California needs a big policy rethink

Image by PHOTOCREO Michal Bednarek

OPINION – After years of budget surpluses and replenishment of the state’s Rainy Day Fund, California now suddenly faces budget uncertainties that could severely stymie its continuing forward progress. Governor Newsom recently released a mid-year revision to his proposed 2023-24 budget, projecting a $31.5 billion shortfall, up from $22.5 billion in January. Last month, in negotiations with California legislators, Newsom agreed to address the shortfall through a series of spending reductions, trigger cuts, and delays or deferrals of investments authorized in earlier years.

While the new state budget preserves important continuing investments in key areas like child care, healthcare insurance, and housing, it also reduces nearly $8 billion in areas like climate justice and education—cuts that will mostly hurt those who are least able to endure them. Additionally, the legislature’s safety net spending is tempered for an imagined ‘rainy day,’ ignoring the millions of families who are in need of support now.

In a state as large and important as California, it makes little sense for us to continue allowing ourselves to be so vulnerable to the vagaries of each shifting budget cycle. Instead, it makes much more sense to develop a more strategic, long-term social investment approach.

Now is the time for a new and better way for California to invest in a future that is far more fair, inclusive, and strategic.

As leaders of coalitions that seek fundamentally to expand prosperity-sharing in California and beyond, we know it is vital for policy leaders across the Golden State to reach a new consensus that concentrates state spending on generational investments in people and planet, rather than privilege and profit.

Much of our recent state policy making and investment seeks to do this, but only in piecemeal fashion and only on the margins, cycle by cycle, rather than in a comprehensive, sustained and proactive way. We need a new state policy compact that will actively commit California leaders to make historic next generation investments in our future, focusing decidedly on key areas of need.

Specifically, new public investment is called for that extends free childcare and K-14 public education, living wage employment, single payer health care coverage, safe and affordable housing, and high-quality transportation among other public goods, and wealth building opportunities to all low- and moderate-income Californians.

We need bold new policy priorities to advance our state toward a future of shared prosperity and lift children and families out of poverty:

Guaranteed income in the form of direct public payments to help low-income Californians meet basic needs)

A state jobs guarantee to ensure work and a living wage for anyone who wants to work but cannot otherwise secure gainful employment.

And more state-supported Baby Bonds, public investments in private asset building accounts for children that can be used later in life for asset building such as education and training, a first home purchase or retirement savings.

Expanding investment in these areas will have immediate economy-wide benefits by enhancing consumer spending and prosperity sharing. It will bolster the skills, agency, and well-being of a large and growing swath of our state population in ways that will make us more globally competitive in the future ahead.

If we want California to maintain its standing as one of the world’s centers of economic activity and a model of inclusive democracy for the balance of the 21st century, we cannot do it by merely powering forward as we have been, hoping and assuming that will keep us there. It won’t.
Rather, what is needed—and urgently—is a new 21st century platform of emboldened economic rights and investments that can help to re-democratize our increasingly exclusive economic centers of gravity.

Moving in this new direction will certainly require not only new spending, but also new revenue generation, particularly by requiring corporations and the wealthy—whose wealth has increased by over $1.3 trillion since the beginning of the pandemic—to pay what they owe in exchange for the many benefits they derive from doing business in the nation’s largest and most consequential state.

Failure to act boldly in these directions now will only resign California to a future of continuing racial, gender and wealth divides that will undermine our global standing and our quality of life.

Shimica Gaskins, J.D. is President & CEO of GRACE/End Child Poverty CA. Gabriela Sandoval, Ph.D, is executive director of the Excessive Wealth Disorder Institute.

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