. And we all know how well that last super committee experiment worked out.

3. Restructure California’s Tax Code

While technically keeping intact the state’s progressive tax system, this proposal amounts to an overhaul. Many agree drastic change is necessary at this point. But much dust has been kicked up on all sides about whether this is the right tax code makeover to actually improve the state’s financial well-being.

The Think Long Committee argues that, in addition to creating budget stability, this tax restructuring would improve the climate for businesses and boost funding for state programs key to California’s long-term economic growth. Major changes proposed include a reduction in personal income and sales tax rates and a new 5-5.5 percent tax on many services that are not currently taxed, with the exception of education and medical care. As you might imagine, this has ruffled a few feathers across the state.

The Blueprint concludes with a number of other proposed reforms concerning topics like the ballot initiative process, pensions, infrastructure, budget issues and education. The latter section has drawn strong reactions from the California Teachers Association, among others. The California Federation of Teachers is backing a labor union’s separate proposal for the November ballot.

The piece that may be the biggest test for voters is the $10 billion tax increase that the committee intends as investment in the state’s future growth, by aiding severely cut areas like schools and local governments.

Whether you agree or disagree with its remedies, the Think Long Committee’s report is a bold recommendation and it is changing the conversation here. It is proof that folks are getting more creative in tackling the persistent budget mess.

The committee generated a great deal of buzz and hope last fall, due to its comprehensive, big-picture approach rather than the obsession with polling and piecemeal strategies employed by some others. But the Blueprint already is drawing naysayers throughout the state. They will have to put up a sizeable fight to match Think Long’s bottomless pockets.

Not to be outdone, Governor Jerry Brown and a number of other parties focused on reform have been busy promoting their own state “fixes” — all aim to get their initiatives onto the November 2012 ballot. Which is perfectly ironic, since this state’s ballot-initiatives-on-steroids system is often vilified, and rightly so, as one of California’s most havoc-wreaking flaws.

Will the Think Long reform proposals turn out to be just another battle in the growing class warfare that’s dragging down the country’s political process? People are understandably wary of paying more taxes, and of the need for equity in the way the tax burden is distributed. It’s clear there are no easy fixes, but we won’t get anywhere close to solving these problems without taking some bold steps to advance the discussion.

At this point, with California’s perpetual crises making a joke of its government, any discussion is better than a punch line.

Annie Rosa lives and works in San Diego and sends dispatches back to her beloved Michigan.