November 3, 2005

OPINION

Proposition 76 helps put state’s financial house in order

By Pat Dando
President and CEO, San Jose Silicon Valley Chamber of Commerce

The first rule that financial advisors tell their clients is to not spend more than they make. This is the first and most vital step for getting onto solid personal financial ground. Advisors note that when expenses outpace incomes, individuals and families must make adjustments. This concept seems logical to you and me and most in the business community.

Lately, these same rules have not applied to the state of California. And the people that run our state, namely the California State Legislature, find no real problem spending money that they don’t have.

On Nov. 8, California voters have the ability to act as the state’s financial advisor and get our financial house in order by voting yes on Proposition 76, the Live Within Our Means Act.

Proposition 76 requires the state to use extra revenue from peak years to build reserve funds to prepare for inevitable future economic downturns.  When revenue shortfalls occur, it will allow the state to spend reserves to maintain essential state services. 

There is ample proof that California’s financial house is upside-down: Between 1998 and 2004, the Legislature increased overall spending by 44 percent—from $75 billion to $108 billion—even though the state did not have enough money to pay for all that new spending. This must stop if we are going to make California a competitive place to attract private investment and jobs. There is a direct connection between having California’s financial house in order and attracting and retaining jobs.

Proposition 76 will place reasonable, responsible limits on state budget growth by limiting year-to-year budget increases to the average growth in revenue for the past three fiscal years.   This will prevent legislators from creating costly new programs during economic booms that demand ongoing spending when revenues drop. This will help limit new taxes on businesses, keep jobs in California and protect working families by making sure job growth remains strong.

This year, we don’t need to rely on a state legislature with a chronic spending problem—we all have the power to send a strong, common sense, and financially sound message to the Legislature in the form of Proposition 76.

The San Jose Silicon Valley Chamber of Commerce, The League of California Cities, and a large coalition of business, community, and public safety leaders, believes that it is time that California starts shaping up financially. Voters can serve as the state’s financial advisors on Nov. 8 by voting yes on Proposition 76.

Editor’s note: For an opposing viewpoint regarding Proposition 76, the state spending and school funding limits initiative and constitutional amendment, visit the Alliance for a Better California Web site at www.betterca.com/prop76 Those opposing the proposition 76 include the California Teacher’s Association, the California State PTA, the California Nursing Association, the California Coalition of Law Enforcement Associations and the California Professional Firefighters organization.

To find out more about arguments in favor of proposition 76 visit the Web site www.joinarnold.com Those endorsing proposition 76 include Gov. Arnold Schwarzenegger, the Howard Jarvis Taxpayers Association, the League of California Cities and Santa Clara County Sheriff Laurie Smith.