Analyst walks a tight rope, tells truth to power

In the Capitol’s incessant budget battles, one of the most important warriors is as crucial to the debate as he is unknown to the public – Legislative Analyst Mac Taylor.

In a Capitol known for treachery, trauma and turmoil, the Legislative Analyst’s Office, or LAO, is an anomaly. Created in 1941 after suspicious lawmakers were fed up relying on the governor’s office to provide accurate budget information, the legislative analyst has developed into a Capitol institution. Taylor is only the fifth person to hold the job in nearly 70 years; one of his predecessors, A. Alan Post, served for 28 years, and Taylor’s immediate predecessor, Elizabeth Hill, served for 23 years. Taylor was appointed 16 months ago.

Craig Brown, a former Finance Director who spent nine years in the LAO, said Taylor is able to tread the political minefield. “He’s incredibly talented and good and nonpartisan. He’s making a valiant effort to make adjustments in the face of reality, which is that the Legislature just doesn’t pay much attention. That’s the bottom line.”

“I mean, think about it,” Brown added, “if you’re a lawmaker on the budget committee or the chair of a subcommittee, and you know all the decisions are being made by the Big 5, would you pay attention? The problem is that the Big 5 has sucked all the power out of the budget process.”

Officially, the legislative analyst is the Legislature’s nonpartisan fiscal adviser and the tradition of nonpartisanship remains at the heart of the LAO’s role – an institution shaped as much by the courtly, meticulous, verbose and detail-driven Post as anyone else.

But passing time has forced other changes.

Traditionally, for example, the LAO has published its “budget Bible” in February, its definitive analysis of the governor’s January budget proposal. But during the past two fiscal cycles, the state’s budget deadlines – always elastic – have been stretched beyond recognition and critical issues arise with little connection to deadlines. So now the LAO posts reports incrementally in a steady stream.

“I think we’ve had to be different in providing the information,” Taylor said, “because a lot of decisions may be made before the book comes out. So we provided shorter documents. We just wanted it as timely as possible. The situation dictated the change. The special session, for example, would have ended by the time our analysis came out.”

In less than two weeks, for example, the LAO has issued 10 significant reports on everything from online poker to food stamps to automated traffic enforcement to job training to higher education to the Fish and Game Department.

The LAO’s Web site, www.lao.ca.gov, is different, too. Top reports are highlighted and presented graphically, photos are used and the site is more reader-friendly than before.  
The direct telephone numbers of the LAO’s staff have long been listed and analysts are willing to discuss their individual issue areas. But what’s different now is that some  analysts may be quoted on the record – a radical departure indeed from Post, Hill and William Hamm, who tightly controlled who said what.

Taylor, like those before him, was hired by the 16-member Joint Legislative Budget Committee. Democrats control the committee – and both houses – and the LAO serves at their pleasure, an arrangement that appears fraught with peril but  works. Regardless of party, lawmakers rarely bash the LAO – an unusual circumstance in the ready-fire-aim, hyper-political atmosphere of the Capitol.

That reputation has served LAO alumni well. The most powerful budget-writing job in government is the director of the Department of Finance, which writes the governor’s budget proposals and decides who gets to spend what. The LAO seems to be a hatchery of finance directors: Four directors in recent years – Brown, Tim Gage, Thomas Hayes and Mike Genest – all worked for the LAO.

Taylor, who has an undergraduate degree in political science and a Master’s from Princeton in public affairs, started at the LAO as an intern during Jerry Brown’s first term. He’s worked on taxes, labor issues, housing, local spending, retirement, state administration and other issues. Taylor, who served as Hill’s deputy for 17 years, lives in suburban Carmichael. He and his wife have three children.

“They’re straight shooters at the LAO and have been for a long time,” said Lenny Goldberg, who has lobbied for years to close corporate tax loopholes.

“People have changed over there, but they pretty much come up with the right thing,” he added. There really is such a thing as good tax policy and bad tax policy. The bad tax policy is all politics and the good tax policy is based on research.”

Some governors have complained about the LAO, especially after they get dinged in a fiscal analysis. Ronald Reagan was outraged that Post had criticized Reagan’s proposal for a 10 percent across-the-board tax cut as a slam on counties, which would be forced to scramble to make up for lost revenue.

“It didn’t make sense at almost any level,” Post testified. An angry Reagan complained that the LAO was “run over by Democrats” and that Post was “more ambitious than smart.” Post, a Republican who ran the LAO like a czar, was amused.

But governors, at least publicly, usually hold their tongue. Partly, that’s because the LAO’s reports often capture media attention and affect the budget debate, and partly because the LAO’s analyses, at one time or another, may be cited by either side to score political points. The result is that the LAO is either being hung in effigy or praised effusively – depending on whose fiscal ox is getting gored.

At one time, the state budget was written behind closed doors. The director of Finance, the LAO, the chair of the conference committee would meet in the basement of what is now Chops restaurant and close the deal. The document was then shipped to the two-house conference committee for a vote. The LAO ruled those meetings, and was the final source of reliable data.

“The LAO was king,” one Capitol veteran said.

But life at the LAO hasn’t been without its bumps.

Ironically, the very creation of the nonpartisan office stemmed from a political feud between the legislative branch and the governor. During the 1930s, lawmakers for years sought to create through statute a legislative budget-analysis office. After then-Gov. Culbert Olson – perhaps the most interesting governor in California history – vetoed the latest attempt, lawmakers tried a different approach.

“The Legislature was not to be deterred, however, and established the office by a Joint Rule of the Senate and Assembly — giving the office the mission to ”. . . ascertain facts and make recommendations . . . concerning the state budget . . . with a view to reducing the cost of the state government and securing greater efficiency and economy,” Hill wrote.
 After voters approved limiting lawmakers’ terms in 1990 and cutting expenses, the staff of the LAO was cut by more than half – from 110 to 50. The staff currently numbers about 56, which includes analysts and 13 support staffers. But the workload hasn’t changed – if anything, it’s increased.

Privately, several Capitol staff members said they have long felt the LAO was too cautious and conservative in analyzing its own data. And there were complaints about Hill’s predecessor, William Hamm –
a nephew of Post – because he left the job after a relatively short time to take a high-paying job as a financial consultant.  

But in the end, most in the Capitol trust the LAO to make the hard calls.

“That,” said Taylor, “is the toughest part of the job.”