ALEC Offers Friendly Advice for Arnold

Published December 1, 2003

The American Legislative Exchange Council (ALEC)–the nation’s largest bipartisan, individual membership organization for state legislators–responded to Arnold Schwarzenegger’s election with a little friendly advice on restoring the stability and vitality of the state’s budget and economy.

“It’s time for Democratic and Republican state legislators to work with California’s new governor,” said Duane Parde, ALEC executive director. ALEC offered the following “five suggestions as a beginning step toward piecing-back-together the vitality of California’s shattered economy.”

1. Reject the usual gimmicks

The borrowing and short-term fixes adopted by California in the past two budgets have been counterproductive, contributing to, rather than solving, California’s fiscal problems. Schwarzenegger must seriously address the chief underlying problems with California’s budget: an uncompetitive tax and regulatory environment and a need for efficiency in state spending.

2. Reform California’s tax and regulatory environment

Only four states with a personal income tax have a higher top rate than California. To reinvigorate personal and business investment in the state, ALEC says, Schwarzenegger must cut California’s personal income tax rates. California also has one of the worst business-tax climates in the country. If California wants to fully employ its workforce, the state has to stop treating businesses like villains and start treating them as partners.

3. Set goals and instill a culture of efficiency in government

In order to get state spending under control, Schwarzenegger needs to instill a culture of efficiency in state government. To do this, ALEC recommends, goals must be set for each agency; a determination must be made whether the public or private sector is best suited to meet those goals; and a system must be put into place for examining all government functions on an annual basis to make certain goals are being met.

4. Employ the “yellow pages” test

Government officials in California–and in all states–should employ the “yellow pages” test: If a service can be found in the yellow pages, it should not be directly provided by the state government. That simple maxim alone could save significant amounts of money each year.

5. Reduce workforce costs

Schwarzenegger must control the costs of the public-sector workforce. Competitive bidding, the elimination of phantom positions, public pension reform, and employment caps all can be used to bring public-sector labor costs under control.

John Skorburg is managing editor of Budget & Tax News. His email address is [email protected].