Beating the $150 million candidate was a good start. Now Jerry Brown faces a $10 billion deficit- at the very least.

Brown will find California during his tenure as the oldest governor in its history very different from back when he was the youngest one. Marred by gerrymandered partisanship, unaffordable generous employee benefits, and overly cozy relationships with special interests, California has become a whipping boy of government mismanagement by the other 49 states. Its budgets are sinking and its citizens unhappy. Perhaps the torrential downpours are an apt metaphor for what has happened to the once-optimistic and always-sunny Golden State.

Clearly, Brown needs to get to work as soon as the bags get dropped off at his governor’s mansion. Here’s a few resolutions he can make to solve California’s problems:

1. Compromise by cutting spending and raising taxes. As we saw with Obama’s tax deal, compromise normally leads to big-spending items added to and not cut from the budget. However, Brown has one weapon Obama doesn’t- the line-item veto. He needs to use it as a threat to the famously hyperpartisan California legislature to show them that the everyone’s agenda will have to take a hit; if someone categorically refuses to offer concessions, eliminate their district’s project funding. Harsh, but effective. Thankfully, redistricting done by an independent commission (thanks to Prop 20) will aid in bringing more moderates into the legislature that need to balance interests and are more willing to compromise.
    
2. Renegotiate pensions. CalPERS has been the single most disastrous government pension fund this side of Greece, accounting for $7 billion of the $20 billion deficit last year. What makes this harder than, say, GM’s negotiations with the UAW is that the California government does not have bankruptcy as an option and a threat. However, the government needs to play hardball in order to reduce pensions to manageable levels.
    
3. Do raise taxes. California’s spending cuts have bordered on draconian the last two years- they have already eliminated most child health insurance and state welfare programs- and there just isn’t that much to cut anymore. While some may want us to believe that balancing the budget only requires more spending cuts, some tax increases need to also be in store. However, raise taxes in a way that least affects consumer spending.
    
4. Be prepared for a fight. Now that California’s cut to the bone, the special interests will fight tooth and nail to preserve what little they have left. In addition, the state Democrats and Republicans, never a friendly bunch, are likely to fight to gridlock. How Brown handles this hostile atmosphere and channels it into progress is a key to watch for.

The coming year will not be an easy one for Brown, as he faces a terrible combination of a deep sinkhole of a budget, pissed off constituents and interests, and an inept legislature. However, he needs to have the political courage to come in and draw the line for partisan bickering and self-interest; the 4 suggestions I made all relate to it. Only by imposing a sense of order in this chaotic state government can he start analyzing in-depth the financial issues plaguing California.


(Photo: Freedom To Marry)