“State of the State” Report Card

Last week Governor Jerry Brown tied Earl Warren for the number of State of the State addresses any governor has given.  While that is a personal milestone that he can be proud of, the content of his vision for California is infinitely more important.

California has major challenges and I for one don't believe in partisan games, but rather in trying to deliver results for our citizens.  So when I agree with the governor on an issue I give him kudos and when we disagree I lay out the case why he is wrong.

So I thought I would review his address and give him a grade.

The governor's general theme was the importance of fiscal responsibility, paying down debt and saving for a rainy day fund.  However, the lack of attention he dedicated to growing the economy and reforming public education was concerning.

Sacramento lawmakers seem to forget that California's net worth is negative $127.2 billion so if we don't take paying down our debts seriously, we will continue down a treacherous road. The governor's call for fiscal restraint must be our top priority and I join him in that fight to restrain unnecessary spending.

Regarding the state's debt load Brown advocates allocating $11 billion in new debt repayment, to immediately repay over $6 billion in school district deferrals and to eventually pay off the “wall of debt” by 2017-18.

Fiscal Responsibility grade - A:  Brown is committed to paying down the “Wall of Debt” although his wall of debt only includes short-term obligations.  The state is facing about $250 billion in unfunded liabilities for public employee pensions and health care costs.

Brown keeps touting the “California Comeback” due to the surplus dollars that the state has derived this fiscal year. This surge in revenue is temporary as it stems from the higher, temporary taxes from Prop 30 and a stellar year in the stock market.  Since this revenue increase won't be sustained, Sacramento leaders need to invest more surplus dollars into the rainy day fund in order to ensure education is properly funded when another economic downturn occurs.

The only way to climb out of our fiscal hole is to grow the state's economy.  California has some of the smartest and hardest working people in the world and Sacramento needs to either lead by investing in infrastructure and setting policies that encourage private investment, or it needs to get out of the way and “cease and desist” in layering regulation upon regulation choking entrepreneurs' dreams before they even launch.

Jobs/Economy grade - Incomplete: The governor failed to address any plans for rebooting the economy and getting Californians back to work. This year I hope he will engage the Legislature in an effort to keep the film and TV industry in Hollywood.  Also, I'm very concerned about the 600,000 manufacturing jobs we've lost over the last decade.  Small business creates two out of every three jobs and we need to be fostering a positive business climate.

Prop 30 was sold to voters as a way to save education and to get the Golden State back on track. Unfortunately, schools will only see about one third of the prop 30 dollars and the remaining funds will be diverted to the general fund to be used for non-education purposes.  On the bright side, the governor's budget projects a $9.7 billion revenue increase over the 2013, 2014 and 2015 budget years from Proposition 98.

Education grade - C:  Last year we passed the Local Control Funding Formula (LCFF) which was designed to give local school districts more flexibility and more money into the classroom. But any time you pass a major reform, there is a need to clean up mistakes, and school districts are already discovering glitches.  But the governor didn't acknowledge that or about efforts to implement the upcoming Common Core curriculum that is scheduled to be in classes beginning in the 2015-16 academic school year.

The High Speed Rail Project (HSRP) has been a disaster from the beginning and I'm frustrated that the governor continues to support this boondoggle. The initiative the voters approved in 2008 required the funding for the project be identified.  That has never happened and the courts had to step in to admonish Brown and temporarily stopped the project in its tracks.   The governor calls for taking $300 million from the “Cap and Trade” account and applying it to the rail project.  I believe this is in violation of both AB 32 (2006) and Prop 1A, which established the bullet train project.

Bullet Train grade - F: I've never quoted Ozzy Osborne before, but when it comes to Brown and the High Speed Rail Project it is “All abroad the crazy train.”  Brown is obstinate about pursuing this colossal waste of taxpayer dollars.  I'm hopeful the courts and policymakers in Washington will kill it.

Overall I give Governor Brown a respectable B- for his State of the State address.  I will work with him on his efforts to set proper spending priorities and pay down debt.  And I'll continue to prod him to engage in helping small business owners and key industries so we really can have a “California Comeback.”