Encouraging fiscal sustainability
The rising tide of concern over California's estimated $68 billion deficit threatens to drown out solution-oriented voices. We're speaking up for those problem solvers. Let's not lose sight of the lifeboat on the horizon: an upcoming flood of nearly $180 billion in federal dollars that can be funneled into local investments to keep vital community programs afloat.
Cuts to these education, job training, broadband, healthcare, childcare and other essential programs are all but certain at the state level from our current levels. Still, even if California's total budget for the upcoming fiscal year were cut by $68 billion, the projected deficit would remain $30 billion higher than it was in 2018, according to data from the Legislative Analyst's Office (LAO).
Policymakers would be wise to rethink their approach to plugging holes before more highwage earners (who buoy California's state revenues by paying higher income taxes) jump ship. We don't necessarily need more money; our state budget has swelled by nearly $100 billion since 2018. We need our leaders to champion financial sustainability.
We're urging policymakers to stretch available dollars by investing federal dollars in areas that relieve the state from having
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letters@dailybreeze.com (Please do not include any attachments) to fully fund key programs. Projects receiving support from the state should have a “stretch” goal included to ensure the money is allocated properly, making them fiscally regenerative and sustainable. Investments should be one time and the program should generate revenue to sustain itself without recurring government commitments.
Communities will have to decide the “how” based on what is best for their specific needs and their policy needs. We think that there are solutions such as Community Development Corporations, which can be a Public Private Partnership model where for-profit subsidiaries make profits, and then use those profits to provide community support.
Another area BizFed Institute is involved in is the California Jobs First program. CJF could be a pilot for the broader model we envision for grant applications to have a double bottom line. We can deliver value for the dollars invested while also ensuring equitable community development and supporting our Community Based Organizations with the recurring revenue, fulfilling investment goals and reducing the state's long-term funding needs.
Lastly, our local private foundations can impact investors in such projects with innovative approaches to finding new funds to unlock those investments and provide sustaining returns. These examples show a holistic double bottom line approach is fiscally sound and benefits residents
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Our leaders must act quickly as the pace of California outmigration among higher wage earners accelerates, especially in coastal metropolitan areas. Census data reveals an increasing share of people moving to California are lower wage earners. This is a new dynamic. Previous budget shortfalls in California were partially offset by a steady influx of high-wage earners. Smooth sailing is impossible if we fail to adjust to changing winds and chart a new course.
We face a unique challenge and pivotal moment for state leaders to modernize their fiscal approach. The forthcoming turnover in elected officials in the state Assembly and Senate is unprecedented. We need new ideas and leaders willing to see things differently. Voters should demand innovative solutions and that their leaders take on these challenges as collaborative cocaptains.
With the help of deeply-connected convening organizations such as BizFed Institute, policymakers can partner with labor, business, community-based organizations, education institutions and leading private foundations to map out sustainable solutions.
Stephen Sachs is president of Sachs Management, Inc. and a member of the BizFed Institute Board of Directors. Kevin Harbour is president of BizFed Institute.
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