Commentary
Call it a joke, call it smoke and mirrors, call it a sales job, call it stupidity, call it whatever you want but please don’t call it a “budget.” Anyone who thinks the latest version of California spending and income figures projected for 2023–2024 by our governor is a budget should really go back to school and learn what a real budget is, what it is used for, and how it is composed, funded, and put into action.
One of the big problems that we Californians face today is that apparently there are many residents in our state who don’t know what a budget is or what it is used for, and they couldn’t care less.
A governmental budget is a detailed outline and dedicated plan of action put forth once a year by our elected representatives that defines governmental operations in terms of expenses. It is a very effective administrative tool that is used by our leaders to allocate resources, direct personnel, and implement and fund public programs. It is not only required by law but is also a wonderful way for the public to gauge the effectiveness and transparency of those in elected office.
In California, the budget presented every year must be balanced, meaning expenditures must be equal to income. As stated earlier, this is a wonderful way for the governor and legislature to be held in check and accountable, but if we don’t know what we are holding them in check for, or understand the hidden and ongoing costs behind so many public programs that are put into action, then we are nothing more than sitting ducks to be taken advantage of by those who exploit public funds for political expediency.
We really have no one to blame but ourselves when we are faced with budgeting deficits, because we continually elect people into public office who don’t care about, understand, or respect the fiduciary responsibilities that a realistic and honest budget promises to the taxpayers.
I am not going to overwhelm you with facts and figures and numbers like so many articles about budgeting do, but try to help you understand how budgets are formed, what they are used for, and how they can be helpful or misused by politicians in today’s world.
There are four basic budget methods used today by local governments:
1. Incremental: This process takes the prior year’s figures and adds or subtracts a percentage to obtain the current year’s budget. In government especially, this process is likely to increase inefficiencies because department heads know that they can grow their budget each year by the given percentage without seeking ways to economize. 2. Activity-based budgeting: This is a top-down type of budgeting method whereby after targets or programs are first identified, the revenue is then sought after to support those targets. The negative of this approach is obvious, as it relies heavily on the salesmanship of those who are promoting a specific activity, is not necessarily bound to a public need, and lacks a track record to evaluate. 3. Value proposition budgeting: This method ties everything being proposed in a budget to a projected value that the supporters or the public at large might see as acceptable. This approach also relies heavily on salesmanship and a reliance that those who are pushing for it really know what they are talking about, as often there is a lack of any track record to evaluate. 4. Zero-based budgeting: This approach starts with the assumption that all departmental budgets must be rebuilt or justified from scratch or zero every budget cycle and aims to insure that all expenditures are essential to the mission of that particular department. Over recent decades, this approach seems best suited for government operations where the handling of public monies in the most responsible manner is of primary concern. It is most effective when analyzing programs that have been in existence for a period of time, and by its nature it assures that there is at least some justification for the allocation of earmarked funds.
Although the State of California has occasionally engaged in zero-based budgeting when the public has demanded such, the basic approach utilized in budgeting today is the incremental method, with a mixture of activity-based and value-proposing methods thrown in to pass pet programs devised by those who want to “save us” from our own doom. This approach essentially uses the current departmental level of funding as a base amount to be adjusted by change proposals, and it allows new and untested programs to be funded initially without regard to future sustainability or costs.
Herein lies the problem, as it is the least accountable method that could be used, especially when analyzing subsequent years’ expenditures.
For example, when Gavin Newsom was mayor of San Francisco, his signature program of providing “Care not Cash” for the homeless was widely acclaimed and voted in by a benevolent public that was led to believe that finally there was a solution to the growing homeless problem at that time. Little did the public know that the “Care” to be provided instead of cash would wind up costing the city (the taxpayers) some 10 to 20 times the amount of cash no longer dispensed!
This was despite the public being warned by a few of us on the Board of Supervisors at that time that the real costs associated with this “Trojan horse of a political program” would not solve the homeless problem, but in reality would become a magnet for the homeless population from all over the country seeking “care,” and it would require a budget in subsequent years that could not be sustained.
Look at San Francisco today. It is a city whose homeless population is totally out of control, and its leaders still haven’t figured out why. Newsom and his monied and nonprofit supporters left “Dodge” without being held accountable, knowing that he pulled off one of the biggest con jobs in that city’s history.
The point is that the initial budget approved for the program did not include what it would actually cost the taxpayers once in action.
It is important to understand just how these different methods of budgeting have been utilized in allowing our governor and his misguided legislature to accomplish what no other administration in the history of California has done, and that is to “blow” much-bragged-about and ballyhooed historic budget surpluses over a two-year period.
This included a $47 billion surplus in the 2021–2022 budget cycle, a $55 billion surplus in the 2022–2023 budget cycle, and what is now a projected $33 billion deficit in the 2023–2024 budget of today! This is absolutely incredible!
I know this is hard for some of you to believe, but you can’t buy this type of incompetence in today’s labor market in the private sector, and here we are in reality paying for it with our hard-earned tax dollars and in a time when there are so many people in need and so many demands on government.
I can’t help but think that somebody is playing fast and loose with the numbers that were included in our budgets of those years, or that perhaps the surpluses were just fantasies made up to project good governance at that time (election time?). Whatever the discrepancy is between now and then, you the taxpayers are being played by a bunch of electeds who have absolutely no regard for any accounting of your tax monies as long as they are allowed to use the budget methods that they have been using for the past many years.
They promise one thing about the costs of a program but do not consider including the necessary costs to maintain the program in follow-up years. That is precisely why our budgets can fluctuate so much from year to year.
On the other hand, if there really was a $100-million-plus surplus less than two years ago that has suddenly changed to a $33 billion deficit today, then it really is high time we changed our leaders because of their gross incompetence, or changed the method of budgeting because it allows for such a false reading.
The incremental, activity-based, and value proposition budgeting methods have allowed our leaders to destroy such a magnificent gift as a monster surplus into a deficit nightmare! Either our leaders are playing games with the numbers or the budgeting process is flawed.
Why and how does this happen?
The majority of our California legislature and our governor are true believers that an ever-increasing government presence in our lives is the answer to all of our problems. Their progressive policies are solidly rooted in programs that are designed to cost more and more for every year that they are in existence. Their programs are like a cancer that feeds upon itself for its very existence.
Our leaders are not really that dumb, and it would be shortchanging them to assume so. They want this to happen to our way of life. They want us to be dependent on them for all our needs. In short, it is the most practiced form of a power grab.
How this happens is very easy in a budget process that eschews accountability at all levels and allows politicians to “pander” to voters with “feel-good” programs without ever addressing the long-term costs or consequences of such programs. Maybe it is time to employ zero-based budgeting.
Incremental budgeting is always best for those who believe that big government is the answer to all our problems. Incremental budgeting allows government operations to grow at a given percentage every year without true oversight because that is what it is designed to do.
Our governor is enthralled with new and innovative cliché-sounding programs of which I am sure he doesn’t even know the true impact. People, especially the young and politically naive who like to think that they are part of something new and exciting, go along with it.
Newsom is a good salesman who incorporates activity-based and value proposition methods with his incremental budgeting in his never-ending cycle of exercising control over the lives of Californians. (This is a good spot to tune in on a wonderful documentary called “Leaving California: The Untold Story,” produced by California Insider. See LeavingCaMovie.com.)
Newsom and the majority of state legislators have made a habit of this type of budgeting activity in recent years. The modus operandi for any rank politician who wants to climb the political ladder has been to devise a phony but good-sounding program, sell it to the voters, and then use the name recognition to run for higher office without ever considering the true costs or benefits to society and without being held accountable.
This “all sizzle no steak” approach to governance is exactly what the radical Left is all about in their quest to remake America into a socialist state. Make no mistake about it, though—Newsom is no socialist, but an opportunist who seeks the monied reins of power to achieve his dreams of occupying the White House.
The programs coming forth from him in the near future will sound more reasonable and appeal more to the middle ground, but they will still need to be funded by a “funny money” type of budget process. So keep alert and analyze what’s coming.
The only question that remains is whether he can do it quickly enough to avoid the ensuing backlash in California.
