Governing the Golden State: A Critical Path to Improve Performance and Restore Trust

Report #174, July 2004
Governing the Golden State: A Critical Path to Improve Performance and Restore Trust

Full Report

Executive Summary

Press Release

FOR IMMEDIATE RELEASE
July 20, 2004

For Additional Information Contact:
James P. Mayer, Executive Director
(916) 445-2125

Commission Provides a Critical Path for California to Restore Prosperity, Improve Performance and Rebuild Trust

California faces critical challenges that policy-makers must address for the state to regain prosperity, improve the performance of government and rebuild public trust. But efforts to solve these problems over several years – from an obsolete revenue system to a dysfunctional state-local relationship – have failed to yield necessary reforms.

The Little Hoover Commission, in a report released Tuesday and titled Governing the Golden State, gleaned the lessons from previous efforts to fashion a “critical path” that leaders could use to develop well-analyzed and publicly supported solutions.

"Beyond the current budget debate, state leaders need to confront and resolve a range of structural issues that hobble how policy decisions are made, resources are allocated, and services are delivered," said Commission Chairman Michael E. Alpert.

Lagging government performance, in turn, reduces the quality of life and the ability of Californians to compete and prosper. California’s educational outcomes, violent crime rates, unemployment and traffic congestion are among the nation’s worst.

"Clearly government will have to find ways to surely and swiftly progress toward public goals, such as an educated citizenry, safe communities and adequate health care," Alpert said. "And in making these improvements, public leaders have an opportunity to restore the public's faith and confidence."

In good times and in bad, well-intended reformers have set out to solve the structural problems that are considered responsible for budgets that aren't balanced, and other policy failures that attract national attention. Many of the problems have festered for decades. However, the fiscal crisis, now in its fourth year, has elevated the need for reforms that would enable the State to provide high quality services at an affordable cost, making California an attractive place to live and do business.

In this project, the Commission examined previous blue ribbon panels and other reform efforts to determine why they did not yield solutions that were enacted by policymakers and successfully implemented. A lack of consistent leadership, inadequate data and analysis and insufficient public involvement were among the reasons why sophisticated solutions to complicated problems have not been developed. Blue ribbon panels are often given vague charges, inadequate resources, and no commitment by policy-makers to seriously consider proposals that are developed.

With the benefit of hindsight, much of it offered by those who were involved in these efforts, the Commission discerned a process that California leaders could use to develop technically sound and politically supported reforms.

"This critical path, if followed, would enable the leadership of California government to achieve a permanently balanced budget while delivering the highest quality public services at an affordable cost," said Commissioner Welton C. Mansfield, chair of the subcommittee of this project.

"Each step on the path is based on actual experiences from people who have been involved, and frustrated, by the attempts to find a better way of funding government, setting policies and priorities, allocating resources among programs and measuring performance," Mansfield said.

The model process begins with – and must be sustained by – state level leaders, who need to agree on the problems to be solved, define the range of acceptable solutions, and devote the political capital necessary to get stakeholders to the table and to build public awareness and support for change.

Deliberations need to be supported by the resources necessary to analyze problems in detail and assess potential solutions. This information must feed into negotiations that include all key stakeholders, who must be committed to forge and sustain agreements that truly reflect the backing of their organizations.

A critical component of the process is public involvement, which is necessary to build awareness of the importance of change and the support for specific proposals.

Ultimately the process must yield sound, mature and vetted solutions that the stakeholders and the public support and policy-makers can enact.

The process itself must be framed with integrity. Previous efforts have often lacked one or more of the following: leadership, trust, transparency, public involvement, inclusiveness, commitment and timeliness. These intangible ingredients are essential to success.

The Commission designed the critical path to be applied to a variety of reform issues. However, in the report, the Commission applied the path to two of the State's most contentious issues: the revenue system and the state-local government relationship. The Commission recognized that solving these two problems is foundational to resolving a number of other fiscal and performance problems plaguing California.

The Little Hoover Commission is a bipartisan and independent state agency charged with recommending ways to increase the efficiency and effectiveness of state programs. The Commission’s recommendations are sent to the Governor and the Legislature. To obtain a copy of the report, Governing the Golden State – A Critical Path to Improve Performance and Restore Trust, contact the Commission or visit its Web site: www.lhc.ca.gov.

Fact Sheet

Study Description

For this study, the Commission engaged in a project to help the Governor and the Legislature resolve the problems responsible for the fiscal management and political crises in state government. Specifically, the Commission developed a roadmap for structural reform. The goal of the roadmap was to provide a path that, if followed, would enable the leadership of California government to achieve a permanently balanced budget while delivering the highest quality public services and infrastructure at an affordable cost.

Agenda

Overview

In this report, the Commission provides a critical path for California to restore prosperity, improve performance and rebuild trust. The Commission's report describes in detail the lessons that can be learned from past attempts at reform and how its critical path could be applied to solve two of the biggest problems: the state’s revenue system and the state-local relationship.

During its review, the Commission found that a lack of consistent leadership, inadequate data and analysis and insufficient public involvement were among the reasons why sophisticated solutions to complicated problems have not been developed.

The Commission recommends eight essential steps that California leaders involved in a reform process should follow to develop technically sound and politically supported improvements. 

Print 
			Agenda
  • March 25
    2004
    Roadmap for Reform
    9:00 a.m., State Capitol, Room 2040, Sacramento, CA
    Public Hearing
    Agenda

    AGENDA

    Public Hearing on the Roadmap for Reform 
    Thursday, March 25, 2004, at 9:00 a.m. 
    State Capitol, Room 2040 
    Sacramento, CA


    Opening Remarks

    Identifying differences among state and local governments and how they complicate structural reform.

    1. Chris McKenzie, Executive Director, League of California Cities
       
    2. Steven C. Szalay, Executive Director, California State Association of Counties (Written Testimony)
       

    Taking a regional approach to state and local revenue reform.

    1. Russell Hancock, President and Chief Executive Officer, Joint Venture: Silicon Valley Network (Written Testimony)


    Presentation – The experience of other states in reforming the budget and the governance process as a path for California.

    1. Peter C. Hutchinson,  President, Public Strategies Group, Inc. (Written Testimony)


    Panel – Challenges previous reform groups have faced in developing revenue reform.

    1. William J. Rosendahl, Chairman of the  California Commission on Tax Policy in the New Economy (Written Testimony)
       
    2. Michael Coleman, Principal, CaliforniaCityFinance.com and fiscal policy consultant to the League of California Cities (Written Testimony)


    Public Comments

  • January 22
    2004
    Roadmap for Reform
    9:00 a.m., State Capitol, Room 113, Sacramento, CA
    Public Hearing
    Agenda

    AGENDA

    Public Hearing on the Roadmap for Reform 
    Thursday, January 22, 2004, at 9:00 a.m. 
    State Capitol, Room 113 
    Sacramento, CA


    Opening Remarks

    Californians’ Support for Structural Reforms and Public Priorities

    1. Mark Baldassare, Director of Research, Public Policy Institute of California (Written Testimony)
       

    Why should California reform its revenue system and how should state leadership pursue reform?

    1. John Bohn, Chairman and Chief Executive Officer, GlobalNet Venture Partners, LLC and former Chairman & Chief Executive Officer, Moody’s Investors Services (Written Testimony)


    What structural reforms are required in the State’s revenue system and what would it take to develop the best technical alternatives?

    1. Donna Arduin, Director, Department of Finance
       
    2. Elizabeth G. Hill, Legislative Analyst (Written Testimony)


    Revenue system reforms being considered by the California State Assembly Bipartisan Group and how the Little Hoover Commission’s Roadmap Project could complement these efforts.

    1. Assemblymember Joseph Canciamilla, member, bipartisan Assembly group (Written Testimony)
       
    2. Assemblymember Keith Richman, M.D., member, bipartisan Assembly group (Written Testimony)


    Why has structural reform been so difficult to accomplish?

    1. Steven C. Szalay, Executive Director, California State Association of Counties (Written Testimony)
       
    2. Scott Peters, San Diego City Councilmember and member of the California Commission on Tax Policy in the New Economy (2000 – 2004) (Written Testimony)
       
    3. Bill Hauck, President, California Business Roundtable, former member of the Speaker’s Commission on State & Local Government Finance (1998 - 2000) and Chairman of the California Constitution Revision Commission (1994-1996)


    Comments Submitted by Members of the Public

    • Wesley C. Hough, Co-President, Public Resources Advisory Group (Written Comments)
  • November 20
    2003
    Roadmap for Reform
    9:00 a.m., State Capitol, Room 112, Sacramento, CA
    Public Hearing
    Agenda

    AGENDA

    Public Hearing on Roadmap for Reform 
    Thursday, November 20, 2003, at 9:00 a.m. 
    State Capitol, Room 112 
    Sacramento, CA
     

    1. Lucy Killea, Ph.D., Former Legislator, California State Senate (Written Testimony)
       
    2. Carl DeMaio, Executive Director, The Performance Institute (Written Testimony)
       
    3. B. Timothy Gage, Former Director, Department of Finance, State of California (Written Testimony)
       
    4. John Upton, Member, South Lake Tahoe City Council and Former President, California State Association of Counties (Written Testimony)
       
    5. J. J. McClatchy, President and CEO, McClatchy Management (Written Testimony)
       
    6. Joseph M. Peters, Secretary/Treasurer, California Farm Bureau Association (Written Testimony)
       
    7. Perry Kenny, Past President, California State Employees Association
       
    8. Tom Stallard, Chairman, Board of Directors, Valley Vision (Written Testimony)
       

    Public Comments

Print 
		Agenda
  • March 25
    2004
    Roadmap for Reform
    9:00 a.m., State Capitol, Room 2040, Sacramento, CA
    Public Hearing
    Agenda

    AGENDA

    Public Hearing on the Roadmap for Reform 
    Thursday, March 25, 2004, at 9:00 a.m. 
    State Capitol, Room 2040 
    Sacramento, CA


    Opening Remarks

    Identifying differences among state and local governments and how they complicate structural reform.

    1. Chris McKenzie, Executive Director, League of California Cities
       
    2. Steven C. Szalay, Executive Director, California State Association of Counties (Written Testimony)
       

    Taking a regional approach to state and local revenue reform.

    1. Russell Hancock, President and Chief Executive Officer, Joint Venture: Silicon Valley Network (Written Testimony)


    Presentation – The experience of other states in reforming the budget and the governance process as a path for California.

    1. Peter C. Hutchinson,  President, Public Strategies Group, Inc. (Written Testimony)


    Panel – Challenges previous reform groups have faced in developing revenue reform.

    1. William J. Rosendahl, Chairman of the  California Commission on Tax Policy in the New Economy (Written Testimony)
       
    2. Michael Coleman, Principal, CaliforniaCityFinance.com and fiscal policy consultant to the League of California Cities (Written Testimony)


    Public Comments

  • January 22
    2004
    Roadmap for Reform
    9:00 a.m., State Capitol, Room 113, Sacramento, CA
    Public Hearing
    Agenda

    AGENDA

    Public Hearing on the Roadmap for Reform 
    Thursday, January 22, 2004, at 9:00 a.m. 
    State Capitol, Room 113 
    Sacramento, CA


    Opening Remarks

    Californians’ Support for Structural Reforms and Public Priorities

    1. Mark Baldassare, Director of Research, Public Policy Institute of California (Written Testimony)
       

    Why should California reform its revenue system and how should state leadership pursue reform?

    1. John Bohn, Chairman and Chief Executive Officer, GlobalNet Venture Partners, LLC and former Chairman & Chief Executive Officer, Moody’s Investors Services (Written Testimony)


    What structural reforms are required in the State’s revenue system and what would it take to develop the best technical alternatives?

    1. Donna Arduin, Director, Department of Finance
       
    2. Elizabeth G. Hill, Legislative Analyst (Written Testimony)


    Revenue system reforms being considered by the California State Assembly Bipartisan Group and how the Little Hoover Commission’s Roadmap Project could complement these efforts.

    1. Assemblymember Joseph Canciamilla, member, bipartisan Assembly group (Written Testimony)
       
    2. Assemblymember Keith Richman, M.D., member, bipartisan Assembly group (Written Testimony)


    Why has structural reform been so difficult to accomplish?

    1. Steven C. Szalay, Executive Director, California State Association of Counties (Written Testimony)
       
    2. Scott Peters, San Diego City Councilmember and member of the California Commission on Tax Policy in the New Economy (2000 – 2004) (Written Testimony)
       
    3. Bill Hauck, President, California Business Roundtable, former member of the Speaker’s Commission on State & Local Government Finance (1998 - 2000) and Chairman of the California Constitution Revision Commission (1994-1996)


    Comments Submitted by Members of the Public

    • Wesley C. Hough, Co-President, Public Resources Advisory Group (Written Comments)
  • November 20
    2003
    Roadmap for Reform
    9:00 a.m., State Capitol, Room 112, Sacramento, CA
    Public Hearing
    Agenda

    AGENDA

    Public Hearing on Roadmap for Reform 
    Thursday, November 20, 2003, at 9:00 a.m. 
    State Capitol, Room 112 
    Sacramento, CA
     

    1. Lucy Killea, Ph.D., Former Legislator, California State Senate (Written Testimony)
       
    2. Carl DeMaio, Executive Director, The Performance Institute (Written Testimony)
       
    3. B. Timothy Gage, Former Director, Department of Finance, State of California (Written Testimony)
       
    4. John Upton, Member, South Lake Tahoe City Council and Former President, California State Association of Counties (Written Testimony)
       
    5. J. J. McClatchy, President and CEO, McClatchy Management (Written Testimony)
       
    6. Joseph M. Peters, Secretary/Treasurer, California Farm Bureau Association (Written Testimony)
       
    7. Perry Kenny, Past President, California State Employees Association
       
    8. Tom Stallard, Chairman, Board of Directors, Valley Vision (Written Testimony)
       

    Public Comments