A Blueprint to Renew : Report and Recommendations Presented by the Think Long Committee for California 2 THINK LONG COMMITTEE FOR CALIFORNIA *We were honored to have Fong’s Matt untilhispassing participation active Think Long Committee for California The Hon. The Hon.Robert The Hon.Condoleeza Rice The Hon. Matthew Fong*The Hon.Matthew Dr. LauraD’Andrea Tyson The Hon. Ronald GeorgeThe Hon.Ronald The Hon.George Shultz The. Hon. Willie Brown The Hon. Antonia Hernandez Maria Elena Durazo Maria Nicolas Berggruen Nicolas David Bonderman Eric Gerry Parsky Gerry Terry Semel

THINK LONG COMMITTEE FOR CALIFORNIA 3 ockler, ockler, inney’s inney’s overnor overnor ntonio ntonio rnold reasurer reasurer T aylor, Jean aylor, ayor A ayor T overnor and overnor ommittee for for ommittee alifornia tate ac overnor A overnor ahn and Jason K ahn and trategies team, Joanne Joanne team, trategies uerbach, M nalyst M nalyst oundation and the James oundation overnor Jerry time took overnor Brown teven C teven ear and countless others who we others who we ear and countless lan A hese include S ommittee for C for ommittee T alifornia S alifornia xecutive NBI Executive to as well, ppreciation, ichelle Rhee, Joe Nunez, John M ichelle Rhee, road F he Broad ur hope is that they will prompt debate debate they will prompt ur hope is that ogan, A T alifornia. alifornia governance. We hope the public We governance. alifornia erggruen, nc., nc., any of the proposals do not require ballot do not require of the proposals any oundation, generously hosted several of our of several hosted generously oundation, hink Long C hink Long T ayer, Joseph D ayer, orce and shared with us his very and shared considerable orce ur thanks goes to the public policyur thanks goes to experts icolas B icolas ewsom actively participated Newsom avin on our Jobs ardels, who spent many hours working with the many who spent ardels, oogle I long with the C with the long ommittee, our team and important our team constituencies. ommittee, outhern C and G chwarzenegger his report represents our best efforts for remedying for our best effortshis report represents athan Nathan colleague my personal thanks to inally, ask F rvine F I meet both in Northern us to meetings enabling and S G that very are appreciative We S G Lt. meet with us. busy schedules to from G T economy. knowledge state’s of the O the C their ideas to who presented our consideration. A deft by all work made it sensitivities Kozberg’s in such a compressed moving the process keeping as did S time period, and writing. communications with care G A Legislative Bill Lockyer, John C Ross, M Villaraigosa, Jim M the months. over consulted F G C this and other to totally himself He has devoted A NBI projects. Nakagawa, who has capably Dawn Director supported all NBI efforts. T ails C what put forth and supports have agrees the ideas we the ballot in November to take initiatives when we 2012. M O initiatives. and action the G among citizens by legislature. N Chair, t ob ike chaafsma chaafsma oundation, oundation, t was not t was ouncil. acramento acramento ommittee ommittee eorge and eorge ommittee. I ommittee. enton’s oug Henton’s hink Long Long hink eter S eter T rvine F ppreciation to to ppreciation ommittee members ommittee itizens C itizens ong as one of our alifornia. I alifornia. att F att alifornia’s political life, we we political life, alifornia’s alifornia presents here its here presents alifornia orward, with whom we share share orward, with whom we rown who headed Brown Willie arsky and alifornia’s promise. alifornia’s rad Williams and P Williams rad B age, hey vigorously engaged in the issues hey vigorously erry P T alifornia F alifornia is dedication to public serviceto is dedication and the ear’s clear-minded approach and approach clear-minded ear’s im G ommittee for C for ommittee T fter a year of deliberations, the the deliberations, of fter year a C will believe we that set of proposals integrated ommittee has shown that difficult bi-partisan difficult that has shown ommittee

y thanks first of all goes to the C y thanks first of all goes aureen D aureen enest, enest, hang for his research support. his research Chang for ndrew t a time when political leaders in both S t a time when political hanks also goes to the tireless teamwork of M teamwork the tireless hanks also goes to T Hertzberg, G and Ron G working group the tax reform on the C their work for Davis Gray M have to honored were We H members. effortto participate he made as part of C us all. to an inspiration was G over monthly meetings and did the hard work of work did the hard meetings and monthly over for C forward figuring out a path themselves. themselves. especially bridge divides, our philosophical easy to and on the tax plan. But in the spirit of pragmatism should believe we perspectivewith a long-term that C again characterize once B to Special thanks goes here do so. able to were M o government official appointed this C official appointed No government and Washington seem hopelessly mired in gridlock, seem hopelessly mired Washington and the C if politics is set aside and can be reached compromise is put first. the public interest We lobby. special interest any by not sponsored was citizens of concerned as a group only came together in C who believe their deep knowledge and long who brought bear on our to government in state experience C proposals. and the James I goals, reform broad efforts. A helped fund the research A M kept us apprised of all the prose straightforward and D Wright Julie issues. constitutional and workforce infrastructure on our jobs, guidance report invaluable. development was A update and modernize the state’s broken system of system broken state’s the modernize and update governance. A 4 THINK LONG COMMITTEE FOR CALIFORNIA Improve theprocess long-term for making • Give Californians real power to make • paying down thestate’s Start • Provide $1billionto California citiesinblock • Empower county governments andhelpreduce • Provide $2.5billionto theUniversity of • Fund education by anadditional$5billion • Reduce thepersonalincome taxacross the • Create apositive businessenvironment for job • plan would: good governance over thecoming decades, our While settinginplace along-term framework for new civicsoftware. C set ofintegrated reforms structural to “reboot” C officials (seelistinA aswellwith anarray ofexperts, asstate andlocal A P Bipartisan Leaving B Gridlock Rebooting California’s Democracy: ommittee for C alifornia’s by installinga democracy dysfunctional fter ayearfter ofdeliberation andconsultation economic policy government accountable stabilizing theboom-and-bustbudgetcycle grants to meettheirlocalneeds additional funding public safety costs by providing $1.5 billionin of C systems to keephighereducation withinreach California andCalifornia State University while fostering reform tax structure board whileretaining C creation alifornia’s families alifornia proposes thefollowing ath to theF ppendix), the alifornia’s progressive ehind witha “wall ofdebt” T hink Long uture and their “return oninvestment.” C body,a non-politicalquality-control theC agendaover thelong-term.the publicpolicy A in today’s globaleconomy –remain at thetop of class through boostingthestate’s competitiveness jobs andthestrengthening ofavibrant middle oflife, fora sustainedquality good opportunities excellence infrastructure, ineducation, world-class approval, willensure that thepublic’s – priorities place initiatives ontheballotfor directly public A C non-partisan that dominates Sacramento. interest andspecial politicalmentality culture interest asacounterbalance to theshort-term watchdogan independent forthelong-term public • ANINDEPENDENTCITIZEN’S WATCHDOG. Creating determined needs. as blockgrants for infrastructure orotherlocally billion annuallywould alsobededicated to cities high costs associated withourstate prisons. One safety responsibilities, ourplanwillhelpreduce the counties to helpcover thecosts ofrealigned public accountable. generating By $1.5billionannuallyfor –andthusthe people more responsive, flexibleand real economy andgovernment functions iscloser to from Sacramento to localities andregions where the powermaking andresources whenappropriate • LOCAL EMPOWERMENT. Returningdecision- But thecore ofourproposal hasthree parts: creation. approvalspeeding upregulatory to foster job and with theneedsofourcuttingedgeindustry; outcomes ofC school reform; andeducational aligning theskills oversight; oninitiative transparency funding;K legislative sessionswithoneyear dedicated to fundtoreserve multi-year budgeting;two-year from common suchasaRainy Day sensepractices O ouncil willensure that C ccountability, whichwould beempowered to ur integrated setofrecommendations range alifornia’s master planinstitutions itizens C ouncil for G alifornia taxpayers get T his impartial and his impartial overnment itizens -12 s THINK LONG COMMITTEE FOR CALIFORNIA 5 nalyst’s nalyst’s overnor overnor erm T romote the Long- romote t is one that must include all t is one that his will be a years-long process process his will be a years-long T alifornia is an economy of distinct of is an economy alifornia overnor, the legislature and city and the legislature overnor, ommittee embraces the principles of embraces ommittee EMPOWERING LOCAL LOCAL EMPOWERING ommittee believes that to make government make government to that believes ommittee A endorses the Legislative ommittee eye towards the long-term towards eye financial flexibility provide to accounts alifornia’s corporate tax, one of the highest in the of the highest in tax, one corporate alifornia’s he C he C urther, the mandatory be single sales factor would urther, urther, our long-term job plan would make state make state job plan would our long-term urther, the under taxes in income $39,452 paid have would the proposed under $33,114 pay will system current system. F time, the same at while, on corporations imposed C with it competitive make to be reduced would nation, business climate. an improved and foster other states I. T for the long-term, accountable and efficient more services government the core that must identify we funding realign and then carefully should provide, those services for the and responsibility to jurisdictions. appropriate F partner and welcoming for a consistent government C Since business. seeks that strategy economic statewide any regions, prosperity a healthy and broad-based bolster to the “from middle class of skilled must be built workers up.” bottom the C While de-centralization, and realignment devolution not have we and responsibilities, of revenues should that how precisely propose to endeavored be accomplished. the G involving I governments. county parties.affected T P to Recommendations G by as proposed of Realignment, Success which include: and the legislature, Brown • with an formulas local funding allocation Develop • Simplify the structure of the realignment GOVERNMENT AND REGIONS GOVERNMENT The ducation ducation djusted djusted or example, or example, corporations, alifornia’s alifornia’s “C” herefore, a PIT cut will herefore, T ’s are the backbone are of the ’s he working middle class T C alifornia’s progressive income income progressive alifornia’s hose making above that amount would would amount hose making that above T earning $45,000 and under would Those verall, the reform will maintain C will maintain reform the verall, ” corporations and LL corporations ” alifornia and for local public safety and other local safety local public and for alifornia hose with low incomes would receive a sales tax receive would incomes hose with low tax of cutting the personal income his combination profits and losses are “passed through” and taxed at and taxed through” “passed and losses are profits tax rate. the personal income boost job-creating F business prospects. of $480,000 that a business with a taxable income mall and medium-sized business proprietorships, business proprietorships, Small and medium-sized “S rebate. the the tax base will help stabilize and broadening boom and bust cycle of the budget while generating start annually to paying $10 billion in new revenues funding and provide “wall of debt,” the state’s down of and the University CalState for schools, K-14 for C needs. the large Unlike economy. California T taxes. income zero pay of $90,000, which would A family with income under taxes $1,449 in personal income paid have $832 – a more pay now would system, the current personal income than 40% reduction in their state tax. O T tax structure, we would reduce rates for every bracket for rates reduce would we tax structure, 4.5% 5% to the sales tax on goods from and reduce apply to a 5% rate the sales tax at while broadening E discretionary. more services,to which are be exempted. would and medical care only 2%. pay $95,000 would up to with incomes would credit and renters’ exemption homeowners’ be doubled. mental for 7.5%. Because of the 1% surcharge pay of rate a top pay would they health on millionaires, 8.5%. Households with A tax system. progressive would Income of less than $20,000 per year Gross in directindirect and of $71 more an average pay than $1 million while those earning more taxes, state of $11,478. an average pay would While maintaining C maintaining While A MODERN, BROAD-BASED TAX SYSTEM. Updating SYSTEM. BROAD-BASED• A MODERN, TAX composition the real mirror to tax system California’s of our modern service economy and information that is system tax broad-based a stable, and provide the long term. over sustainable 6 THINK LONG COMMITTEE FOR CALIFORNIA GOVERNMENT ACCOUNTABILITY the short-term politics ofSacramento, politics governancethe short-term good governance. To ensure accountability andto balance politicalelected figures to pledgetheywillpursuegood The Think Long Committee believes itisnotenough for ofSacramento.term politics of allCalifornians andto move away from theshort- responsively andaccountably inthelong-term interests trust ingovernment’s effectively, to both act ability governance. This means, above all, restoring the public’s California desperately needsareturn to good behind. left being a consequence, theworld ismoving onandCalifornia is dollars are usedto being improve Californians’ lives. As the future tax ifitcannot assured be itshard-earned understandably resists investing publicresources in is notevaluated oraccountable. The publictherefore dollar iswasted because government performance 2011, thepublicbelieves thatnearly40cents ofevery to theCalifornia Deliberative Poll conducted inJune California iscaught inadownward spiral. According II. use. their discretionary annually would flow to localitiesasblock grants for cover publicsafety realignment. Onebilliondollars would generate $1.5 billionannuallyfor counties to safety andinfrastructure. I to withrespect public responsibilities, particularly a stableflow offunds to localities to cover their update ofC A Avoid mandates state-reimbursable • definethestate’s Clearly role andfunding • Promote localaccountability • Ensure that localfiscalincentives are aligned with • changesto provide statutory counties Enact with • s detailedinourtaxreform plan,we propose an responsibilities statewide goals appropriate program flexibility THE CITIZENSCOUNCIL FOR alifornia’s taxsystem that willensure f implemented, ourplan

1. PURPOSE: qualify aninitiative measure. California Constitution, theCommittee intends to Accountability. thiswould As involve amendingthe to establishaCitizens Council forGovernment To thisend, theThink Long Committee proposes approval. education, directlybefore theirfellow Californians for proposals, addressing reform inareas suchasjobsand officialsaselected wellasthe power toplace initiative with thepowerfrom their to demandperformance entrusted ofcitizensshould alsobe to invested abody 2. goals for C to develop avisionencompassing long-term body–would beestablished and non-partisan A Long-term strategic concerns • standards, Setting oversight ofperformance • increasingly focus ontwo areas of competence: to localities, aleanerstate government should in C ROLE ANDPOWERS: A want to reside andwork. a welcoming place where familiesandindividuals T thatbeyondperspective extends politicalcycles. the legislature andG oversight, horizon of balancingtheshort-term I achievement ofthisvision. government sothat italigns withandsupports accountability andensuring ofstate performance T energy andthestate educational master plan. capital spendingprojects, infrastructure, water, wage jobs. I competitive businessclimate that generates high- class infrastructure, environmental anda quality aimed at creating educational excellence, world- sustaining anintegrated strategy for thestate coordinating,with charting, shepherding and n short, its purpose would itspurpose be bothforesightn short, and hese goalswould ensure that C he C ccountability – an independent, impartial ccountability –anindependent, impartial alifornia andmore responsibilities move across jurisdictions at alllevels of government, fairness ensuring ouncil alsowould betaskedwithpromoting alifornia’s future. I T ts purview would includelong-term ts purview he C itizens C overnor withalong-term s realignment takeshold ouncil for G t would betasked alifornia remains overnment THINK LONG COMMITTEE FOR CALIFORNIA 7 ontroller, ontroller, he Speaker tate C tate onstitution, T rticle VI, sectionrticle ouncil would ouncil would ommittee would would ommittee overnor’s appointees overnor’s alifornia with varyingalifornia ouncil vote would be would ouncil vote enate for malfeasance malfeasance for enate he four ex-officio andhe four alifornia C alifornia T ouncil could be removed by by be removed ouncil could reasurer, the S reasurer, t-large appointees would be would appointees t-large ommission on Judicial T eneral, whose duties would whose eneral, tate tate enate Rules C Rules enate he length of the term is designed designed is he length of the term T embers of the C he S T t least two of the G of t least two ttorney G ttorney ssembly would appoint two members, members, two appoint would ssembly ouncil would seek cooperation with all state with all state seek cooperation ouncil would inance, the S inance, ine members would be appointed by the by appointed be would ine members overnor. overnor. ny member of the C ny erformance. he C erms would be limited to two six-year staggered staggered six-year two to be limited erms would members and four ex-officio non-voting members. members. ex-officio non-voting four and members N G and the A of C distinguished residents former scholars, – such as prominent experience or justices former leaders, legislative governors, and leaders from presidents university judges, well as as labor and community affairs, industry, – who business or social entrepreneurs young the state to a commitment demonstrated have appoint two members, one from each of the one from members, two appoint parties. political largest two state’s of the A political largest two each of the state’s one from parties. A two state’s in either of the not be registered would parties. political largest proposals. initiative of include the analysis T agency heads. T setting up staggered A model for appointments. in A membership can be found 8, subsection (c) of the C the C which governs P perspective a long-term on issues encourage to electoral to cross and cycles affecting our state or political influence against insulate so as to M patronage. be per-diem and would compensation receive necessary and reasonable all for reimbursed performance in the incurred expenses of their duties. A simple majority of the C a statutory proposal place to initiative required be would on the ballot and a two-thirds vote amendment. a constitutional for required A of the S a two-thirds vote or corruption. non-voting members would include the Director members would non-voting of F A 4. QUALIFICATIONS:

ouncil’s comments and comments ouncil’s ouncil would have the have ouncil would ouncil would not be an added layer not be an added layer ouncil would ouncil would play a central role in both in both role a central play would ouncil tate to publish the C to tate S and initiatives proposed positions on relevant on the election ballot referendums s such, the C he C o fulfill its role the C o fulfill its central A central planning. and long-term oversight where a forum provide function be to would branches, and executive legislative the state’s master cities, counties, organizations, regional and leaders institutions plan educational labor and the environmental business, from on a sustained together work community would election transcends cycles, that strategy boundaries, organizational partisanship, limited and short-term thinking. T powers: following • directly on the ballot initiatives Placing and develop to be empowered would Council The directly on the ballot. proposals initiative place in of California the residents assist would This the long- regarding voice active a more developing than be rather direction of the state, future term with only disconnected true, as is currently faced, Council The single-issue choices. or special interest and receiving elected with officials, also work would legislation. and proposing information, monitoring • direct the Secretary to Authorization of on comment to be authorized would Council The their with respect proposals to initiative relevant priorities. strategic impactlong-term on the state’s • Subpoena power the same subpoena be granted would Council The the Little Hoover held by currently power “to issue subpoenas compel – i.e., to Commission of witnesses and the production the attendance reports and accounts, papers, records, of books, documents.” A T and pro- an extended but voice of bureaucracy, public interest the long-term for active watchdog of government. quality control and for The RULES: MEMBERSHIP/TERMS/VOTING of 13 voting be composed would Council 3. 8 THINK LONG COMMITTEE FOR CALIFORNIA 6. STAFF: 5. independent staff, exempt from civilservice residents. more accessible andtransparent to C computing, to render allgovernment operations technology, includingnewadvances incloud useofavailable by making participation F the electorate. Council’s initiative proposals would placed be before in theCouncil’s decisionsregarding whichofthe direct inputintheCouncil’s andthus policy-making theresidents ofCalifornia would haveIn short, participation. media window” for publicconsultation direct and proposals and alsomaintain a its policy “social hold regular to hearings obtainpublicinputon PUBLIC PARTICIPATION: organizations orcandidates. orpolitical calendar year for allpoliticalparties or inexcess ofanaggregate of$1,000inany orpoliticalorganization orcandidate,party hundred dollarsinany calendaryear perpolitical organization orto acandidate inexcess offive orpolitical make contributions to apoliticalparty funds for apoliticalorganization orcandidate; or T Canon 5oftheCalifornia Code ofJudicialEthics. bias orimpropriety, A(3)of specificallysection regarding avoiding theappearance ofpolitical thecodemodeled after that applyto judges A assuming andleaving office. interest disclosure documents, bothupon aswellreports, asstatements ofeconomic its memberswould berequired to fileannual be required to comply withthoselaws. apply to publicofficials, andtheC (California Government 87103)that Code section T to prevent orperceived actual improprieties. S cultural andsocialdiversity ofC and are broadly reflective oftheeconomic, o thisendnoappointee shallpersonallysolicit inally, theC he state hasexplicit conflict-of-interestlaws conflict-of-interestrules would apply trict ppointees to would restrictions besubject T he C ouncil would facilitate public ouncil would employ itsown T he C ouncil would alifornia. ouncil would alifornia’s T hus, 8. 7. Infrastructure. • A C withthe institutions becharged withworking the C institutions involved inplanning. resources ofthevariousgovernmental T Agenda. a common roadmap State –theGolden Strategic sotheseplansareprioritization integrated into recommendations basisandmaking foron-going reviewing regional andstatewide plansonan T championed by effective leadership. drive becausetheyare decision-making, not integrated into aunifiedplan,anddonot disparate islimited. efforts requirements. numerous planningagenciesand Strategic Agenda: C Integrating Foresight – The State Golden Legislature. to threatened by reductions theG of theC base amount –would protect theindependence deems necessary. appropriate whatever additionalamounts it I members would onlyreceive expenses. per-diem professional staff.a high-quality C for theC necessary proposed budget. would beincludedeachyear intheG indexed to inflation each year, andthissum base appropriation ofnolessthan$2.5million FUNDING: T integration withstate andlocalagencies. and private) to and ensure adequate expertise on “loaned” executives andanalysts (public regulations,hiring andhave to draw theability n addition,theLegislature would beableto he C he C ouncil indeveloping theG genda: strategic plan. I responsibility for coordinating theC of the nfrastructure P ommittee proposes that thefollowing ouncil would beableto draw onthe ouncil would therefore becharged with ouncil because it would not be subject ouncil becauseitwould notbesubject D epartment of epartment he C T he value oftheresulting ouncil would have acontinuous T T ouncil to andmaintain attract The Council, withthesupport his approach –aguaranteed lan withtheoverall state his amount isdeemed alifornia isburdened with F inance, would be given T olden S hey are not T ouncil overnor or o thisend tate S overnor’s alifornia trategic THINK LONG COMMITTEE FOR CALIFORNIA 9 tate tate Tax ouncil’s ouncil’s alifornia for for alifornia as part Bureau, The alifornia’s chronic budget chronic alifornia’s ommission, as part as ommission, of alifornia’s economy moved moved economy alifornia’s In 1950, Sales and Use Tax. ouncil’s strategic agenda. strategic ouncil’s ome of these are beyond the control the control beyond ome of these are s this occurred, our tax revenues became revenues our tax s this occurred, A BROAD-BASED TAX A TAX BROAD-BASED ax accounted for a little more than 10 a little more for ax accounted T to encourage the C encourage to of the effectiveness assess to its reviews, their efforts including to achieve agencies, and objectivesthe goals of the C agenda. strategic assess to be encouraged would of its audits, including their of agencies, the effectiveness and objectives the goals of efforts achieve to the C • Audits. of State Bureau ver the past 60 years, C the past 60 years, ver C position to is designed his initiative C causes for many are here ogether these problems helped create a boom-and- helped create ogether these problems ncome ncome SYSTEM FOR THE FUTURE FOR SYSTEM III. Purpose T to the tax code reforming by growth economic future budget stability create the business climate, improve criticalto programs state funding for and increase growth. economic long-term Problem T shortfalls. S policy such as the international of state makers, cycle business and national and the spending S population. an aging from result that pressures the blame bears some of however, itself, government and its tax code and outdated because of its volatile budget decisions. long-term inability make sound, to T state massive crisis, bust budget cycle in perennial and jobs growth. debt and anemic economic O and agriculture fueled by was one that from by driven manufacturing is increasingly one that to services. A driven on sales and use tax and more less reliant Income Personal by revenues; of all state almost 60 percent comprised Personal about 25 percent. for it accounts today, I it in 1950; today, revenues state of total percent than 50 percent. more for accounts ouncil, ouncil, ouncil on ouncil, ouncil, ouncil and ouncil and OfficeThe Council The Commission’s The cabinet-level This Resources Water ommission and ouncil would be ouncil would he following is he following T he C altrans should develop should develop altrans his plan should be ouncil should integrate it ouncil should integrate udits in obtaining detailed T DepartmentThe of t would advise the C t would tate A tate ouncil should integrate the energy the energy ouncil should integrate ouncil should integrate it into the it into ouncil should integrate is required Commission Energy The DepartmentThe of lanning and Research is required to to is required and Research lanning ouncil, and the C ouncil, ransportation produces a comprehensive a comprehensive ransportation produces creating an overall integrated plan. integrated an overall creating would coordinate with the relevant education education with the relevant coordinate would a develop agencies to and workforce the needs of industry, meets that workforce non-profits education, social services, labor, and other sectors the economy. of a comprehensive produce every to years two strategy. energy and the C plan. strategic state the overall plan into activities branch executive body coordinates grants, administers growth,” “smart to related support technical local and provides to I governments. developed in coordination with the C in coordination developed plan water a state produce to is required DWR should years. (Bulletin 160) every five with the the plan in coordination develop C of P growth a report guide the state’s to produce this responsibility and and development, the C with coordinated be would plan. strategic overall the into integrated plan. the strategic into T with a 20- transportation the state plan for C time horizon. year with the C this plan in coordination and the C plan. strategic authorizing statute would be amended would authorizing statute • Energy. • Water. • Goals and Policy. Environmental • / Human Capital. Workforce • Transportation. • Council. Growth Strategic Integrating Oversight: T Oversight: Integrating review of state programs. programs. of state review proposed: therefore • Commission. Little Hoover oover C the Little Hoover by assisted of S the Bureau 9. 10 THINK LONG COMMITTEE FOR CALIFORNIA overly reliant ononesegment oftheeconomy. of therevenue volatility associated withataxcode plummeted by 19percent. at ananemic3 percent, butGeneralFund revenues economy, asmeasured by P the latest to recession befelt, was thestate’s starting fiscalyearsBetween 2007-08and2008-09,just as budgetdeficit. and along-term structural what G remainder ofthedecade, thereby helpingto create that plaguedC address theshortfalls fixes,to borrowing one-time and gimmicks to When theinevitablecrash came, thestate resorted narrow thetaxbase.commitments andfurther surge inrevenue to permanentlyexpand spending ingoodtimes”practices by usingthetemporary S soar by 23percent inasingleyear. –causedrevenueseconomy earners to –high-end reliant onthemostvolatile component ofthe options. I temporary, increases incapitalgainsandstock boomresultedwhen thedot-com inmassive, but This cameto aheadinfiscalyear 1999-2000 tate policy makersmade themistakeof tate policy “bad overnor Brown hastermed a “wall ofdebt” C n thisenvironment, ataxcode overly alifornia S ofFinance CaliforniaSOURCE: Department tate Revenues by S Figure 1

This was theflipside ersonal I ncome, grew alifornia for the ource B such aseducation andpublicsafety. depends onstableandadequate fundingofservices states. I compared to thetop taxrates ofotherwestern C the state’s deficit. budgetdebtandstructural created andbecauseoftheuncertainties by part impeded by thestate’s highcorporate taxrate in C economic outputisnottaxed. –that $1trillion is,nearly roughly half–ofthestate’s activities. andinformation composed ofservices is primarily dominated andagriculture, by manufacturing but California’s economy $2-trillion isnolonger need to reform andupdate thepresent taxcode. the services, a return to stableandadequate fundingofcritical business climate whileincreasing revenues to ensure volatility andimprovebudgetary thestate’s T Solution o finda way to reduce the wall ofdebt, reduce eyond national andinternational conditions, alifornia hasthehighestcorporate taxrate when alifornia’s recovery from recession isbeing C omparison of omparison FederationSOURCE: of n thelongerterm, economic growth also Y et, C T hink Long C alifornia’s taxcode issooutdated that T op M Figure 2 Tax Administrators, February 2011 arginal C ommittee believes that we

orporate T ax Rates T oday, THINK LONG COMMITTEE FOR CALIFORNIA 11 he T axpayers would would axpayers (PIT) and Tax T . he current tax rate structure would be structure would tax rate he current he tax rate on corporate income would would income on corporate he tax rate he measure would eliminate most credits most credits eliminate would he measure t would also make mandatoryt would the use of T health on those mental for 1% surcharge remain, $1 million would over with incomes 8.5%. making rate effective that T the 7% – below 8.84% to from be reduced average. national with the number of tax brackets streamlined, two. to being reduced in beginning structure, Under the revised tax be no personal income would 2014 there $45,000 up to with incomes filers on joint deductionbecause of the standard ($45,000 of 2 single filers). A tax rate for $27,500 joint; of joint income be applied to would percent would $95,000, and a 7.5% rate filers up to amount. that above incomes apply to a receive households would Low-income most of the direct offsetting sales tax rebate and indirect impact of the new sales tax household with on services on the average similar income. T for deductions except and all itemized charitable property mortgage interest, taxes, D and R& contributions deduction, standard an expanded receive for filers ($27,500 joint $45,000 for equal to single filers). I apportion to the single sales factor formula profits. corporate multi-state • • • • • • imposed rates reduce simplifying the code, tax and the sales tax under the corporation on goods. Income the Personal from the corporation on the PIT, tax rates lowering tax on goods and the sales tax (Corp) rates will have a positive impact a positive will have PIT rates he reduced T which most of businesses, on small and mid-sized “pass-through” or as proprietorships organized are • in the PIT while tax rates marginal Reduce • deductions reducing by the tax base Broaden n ommittee ommittee hink Long C hink Long urrent projections urrent T ommittee proposes proposes ommittee f the revenue increases turn out increases f the revenue January4 % effective 1, 2014, but the be as high as 4.5%. could rate January5% effective 1, 2015, but the be as high as 5.5%. could rate 7 July 1, 2013, allowing 3% effective aftermonths the enactment of the 2012 on the November initiative businesses and tax officials, ballot for the new tax. for prepare to consumers he new sales tax on services be would o ease the transition to the new tax system, the new tax system, to o ease the transition • • T a two- be phased in over would the tax rate period as follows: year • be 5 1/8% to will need to rate the that show in the gains targeted the revenue achieve I initiative. T apply to 5.5% and would of 5 to a rate at as to all services, businesses as well to and care health for except consumers, services.educational C the rate than estimates, robust more be to end up being less than 5%. could • • o address these issues, the C these issues, o address With these goals in mind, the mind, these goals in With to broaden the tax base while reducing personal the tax base while reducing broaden to the and bringing the board across taxes income in line level a competitive to down rate corporate will new tax code the However, with other states. to revenues in increase a sufficient produce to have budgetary debt and in the longer the state’s reduce the for funding growing stable and provide term economic long-term services to essential are that and public safety such as education, growth in infrastructure. investment T essence, those who produce goods such as donuts goods such produce those who essence, or machinerywho produce those subsidizing are services and information. While we tax the sale of a donut eaten in a coffee in a coffee eaten of a donut the sale tax we While sale of legal, tax the example, for don’t, we shop, services. I or architectural accounting consulting, • include services. tax base to the Broaden proposes the following reforms: the following proposes 12 THINK LONG COMMITTEE FOR CALIFORNIA propose the tentative following uses: to reach $10billionwhen fullyphasedin–we With theavailable newrevenues –whichwe expect bycollected thestate. payingearners 62percent ofallpersonalincome tax progressive withthetop taxstructure 5percent of T would pay anadditional$11,478. household. more Householdsearning than$1million taxesand indirect ranging from $71to $806per incomes upto $1million would pay additionaldirect On average, householdswithadjusted gross an equivalent expansion oftherenters’ credit. taxexemption fromproperty $7,000to $14,000with A would belowered from 5%to 4.5%. groups oftaxpayers. proposal would lower thePITpaidacross allincome retain thePIT While reducing alltaxrates, thesechangeswould personal income taxinstead ofcorporate tax. businesses, suchasS he C dditionally, we would doublethehomeowners’ Estimated P ommittee’s proposal would maintain thestate’s Would Paid Be by ’s progressive nature. O ercentage ofP SOURCE: T - C he state salestaxrate ongoods Think Long Committee Figure 3 orps andLL orps Top 5Percent ofFilers

ersonal I Cs andthuspay ncome verall, the T ax T hat • • • • • areas: to repay thestate’s debtintwo key budgetary I Upto $1.0billionto citiesasunrestricted • Upto $1.5billionto counties for therecently • Up to $2.5billion for highereducation. • new revenue willbeallocated asfollows: Beginning in2014-15, theremaining $5billionin the newsalestaxonservices. improving economy increases therevenues from schools. increase infundingforpermanent, discretionary future obligation forand uncertain anear-term, billion, thisinitiative exchanges that long-term increase K-14 education fundingby about$10 representsfactor anobligation to permanently 98 maintenance factor. of thestate’s debt, theP budgetary exchange for eliminating anothermajorpiece going to K-14 education willbeprovided in Beginning in2014-15,theadditional$5billion n thefirst year, revenue gains could onlybeused revenue P enacted amount ofdeferred payments. first year’s payment going to help reduce the for schoolsby $5billionannually, withthe by thisinitiative willbeto increase funding T year totaling to over thenext, $10billion. schools, required by Proposition 98,from one few years, thestate delayed payments to K-14 I debt. balance ofthisbudgetary this initiative willbeto retire theremaining for theincreasedpriority taxrevenues from about $4.3billionby 2013-14andthefirst T the state soldtheentire $15billionofERBs. the debtfrom years. theprior Ultimately B Recovery 2005,thepeopleauthorized EconomicIn n thebudgetandcash-flow ofthelast crises he next priority for therevenues priority he next generated he outstandingbalance willbedown to T his amount willgrow over timeasan ublic S onds (ERBs)asaway to refinance afety realignment. While themaintenance roposition THINK LONG COMMITTEE FOR CALIFORNIA 13 und for the und for mendment mendment ommittee supportsommittee he C T onstitutional A he boom and bust cyclehe boom and bust of T ommittee advocates the Rainy the Rainy advocates ommittee und is a straightforward, common- und is a straightforward, oo often, a supposedly balanced oo often, a supposedly balanced T ssembly C he C his system contributes as well to the to as well contributes his system T T alifornia’s revenue system creates a highly creates system revenue alifornia’s his measure seeks to accomplish two important two accomplish seeks to his measure the to stabilize help first, he reserve will, C net a frayed leaves business, uncertain for climate with education havoc of social services, and plays funding. and temporarygimmicks on budget reliance as it has solutions during lean times because, has the Legislature repeatedly, demonstrated restraining to little discipline when it comes is high. growth spending when revenue F Day A Rainy A pending ballot problems. these to sense answer A measure, 2014. in the voters go before 4, is scheduled to T F Day a Rainy and protect goals: create unexpected revenue budget and prohibit state’s programs. ongoing state for spikes being spent T one-time only for then, be available and, budget, in infrastructure purposes such as investment projects. 4 be included in ACA as proposed Fund Day on the ballot for along with its other proposals 2014. to 2012, and not be delayed November efforts perspectiveto adopt a long-term on state budgeting. a fiction the budget is really and obscures the due to years will arise that in later problems use of one-time and budget gimmicks solutions, budgeting has multi-year While estimates. rosy in the past because of the ineffective proven a in the future economy, highly volatile state’s Further, the review or oversight of state programs is programs of state oversight or review the Further, are taxpayers California that to ensure insufficient their representatives. by promised results getting the spends engaged in a little time Legislature The over Branch dialogue with the Executive constructive that ensure to how and programs of state the goals goals. achieving those are programs set of a has developed Committee Long Think The culture” the “budget change to that aim budget reforms and results focus on long-term to in Sacramento performance. 1. Fund. Day Rainy 2. budgeting. Multi-year unding

dditional F dditional Figure 4 Figure Committee Long Think Billion) $10 (Total: SOURCE: Summary of A he remainder of the increased revenues will revenues of the increased he remainder BUDGET AND OVERSIGHT BUDGET AND OVERSIGHT

T from resulting losses revenue the offset go to the tax reforms.

•

REFORM Instead of adopting common sense reform – like a – like sense reform of adopting common Instead states in many day fund reserve in place already rainy budget exacerbated have lawmakers – California poor and planning in good through times, problems in gimmicks or borrowing and mirror smoke through bad times. California’s budget and budget process no longer budget and budget process California’s The support to reliably public programs. operate critical on personal is over-reliant fund budget, which general As volatile. is notoriously gains, tax and capital income boom bust with to swings from economy California’s the state’s economies, the national and international multi-billion dollar to being flush budget swings from programs Health, social servicedeficits. and education be cut back in bad times – to funded in good times have needed most. when they are IV. 14 THINK LONG COMMITTEE FOR CALIFORNIA . Legislative oversight intwo-year session.A 3. I house oforigin inthefirst year. would bemadefor legislation that passes its legislationonly urgency allowed. A budget oversight review, andperformance with regular sessionlegislation, andthesecond on the first two-yearyear ofthe session focus on intended goals, theC T the Legislature to focus onbudgetoversight. C effectively andefficiently aspossible. ensure that thestate’s revenues are expended as budgetingto to institute performance-based T thatthese objectives theC developed aproposal that effectively addresses years. Reform group C expenditure estimates for thesucceeding three period, andofpublication ofrevenue and the budgetto bebalanced over atwo-year T C withaRainy Day F used inconcert andstablebudgetingprocesspredictable if multi-year budgetplanwould establishamore when necessary. these requirements, ashasbeendoneinthe past, inaspecialsessionwithout meeting be enacted budget itself. legislation Emergency could still legislation accompanying thebudgetand inprint of3daysperiod shouldberequired for of legislation byAshorter affected parties. prevalent andprevents any adequate vetting and amending” legislation hasbecome too form.then-current only beconsidered by thehouseintheir that billsnotamendedby that deadlinecould of oneweek to prior theendofasession,so effectively establishanamendment deadline toprior passageineitherhouse. regular sessionlegislation beinprintfor 7days process would beimproved by requiring that all oversight andaccountability inthelegislative n addition,theC o insure that state programs are meetingtheir he C he C onstitutional A ommittee’s taxreform proposals. ommittee is also supportive of efforts ofefforts ommittee isalsosupportive ofrequiring ommittee issupportive mendment isneededto require ommittee believes that T he practice of he practice “gutting ommittee proposes having alifornia F ommittee supports. ommittee supports. orward has orward T und andthe his would n exception term limits. Modify C 5. Pay-Go for legislation andballotmeasures. 4. the Los A C A June2012ballotmeasure, sponsored by to theirelectorates. of theirjudgment butstillkeepthemaccountable officials’the experience ofelected andthequality desire for willimprove anabsolute limitonservice, for legislators, whilestillmaintaining thevoters’ leaders.among elected A andknowledge ofexpertise the present dearth sideeffects,a numberofunfortunate including voters saw withhaving “career legislators,” hashad limits, originally aimedat addressing problems the the state’s infrastructure plans. offunding measures becauseoftheimportance exception would bemadefor legislative bond it would notbeallowed to passeitherhouse. A than $25millionbecauseofinsufficient offsets, legislative measure isdetermined to cost more offsets, it would notbeplaced ontheballot. I considering theproposedthan $25million,after initiative measure isdetermined to cost more of roughly thesamevalue. I a provision eliminating anotherspecialtaxcredit measure granting atax credit might beoffset by a provision increasing vehicle license fees. A operationsspending for might include parkland F how thecost ofthemeasure would beoffset. other provisions sufficient to credibly establish more than$25millionwould have to include proponents oflegislation orinitiatives costing T the C caused to state finances by off-budgetspending, would bereconciled. I ideally thetradeoffs ofthestate andpriorities never considered inthebudgetprocess, where M both intheLegislature andat theballotbox. C but allow an elected official to serve all12 but allow official toserve anelected would reduce term limitsfrom 14to 12years, the Los A or example, aninitiative that required new he principle behindaP he principle alifornians for aF alifornia hastrouble restraining itsspending, any proposals are into enacted laws that were ommittee supports theconcept ofP ommittee supports ngeles C ngeles A ounty F ounty rea Chamberof resh S alifornia’s impositionofterm n order to limitthedamage ay- tart, agroup including tart, llowing for longerterms ederation ofLaborand G n otherwords, ifan o proposal isthat ommerce, ay- G f a o. n THINK LONG COMMITTEE FOR CALIFORNIA 15 he T he T tate should be should tate onstitutional t may amend an initiative amend an initiative t may n addition, in the months the months in n addition, ecretary of S s history has shown, there have s history have there has shown, mendment that would allow the allow would that mendment onstitution presently provides: “ provides: onstitution presently ection 10, subdivision(c) of the he Legislature may amend or repeal amend or repeal may he Legislature t may amend or repeal an initiative an initiative amend or repeal t may T ommittee supportsommittee the principle the that supportsommittee a C ffice of the S ffice mendment to allow the Legislature to review review to the Legislature allow to mendment I, S V rticle alifornia C alifornia ommittee is also generally supportive is also generally ommittee of a onstitutional A he C he C his constitutional provision should be amended provision his constitutional their contributions. I contributions. their pamphlet, ballot of the publication following the O on regularly this information update to required its website. Indirect Initiative/legislative review when review Indirect Initiative/legislative by faced issues the complex qualified. Given by reform effortsto bring about our society, by been hampered inevitably have initiative A drafting errors. when an initiative occasions been a number of drafted and been better have could measure avoided difficulties serious implementation errors correct potential to had it been possible on the ballot. of the measure placement before T sponsors in with initiative should work Legislature spirit to of confrontational instead a collaborative the best policy – as long as the achieve outcome with the objectives acts of consistently Legislature the proponents. T A and fix flaws, proposals pending initiative legal or otherwise, an alternative or propose by upon final approval contingent version, measure. of the initiative the proponents C C after adoption amend an initiative to Legislature with the in a manner consistent the voters, by objectives of the initiative. A C referendum amend or repeal may Legislature I statutes. effective becomes that another statute by statute the electors by unless the only when approved permits or repeal amendment statute initiative without their approval.” T “ read: to I statutes. referendum in a manner that another statute by statute furthers and may the purpose of the initiative, by otherwise statute an initiative amend or repeal 2. he T ecretary enate or a enate ommittee will will ommittee alifornia today today alifornia his measure is consistent is consistent his measure adison’s worst nightmare. nightmare. worst adison’s T ssembly or the S or the ssembly hink Long view, and the C and the view, hink Long T April 23, 2011 Economist, -The ommittee proposes requiring the S requiring proposes ommittee assions are inflamed rather than cooled. cooled. than rather inflamed assions are tate to include in ballot pamphlets a list of to tate

P INITIATIVE REFORM INITIATIVE he C onfrontation replaces compromise as minority compromise replaces onfrontation Voters are often unsure who an often unsure are Voters Transparency. are. and opponents proponents initiative’s public would be better served clear be better having by public would of support the sources regarding information campaigns. ballot measure and opposition for T of S in of $50,000 or more contributors top the five (both in support campaign an initiative and in of amount the total provide opposition), and to combination of both. of both. combination with the years in either the A in either years support it.

intended to control, and an impediment to the to and an impediment control, to intended he initiative culture as it exists in C as it exists culture he initiative C alifornia’s chief justice, worried publicly about the worried chief justice, alifornia’s may resemble James M resemble may T factions (special interests) battle one another with battle factionsinterests) (special the tool of the very it was the tool types of special interests the time at In 2009, Ronald George, rival initiatives. C effective functioning process?” effective of a true democratic as the voter initiative now become become now initiative “Has the voter effect on liberty: Abuse of the initiative process undermines the capacity undermines the capacity process Abuse of the initiative function democracy to effectively. of representative at targeted are for reform proposals following The process that the initiative ensure curbing these abuses to public will – not a tool of the a vital recourse remains blunt instrument for or an unwieldy of special interests Set forth a series are below at the ballot box.” “budgeting improve to intended process the initiative to of reforms an instrument that can it as and restore the process of Californians. servebe used to interests the broadest Accountability, for Government Council Citizens The in this report, elsewhere proposed for an provides also designed process use of the initiative innovative a further remains to process that the initiative ensure interest. in the public mechanism of good governance

1. V. 16 THINK LONG COMMITTEE FOR CALIFORNIA 4. 3. low-turnout election. S low-turnout election. to beconsideredsomething too important at a C A elections. voters higherthanat primary whereelections, there of isalikelyturnout submitted to theelectorate onlyingeneral amendments to theC T Constitution only. ingeneral elections Allow ballotmeasures that amendthe days. ofsignaturesthe collection from 160days to 365 legislation allowed to thetimeperiod extend for signatures. the S signature electronic gatheringif also supports C statute, and8percent inthecaseofaproposed inthecaseofaproposed gubernatorial election registered voters eligible to castballotsinthelast an initiative shouldbebasedon5percent of T relatively easierto qualifyaninitiative measure. processelection isnot, sothat itisbecoming rising, inthe thenumberofvoters participating A voters registered inthelastgeneral election. ofsignaturesNumber to qualify basedon initiative. rather thaninanauthorizationcontained inan language were contained intheC the sameapproach ifthe thepurpose”“furthers invalidated. P initiative, itspurpose, willbe anddoesnotfurther an alteration rather thanaclarificationofthe any by theLegislature action that constitutes consistent oftheinitiative,” thepurpose “with states that any legislative amendment mustbe Wilson (1995)11Cal.4th 1243,that ifaninitiative initiative at issueinAmwest Ins. Surety Co. v. invalidating alegislative amendment to the T their approval.” statute amendment permits orrepeal without approved byunlesstheinitiative theelectors another statute that becomes effective onlywhen he C he numberofsignatures required to qualify he C onstitutional A onstitutional A lthough thestate’s population issteadily ecretary ofS ecretary ommittee supports the principle that theprinciple ommittee supports alifornia Supreme C T he C resumably the courts wouldresumably follow thecourts mendment isby definition mendment. ommittee further supports supports ommittee further tate cancredibly verify these onstitution shouldbe tatutory measures should tatutory ourt madeclear,ourt in T he C onstitution ommittee

AND ECONOMIC GROWTH 1. path: & Workforce” usdown this to start (seeAppendix), report recommendations, drawn from its“Jobs, Infrastructure The Think Long Committee proposes thefollowing take place inemerging economies ledby China. inthecoming decades whenmostgrowthexports will manufacturing baseinCalifornia andforexpanding a Such anapproach isessentialto re-establishing uppotential growth tying often, withred tape. businesses, layingoutthered carpet, rather than,too forjob-creating aproactivebe facilitator andpartner working conditions, ourstate government must also itcontinuesAs protecting California’s environment and families andindividuals willwant to reside. continuing to make California awelcoming place where climate thatcan sustainasolidmiddleclasswhile business toshould be buildavibrant, job-creating A guidingobjective ofthestate’s long-term strategy broadband informationhighways ofthefuture. and infrastructure, energy gridsto the from smart public investment inawell-educated workforce burdensome regulations onbusinessandfacilitating and jobgrowth to California requires streamlining both The Committee believes thatrestoring economic vitality VI. consuming andcostly. – makeexpansion orlocation ofbusinessestime- when conjoined withfederal andlocalregulation anddisparate agencies–particularly jurisdictions multiple layers ofregulation, overlapping mustbemaintained,functions thestate’s While andpermitting essential regulatory of regulations that are onerous andconflicting. one that isbothreal andperceived, isascheme A significant hindrance to businessinC Streamlining /improving customer service. general election ballot. general election inorderelections, to avoid “overloading” the andgeneral continue to appearonbothprimary JOBS,HIGHEREDUCATION alifornia, THINK LONG COMMITTEE FOR CALIFORNIA 17 ourts o fund T ourt of matters be A matters hese include: T

lawsuit challenges in A lawsuit A, particularly with respect t would also be advisable t would etitioners should be able etitioners should current tightening by lawsuit only if they have, if they have, only A lawsuit rovide expedited access to to access expedited rovide and new or expanded business business new or expanded A and “standing” ppeal. P ppeal. ommittee believes that the balance the balance that believes ommittee ppeal justices. I ppeal justices. requirements. P requirements. bring a CEQ to in court, a legitimate and can demonstrate concern environmental and concrete of a as the absence well about a project, as interest or economic commercial competitive on their part in the project. be filed directly with the C decisions to of A CEQ quickly resolve the the appeal of decisions by the same way handled are Utilities Commission Public state Utilities Code section 1759). Public (Calif. be included in the mandatory continuing C for required already education A working attorneys research appellate that on CEQ with these justices this subject included in their have to required requirements. education continuing the should authorize the state this process, courtsappellate adopt rules establishing to those parties be paid by additional fees seeking judicial review. expedited within the same jurisdiction are that locations to in order development, for and available unnecessary studies and avoid and irrelevant strategies. but here” “anywhere any of these reforms are included in recently included in recently are of these reforms any overnor also has signed, makes a number of also has signed, overnor he C T CEQ between opportunities a series of by can be enhanced law. the current to reforms • Limit • agency local challenges to Allow CEQA • matters in CEQA special training that Require • projects to analysis Restrict alternative CEQA M enacted AB 900 (Buchanan/Gordon/Steinberg) CEQA similar which create and SB 292 (Padilla), a sports for stadium and other large exemptions job-producing projects. which the In addition, SB 226 (Simitian/Vargas), G CEQ to improvements ) A A can be his office his office CEQ T conomic and conomic ct ( ther states have have ther states ffice of E ffice ctober 2011 report, ct is another. ct is another. alifornia. O alifornia. t also would carryt also would out the alifornia’s most precious and most precious alifornia’s rocedure A rocedure nalysis, as suggested by the Little by as suggested nalysis, alifornia by simplifying permitting by alifornia ommission in its O tate can reduce the costs of doing of the costs can reduce tate etter Regulation.” Regulation.” etter dministrative P dministrative nvironmental Quality A Environmental alifornia’s ommittee’s proposal to consolidate disparate disparate consolidate to proposal ommittee’s erving business of contact for as the single point he S o this end, we propose creating the position creating propose we o this end, T and duplicative eliminating by business User-friendly, regulations. government outdated can regulations consistent and transparent confidence building by growth economic foster and certainty lawsuits costly while reducing by generated regulatory processes and lengthy unclear or conflicting standards. T ombudsman whose permitting” “one-stop of a service the customer improve be to would focus or seeking of those doing experience do to business in C tape. red and cutting through is enactment of AB 29 (Perez) recent The with the consistent first step a promising C functions a into development economic existing authority in the Executive central strengthened the EnactingBranch. strengthen SB 617 to A S offering focus on would this new office assistance, seeking companies to to service” “one-stop in C and expand locate oover C Hoover “B permitting process. the CEQA Accelerating C successfully employed this approach. this approach. employed successfully Regulatory A the has served that is landmark legislation over C protect to years asset. treasured CEQ however, or regulation, law Like any would also work with the state’s diverse economic economic diverse the state’s with also work would and develop them to encourage to regions on focusing strategies customized implement mix of industries unique challenges, each region’s and distinct I assets. regulatory functions of an O can and working its regulations abused, through be time-consuming in of delay and cause years job-creating projects. 2. 18 THINK LONG COMMITTEE FOR CALIFORNIA 3. Encouraging • withjobsby promoting Aligning skills career • onthefollowingRossi, keyareas: for JobsandBusinessD to work withtheG T training itprovides itsstudents andresidents. match itsworkforce and needswiththeskills decades meansC of thestate’s best-paying jobsinthecoming T have therighttraining for therightjobs. economic environment. Butthat workforce hasto first inanational, andnow inaninternational, provided thestate withsignificant advantages been oneofC A strong, well-educated workforce haslong Aligning workforce withfuture jobs. skills soon aspossible. enable businessesto open,expand andcluster as as theC should target high-unemployment areas such with localzoning authorities, thestate initially and otherland-usezoning permits. Working economic zones that are pre-approved for CEQ C improvementlow-carbon inC to renewable energy that projects contribute to o thisend, the he predicted shortage ofworkers for manyhe predicted shortage alifornia alsoshouldcreate “plug andplay” P betweenefforts WIBSinSilicon Valley andthe their localeconomies. Recent collaborative oflocal maintaining the connection WIBS to ofscarceefficiency resources, whilestill to avoid duplication and maximize the collaborate withinregional labormarkets to coordinateIBS) andtheirpartners and (W opportunities. how education to isconnected career and internships that demonstrate to students P graduates.in highschoolandpost-secondary fortechnical students training opportunities models for ofcoordination. this type artnership for theS artnership to develop programs withindustry artner entral Valley and theI alifornia’s keystrengths, andhas T hink Long C Workforce Investment Boards alifornia mustbegin now to overnor andhisS evelopment, M an Joaquin Valley provide ommittee willseek nland Empire to alifornia’s climate. enior A ichael dvisor A 4. Establishinga • education leadersto takethefollowing action: the C productive workforce industries, andworld-class T C California State University andtheUniversity of go to C from ourtaxreform proposal would annually As noted above, $2.5billion innewrevenue infrastructure. and affordability for allstudents, its andpreserve faculty,maintain quality provide accessibility state, whichthreatens to and attract itsability to decreasedhas fallenvictim fundingfrom the edge technologies. I andhasfueledthegrowththinking ofcutting- the incubator for innovative, entrepreneurial of theworld. M has beentheenvy notonlyofthiscountry, but decades, C education asafoundation for growth. F Renewing thecommitment to higher information centers. including through on-linesites andpublic and placement program needto beimproved to beidentified andaddressed andtraining gapsneed time economic expectations. Skill in private needsandbebasedonreal- sector needs to be better with rapid connected changes O Pressing thefederal government to expand • o enablethestate to continue to develop a alifornia). Butmoneyisnotthesolesolution. verall, workforce development across C workforce. we educate ofour whowant to become part in STEMfields to ensure we donotlosethose students graduating withadvanced degrees of expedited permanentvisasfor foreign graduates anddevelop anewcategory access to H1Bvisasfor qualified college needsto beincreased. curriculum rigorous STEMprograms inC CSUs andUCsto future jobs. M STEM (S program laborthat connects for home-grown companies to create amentoring/internship ommittee encourages thestate andhigher athematics) students college, incommunity alifornia highereducation (including alifornia’s highereducation system cience, ore importantly, ithasbeen “jobs consortium” T echnology, Engineering and n recent years, however, it The pipelineof alifornia’s P ofcutting-edge alifornia or reK -12 -12

THINK LONG COMMITTEE FOR CALIFORNIA 19 his T he selection reative reative T bligation bonds bonds Obligation eneral ommittee’s belief that costs costs belief that ommittee’s ommittee also believes also believes ommittee he C T . should adopt user fees, state The alifornia faces a mammoth infrastructure infrastructure a mammoth faces alifornia C OADBAND Addressing the $765-billion infrastructure the $765-billion Addressing debt. a smart building – from challenge to grid energy refurbishing ports congestion, traffic relieving information the broadband and expanding of the future. highways must be deficit infrastructure Closing the state’s effort the interconnections so that a coordinated as a and the state regions localities, between even if as cost-efficient as possible, whole are C local demand. by driven necessarily close its to will enable the state approaches way. gap in the most cost-effective infrastructure local agency ability improve to BONDS. One way would be infrastructure and finance for plan to local infrastructure the same rules for adopt to for have districts currently and transit we that by be approved new funding could schools i.e., than rather majority a 55% by vote, local voters However, of a 2/3 vote. requirement the current C with the consistent option, and not hidden, this must be transparent via an initiative, be accomplished which would funding new dedicated that also require would G state future for sources a new also approved only if voters be approved funding source. USER FEES. funding. infrastructure for when appropriate, can include tolls for peak- hour freeway use and hour freeway peak- for can include tolls partnershipsthe use of public–private where public sector and develops finances the private user fees. for in return infrastructure of infrastructure projects should be guided by an projectsof infrastructure should be guided by and strict analysis. objective process cost-benefit PERMITTING . One goal of a strategic FAST as suggested be, plan would infrastructure and in this report, streamline elsewhere to shorten so the needed the permitting process job-creation can get and related infrastructure underway without delay. BR (PUC) Utilities Commission should the Public to among providers collaboration encourage the throughout penetration speed broadband 5. al rioritize tate tate “time to olleges. olleges. al S ommunity C onsider an excess-of-units onsider an excess-of-units olleges. inancial aid packages need to alifornia C alifornia arolina, that would impose added fees on impose added fees would that arolina, alifornia has been a national leader via C a national has been alifornia ommunity C he transfer of students between higher- between of students he transfer inancially needy middle-income students degree” while maintaining the same learning while maintaining degree” requirements. and educational outcomes are and universities colleges that Ensure graduation, for classes essential providing P options. including on-line course “on-track” those students for class enrollment C their degree. for in North such as has been adopted surcharge, C hours required the credit units taken beyond (It graduation. is 50% in Northfor Carolina.) embrace a public policy a public embrace supporting gradual, increases and predictable fee moderate the strengthens that systems all three for higher education. to commitment state’s C T a more become to needs systems education seamless process. innovations, technological effortsto adopt online learning programs. including proven the especially at classes, outdated Eliminate C the end of their junior at readiness college the C begun by as already year, classes remedial and offer system, University those in need. for in their senior year aid programs, and college/university Grants a becoming close to but it is dangerously by is dominated access where state “barbell” incomes one end and low at high incomes F the other. at support to students. continue low-income F sliding-scale receive should be able to benefits. and the various high school system through University i.e, of higher education– segments Universities State California of California, and the C • should California affordability. Guarantee • and university barriers college to Remove • shorten policies to Adopt student • all secondary-school Assess for students • the Pre-K between coordination Improve 20 THINK LONG COMMITTEE FOR CALIFORNIA proposed service bureauproposed would service include: T charge areasonable theentity fee for itsservice. bureau wouldIdeally theservice beableto agreement for astate orlocalgovernment entity. and managing thepublic-private partnership isappropriate to implementingpartnership assistance withdecidingwhetherapublic-private onmattersproviding ranging expertise from organized labor, could be acenter ofexcellence with professional trade organizations and costs.transaction small infrastructure projects, inorder to lower procurementpartnership contracts andbundle effectively negotiate complex public-private Bank to help state andlocalgovernments the I should alsocreate a “service bureau” to work with BUREAU. SERVICE AN INFRASTRUCTURE partnerships. agencies, aswell asthestate, withmulti-sector should empower theC expedite infrastructure development. contracting) to performance-based partnerships, for (e.g., bestpractices design/build, public-private andby promotingpriorities; legislation allowing regional infrastructure and economic development leverage resources inways that promote local/ the 19transportation approval by ofinfrastructure projects; incentivizing to control theirown future whenconsidering the interests, whichallows localandregional areas the balance amonglocal, regional andstate I partnerships. innovative fundingmechanismsanddeveloping C resourced P COMMISSION. ADVISORY PUBLIC INFRASTRUCTURE of thestate. infrastructure,regions specificallyinunderserved S with thePUCto expand theCalifornia Advanced T state anddevelop standards. modelpermitting he expertise that could beprovidedhe expertise by the tohe state work shouldencourage industry ervices F ervices ommission withestablishingaframework for nfrastructure andE und to assistthegrowth ofbroadband ublic I t shoulddosoinitiallyby restoring T he state shouldtaskafully nfrastructure A T his service bureau, working his service “self-help” ommission to assist local ommission to assistlocal conomic D regions to dvisory dvisory evelopment

T he state The state

goals by 2020. lines andhelpthestate meetitsclean-energy ofnewpowerspeed construction transmission interconnecting renewable facilities. D beimposedon burden that would otherwise renewable energy facilitiesby lowering thecost can significantly for new reduceto entry barriers of incentives, policiesandprocedures, thestate T for renewable energy development (e.g., E power facilitiesinareas that have ahighpotential and federal ofnew policies,theconstruction companies to pursue, consistent withstate, local F CONNECTION Calculating infrastructure costs for all • measurements that performance will Utilizing • by borne eachpartner Delineatingtherisks • analysis value-for-money ofeach Conducting • Helpingto retain experienced professionals • ehachapi project.)Employing acombination inally, the state shouldalsoencourage utility life oftheasset. owning theinfrastructure over theprojected costs ofbuilding, maintaining, operating and intolife account oftheproject,taking all over orotherwise, the private partnerships by public- projects, whetherundertaken allow evaluation oftheresults ofeachproject. appropriate. when partner torisk itsprivate-sector and identifying how thestate hasshifted partnership. asapublic-private should beundertaken toproject determine whether theproject with theprivate sector. dealto ensure fairnegotiations partnership to represent thestate onany public-private RENEWABLE ENERGY PRODUCTION. oing sowill dison’s THINK LONG COMMITTEE FOR CALIFORNIA 21 odernize odernize his would also his would T olicy include: changes should funding Formula Student Weighted Out hiring and firing). of Last In/First 5 years). 2 to from and moving equitable distribution of teacher (i.e., talent salary within districts). schools across dollars model to ensure equality of funding for equality for of funding ensure model to public charter schools. those to allocated the funds are that ensure the needs of determine in the best position to individual students. highest-performing public charter schools serve that students the most disadvantaged education). for zones enterprise (i.e., learning opportunities of elimination (i.e., on funding based time requirements, seat etc.). achieving competency, administrator data systems. data administrator resources state that ensure to of data analysis of professional analysis used wisely (i.e., are of best identification programs, development etc.). textbooks, policies for recruiting, compensating, retaining retaining compensating, recruiting, for policies and teachers and evaluating and rewarding, P principals. • Meaningful and principal evaluations. teacher • elimination (i.e., Non-seniority based layoffs • based on effectiveness (i.e., Earned tenure • Ensuring equitable distribution of teacher . M effectiveness principal and Teacher • of the growth for financial incentives Provide • of digital barriers the expansion to Remove quality public charter schools and providing additional high-quality and students options for parents. • a Utilize systems. and school data • and teacher student, Implement statewide • the for level the state funds at Provide 1. 2. equality and opportunity Promoting high- for 3. district and useful state, strong for Providing K-12 EDUCATION REFORM EDUCATION K-12

In addressing these issues, the Committee spoke with spoke the Committee these issues, In addressing their leaders who provided of education a number expertise others have and many They and perspectives. the improve to ways researching spent their careers knowledge and their collective system, educational Committee upon which the the scaffolding provides priorities: reform key bases the following The Think Long plan would provide for a steady and for a steady provide plan would Long Think The coming the over to education revenue of flow growing schools and $2.5 for K-14 – $5 billion annually decades State at California for higher education billion annually and California’s University of California, University, such new funding believe We colleges. community that is a system to given should not be automatically It instead millions of Californians. educate to failing performance improving should be of K-12 tied to as of teachers, evaluation of rigorous as a result schools, and seniority. tenure teacher as curbs on automatic well further that new financing for education believe We parents, provide as to should be designed in such a way choice with the maximum especially poor, the working educated. are their children and where how over However, the issue of the state’s decaying educational educational decaying of the state’s the issue However, and business economic beyond goesfar system that the poor when some argue a moment At concerns. public schools is “the rights civil quality of California’s and significant systematic serious, issue of our time,” learning to improvements Without needed. are reforms of the poorer communities in many students outcomes, side of the wrong on the will remain of California in some of the country’s trapped Gap, Achievement schools. worst Quality K-12 education is the foundation of any solid of any is the foundation education Quality K-12 opportunities providing for upward society, middle class is especially a knowledge economy so in This mobility. students competitionwhere globally and stiff that faces to South to Singapore Korea from in other countries the ensure To students. China outperform California’s schools California competitiveness, long-term state’s global standards. up to be brought must VII. 22 THINK LONG COMMITTEE FOR CALIFORNIA . Improving accountability systems whileat the 4. Ensure robust whenaschool state action • inCalifornia, For districts highestperforming • greater Give indecision- districts authority • Create school-level ameaningful • meet accountability goals. same timeincreasing autonomy district-level to performing schools. performing including theclosingofpoorest continually failsto educate students, funds, includingallcategorical funds. allow for inutilizingstate maximumflexibility available. widely disseminated andbeeasilypublicly be performance and school-district-level would require that data onbudgetallocation priorities.state fundsto meetdistrict includingtheflexibility to allocatemaking, funded schoolsaccountable for results. and usethissystem to holdallpublicly and absolute levels ofstudent performance, both improvement instudent performance accountability system that accurately assesses approved individualproposal. withoutimplyingthateachmembercompletely agrees withevery way toward restoring goodgovernance to Elena California.Durazo abstainedonthefinal Maria for California. istherefore Having incommontheambitionofaunanimous position,thisreport However, whatwe allagree onisthat,asawhole, thesereforms, ifimplemented, willgoalong These proposals are theresult ofaconsensusby themembersof Think Long Committee recommendations. Fong Matt passedaway thecourseofyear. during T his already builtup. been costs andtheunfundedliabilitiesthathave ofpensions employee unionsto find ways to address thelong-term officials make to itthehighestpriority workwithpublic that theGovernor, Legislature andlocal government health care inthelong run. benefits We recommend halfoftheprojectedabout costs andretiree ofpensions employees –thatheindicated would save taxpayers retirement ageto 67andincreased contributions from – includingahybrid ofthe 401ksystem, extension Governor Brown proposed apackage reforms ofpension was finalized, being 27,asthisreport October On unions allotherreform progress isatrisk. state andlocalbetween officialsandpublicemployee as $500billion.Unlessresolved through negotiations Estimates ofthetotal unfundedliabilitiesrange ashigh job creation services. andsocial competing forfundingwitheducation, infrastructure, an unsustainableburden onmany ofthesebudgets, under-funding indifferent jurisdictions, they represent matter. systems pension are While invarious states of deliberation to address thiscritical publicpolicy scope andtimeframe oftheCommittee’s year-long liabilities,and healthbenefit it beyondwas the Given thecomplex issuesoflong-term publicpension VIII. BENEFIT REFORM PENSIONANDHEALTH THINK LONG COMMITTEE FOR CALIFORNIA 23 A Blueprint to Renew California: Report and Recommendations Presented by the Think Long Committee for California