This Wednesday is D-Day for the California Legislature. It’s the deadline for passing a balanced state budget. And it is an opportunity to pull our state out of the financial and economic morass we find ourselves in today.
Financial deadlines usually force people out of their comfort zones and give them an urgency to act. Gov. Jerry Brown and members of the Legislature should use Wednesday’s deadline as an opportunity to put a financial workout plan into place for California.
In the business world, a workout plan is an agreement between a financially troubled company and its lender to alter the terms of repayment. Typically, the lender agrees to modify the terms in exchange for legally binding commitments from the company to fix the structural problems that got the company in trouble. That’s what California needs: a workout plan where taxpayers agree to extend temporary taxes on the condition that state government fixes the underlying conditions that got California in trouble.
We disagree with those who don’t see the need for a workout – those who favor an all-cuts budget that will scar California’s future, as well as those who want tax extensions without the reforms needed to get California out of this mess.
In February, the Los Angeles Area Chamber of Commerce voiced its support for such a plan. In early March, it looked like Brown and members of the Legislature were heading toward a reasonable agreement. For whatever reasons, the negotiations did not succeed. We do know that they came close to a resolution.
In May, a coalition of 13 major business organizations from across the state, including the L.A. Area Chamber and the Los Angeles County Economic Development Corp. formed the Coalition for a California Financial Workout Plan to encourage Brown and legislative leaders to restart negotiations around a five-point workout plan. The components include:
• Spending control and budget reform
• A focus on job creation that includes regulatory reform
• Pension reform
• Government closer to the people
• Extension of temporary taxes
Long term solutions
The citizens and businesses of California don’t want short term fixes that pass the problem on to future generations. Neither do they want another set of gimmicks or smoke and mirrors. Californians want real long-term solutions that put our state on a straight path toward financial stability and job growth in the future.
It can’t all be done by Wednesday, but the framework of a workout plan can be in place by then. A sense of urgency, long-term vision, courage and compromise is what it will take. The benefits will last for generations. Please join us by calling upon Brown and the Legislature to work night and day to make this happen by Wednesday.
Gary L. Toebben is president and chief executive of the Los Angeles Area Chamber of Commerce.
