Sunday, August 29, 2004

She's On Their Case!

"Plan Won't Fix Budget, Analyst Says" - LA Times

Doubts raised over governor's ideas for huge savings" SF Chronicle

California's nonpartisan Legislative Analyst has now weighed in with an initial assessment of the California Performance Review. Professor Tax is reassured to see that the Legislative Analyst was not taken in by the Review's promise of $32 billion in savings from reorganizing state government. Instead, she found (p. 6):

"Savings Overstated. In many instances, the CPR was conservative in scoring savings from its individual proposals—acknowledging that actual savings, while likely, simply could not be estimated. However, in other instances, the CPR scored savings that are uncertain or overstated. This is especially the case with regard to many of the proposals with the largest identified savings."

What diplomats they must be over in the Legislative Analysts' shop! Professor Tax called Recommendation GG 07, to gain $8.2 billion in Federal funds by centralizing grant-seeking under the Governor, "creative accounting, Hollywood style" and "the imaginary product of irrelevant numbers and distorted quotes". The Legislative Analyst says the same thing, but so much more politely (p. 43):

"However, it is not clear how the CPR proposal would enhance California’s chances of modifying federal formulas. Without significant changes to federal law, which also could have negative fiscal implications for other states, the level of assumed revenues is unlikely to materialize."

Professor Tax was concerned that Recommendation ETV 11, changing the kindergarten start date, could save money only by creating a "lost battalion" class of kids, 3/4ths the size of classes before and after, who would trudge through the grades like a pig in a python, only in reverse. What an ugly metaphor! The Legislative Analyst used gentler phrasing in referring to the "difficult logistical issues" that would result (p. 23):

"Research on the merits of changing the kindergarten entry date, however, is more mixed than suggested by the report. In addition, the report excludes any discussion of the impact of the date change on school districts and on families. The CPR’s proposal presents difficult logistical issues for districts, and magnifies the fiscal issues districts face from declining student enrollment."

The Legislative Analyst's assessment of the way the Special Effects team morphs DMV reform into a $1 billion car tax increase is also spot on (p. 37):

"Our review suggests that the one-time VLF revenue windfall is likely to be about $1 billion rather than $1.3 billion. Regardless, it would appear that the proposed transfer of all VLF windfall revenues to the General Fund would require a constitutional change. This is because VLF revenues are constitutionally designated for distribution to local governments. Also, the VLF windfall that would result from the proposal’s implementation could be construed as a one-time tax increase, since in the first year of the plan’s implementation about $1 billion more would be collected from state motorists than would otherwise be the case."

What a relief! The Legislative Analyst has exploded the mythic claims of savings that were in the Performance Review. Future comments by Professor Tax -- and yes, he has a few more observations -- will focus on aspects of the Review that by their nature are off-limits to the objective, nonpartisan folks in the Analyst's office.

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