Think Long Committee's Recommendations

A Blueprint to Renew California:
RepoRt and Recommendations pResented by the think Long committee foR caLifoRnia
Think Long Committee for California

Nicolas Berggruen David Bonderman Eli Broad The. Hon. Willie Brown The Hon. Gray Davis
THINK LONG COMMITTEE FOR CALIFORNIA
Maria Elena Durazo The Hon. Matthew Fong* The Hon. Ronald George Antonia Hernandez The Hon. Robert Hertzberg Gerry Parsky The Hon. Condoleeza Rice Eric Schmidt Terry Semel The Hon. George Shultz Dr. Laura DAndrea Tyson
*We were honored to have Matt Fongs active participation until his passing
fter a year of deliberations, the think Long committee for california presents here its integrated set of proposals that we believe will update and modernize the states broken system of governance. at a time when political leaders in both sacramento and Washington seem hopelessly mired in gridlock, the committee has shown that difficult bi-partisan compromise can be reached if politics is set aside and the public interest is put first. no government official appointed this committee. it was not sponsored by any special interest lobby. We came together only as a group of concerned citizens who believe in californias promise. my thanks first of all goes to the committee members themselves. they vigorously engaged in the issues over monthly meetings and did the hard work of figuring out a path forward for california. it was not easy to bridge our philosophical divides, especially on the tax plan. but in the spirit of pragmatism and with a long-term perspective that we believe should once again characterize californias political life, we were able to do so. special thanks goes here to bob hertzberg, gerry parsky and Willie brown who headed the tax reform working group and Ron george and gray davis for their work on the citizens council. We were honored to have matt fong as one of our members. his dedication to public service and the effort he made to participate as part of committee was an inspiration to us all. thanks also goes to the tireless teamwork of mike genest, tim gage, brad Williams and peter schaafsma who brought their deep knowledge and long experience in state government to bear on our proposals. california forward, with whom we share broad reform goals, and the James irvine foundation, helped fund the research efforts. appreciation to andrew chang for his research support. maureen dears clear-minded approach and straightforward prose kept us apprised of all the constitutional issues. Julie Wright and doug hentons guidance on our jobs, infrastructure and workforce development report was invaluable.
along with the california strategies team, Joanne kozbergs deft sensitivities made it all work by keeping the process moving in such a compressed time period, as did steven cahn and Jason kinneys care with communications and writing. google inc., the broad foundation and the James irvine foundation, generously hosted several of our meetings enabling us to meet both in northern and southern california. We are very appreciative that governor arnold schwarzenegger and governor Jerry brown took time from busy schedules to meet with us. Lt. governor gavin newsom actively participated on our Jobs task force and shared with us his very considerable knowledge of the states economy. our thanks goes to the public policy experts who presented their ideas to the committee for our consideration. these include state treasurer bill Lockyer, Legislative analyst mac taylor, Jean Ross, John cogan, alan auerbach, mayor antonio Villaraigosa, michelle Rhee, Joe nunez, John mockler, Jim mayer, Joseph dear and countless others who we consulted over the months. finally, personal thanks to my colleague nathan gardels, who spent many hours working with the committee, our team and important constituencies. he has devoted himself totally to this and other nbi projects. appreciation, as well, to nbi executive director dawn nakagawa, who has capably supported all nbi efforts. this report represents our best efforts for remedying what ails california governance. We hope the public agrees and supports the ideas we have put forth when we take initiatives to the ballot in november 2012. many of the proposals do not require ballot initiatives. our hope is that they will prompt debate among citizens and action by the governor and legislature.
nicolas berggruen, chair, think Long committee for california
Rebooting Californias Democracy:

Leaving gridlock behind with a bipartisan path to the future
after a year of deliberation and consultation with an array of experts, as well as state and local officials (see list in appendix), the think Long committee for california proposes the following set of integrated structural reforms to reboot californias dysfunctional democracy by installing a new civic software. While setting in place a long-term framework for good governance over the coming decades, our plan would: Create a positive business environment for job creation Reduce the personal income tax across the board while retaining californias progressive tax structure Fund education by an additional $5 billion while fostering reform Provide $2.5 billion to the University of California and California State University systems to keep higher education within reach of californias families our integrated set of recommendations range from common sense practices such as a Rainy day reserve fund to multi-year budgeting; two-year legislative sessions with one year dedicated to oversight; transparency on initiative funding; k-12 school reform; aligning the skills and educational outcomes of californias master plan institutions with the needs of our cutting edge industry; and speeding up regulatory approval to foster job creation. but the core of our proposal has three parts: LOCAL EMPOWERMENT. Returning decisionmaking power and resources when appropriate from Sacramento to localities and regions where the real economy functions and government is closer to the people and thus more responsive, flexible and accountable. By generating $1.5 billion annually for counties to help cover the costs of realigned public safety responsibilities, our plan will help reduce the high costs associated with our state prisons. one billion annually would also be dedicated to cities as block grants for infrastructure or other locally determined needs.
AN INDEPENDENT CITIZENS WATCHDOG. Creating an independent watchdog for the long-term public interest as a counterbalance to the short-term Empower county governments and help reduce mentality and special interest political culture that dominates Sacramento. this impartial and public safety costs by providing $1.5 billion in non-partisan citizens council for government additional funding accountability, which would be empowered to Provide $1 billion to California cities in block place initiatives directly on the ballot for public grants to meet their local needs approval, will ensure that the publics priorities excellence in education, world-class infrastructure, Start paying down the states wall of debt and a sustained quality of life, opportunities for good stabilizing the boom-and-bust budget cycle jobs and the strengthening of a vibrant middle class through boosting the states competitiveness Give Californians real power to make in todays global economy remain at the top of government accountable the public policy agenda over the long-term. as Improve the process for making long-term a non-political quality-control body, the citizens economic policy council will ensure that california taxpayers get their return on investment.
A MODERN, BROAD-BASED TAX SYSTEM. Updating Californias tax system to mirror the real composition of our modern service and information economy and provide a stable, broad-based tax system that is sustainable over the long term. While maintaining californias progressive income tax structure, we would reduce rates for every bracket and reduce the sales tax on goods from 5% to 4.5% while broadening the sales tax at a 5% rate to apply to services, which are more discretionary. education and medical care would be exempted. those with low incomes would receive a sales tax rebate. Those earning $45,000 and under would pay zero income taxes. the working middle class with incomes up to $95,000 would pay only 2%. The homeowners exemption and renters credit would be doubled. those making above that amount would pay 7.5%. Because of the 1% surcharge for mental health on millionaires, they would pay a top rate of 8.5%. A family with income of $90,000, which would have paid $1,449 in personal income taxes under the current system, would now pay $832 a more than 40% reduction in their state personal income tax. overall, the reform will maintain californias progressive tax system. households with adjusted Gross Income of less than $20,000 per year would pay an average of $71 more in direct and indirect state taxes, while those earning more than $1 million would pay an average of $11,478. this combination of cutting the personal income tax and broadening the tax base will help stabilize the boom and bust cycle of the budget while generating $10 billion in new revenues annually to start paying down the states wall of debt, and provide funding for K-14 schools, for CalState and the University of california and for local public safety and other local needs. small and medium-sized business proprietorships, s corporations and LLcs are the backbone of the California economy. Unlike the large C corporations, profits and losses are passed through and taxed at the personal income tax rate. therefore, a pit cut will boost job-creating business prospects. for example, a business with a taxable income of $480,000 that
would have paid $39,452 in income taxes under the current system will pay $33,114 under the proposed system. further, the mandatory single sales factor would be imposed on corporations while, at the same time, californias corporate tax, one of the highest in the nation, would be reduced to make it competitive with other states and foster an improved business climate.
EMPOWERING LOCAL GOVERNMENT AND REGIONS

the committee believes that to make government more efficient and accountable for the long-term, we must identify the core services that government should provide, and then carefully realign funding and responsibility for those services to the appropriate jurisdictions. further, our long-term job plan would make state government a consistent and welcoming partner for business. since california is an economy of distinct regions, any statewide economic strategy that seeks to bolster broad-based prosperity and a healthy middle class of skilled workers must be built from the bottom up. While the committee embraces the principles of de-centralization, devolution and realignment of revenues and responsibilities, we have not endeavored to propose precisely how that should be accomplished. this will be a years-long process involving the governor, the legislature and city and county governments. it is one that must include all affected parties. the committee endorses the Legislative analysts Recommendations to promote the Long-term success of Realignment, as proposed by governor brown and the legislature, which include: Develop local funding allocation formulas with an eye towards the long-term Simplify the structure of the realignment accounts to provide financial flexibility
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Enact statutory changes to provide counties with appropriate program flexibility Ensure that local fiscal incentives are aligned with statewide goals Promote local accountability Clearly define the states role and funding responsibilities Avoid state-reimbursable mandates
should also be entrusted to a body of citizens invested with the power to demand performance from their elected officials as well as the power to place initiative proposals, addressing reform in areas such as jobs and education, directly before their fellow Californians for approval. To this end, the Think Long Committee proposes to establish a Citizens Council for Government Accountability. As this would involve amending the California Constitution, the Committee intends to qualify an initiative measure. 1. PURPOSE: the citizens council for government accountability an independent, impartial and non-partisan body would be established to develop a vision encompassing long-term goals for californias future. it would be tasked with charting, coordinating, shepherding and sustaining an integrated strategy for the state aimed at creating educational excellence, worldclass infrastructure, environmental quality and a competitive business climate that generates highwage jobs. its purview would include long-term capital spending projects, infrastructure, water, energy and the state educational master plan. the council also would be tasked with promoting performance and ensuring accountability of state government so that it aligns with and supports achievement of this vision. in short, its purpose would be both foresight and oversight, balancing the short-term horizon of the legislature and governor with a long-term perspective that extends beyond political cycles. these goals would ensure that california remains a welcoming place where families and individuals want to reside and work. 2. ROLE AND POWERS: as realignment takes hold in california and more responsibilities move to localities, a leaner state government should increasingly focus on two areas of competence: Setting standards, oversight of performance at all levels of government, ensuring fairness across jurisdictions Long-term strategic concerns
as detailed in our tax reform plan, we propose an update of californias tax system that will ensure a stable flow of funds to localities to cover their responsibilities, particularly with respect to public safety and infrastructure. if implemented, our plan would generate $1.5 billion annually for counties to cover public safety realignment. one billion dollars annually would flow to localities as block grants for their discretionary use.
THE CITIZENS COUNCIL FOR GOVERNMENT ACCOUNTABILITY

California is caught in a downward spiral. According to the California Deliberative Poll conducted in June 2011, the public believes that nearly 40 cents of every dollar is wasted because government performance is not evaluated or accountable. The public therefore understandably resists investing public resources in the future if it cannot be assured its hard-earned tax dollars are being used to improve Californians lives. As a consequence, the world is moving on and California is being left behind. California desperately needs a return to good governance. This means, above all, restoring the publics trust in governments ability both to act effectively, responsively and accountably in the long-term interests of all Californians and to move away from the shortterm politics of Sacramento. The Think Long Committee believes it is not enough for elected political figures to pledge they will pursue good governance. To ensure accountability and to balance the short-term politics of Sacramento, good governance
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the council would play a central role in both oversight and long-term planning. a central function would be to provide a forum where the states legislative and executive branches, regional organizations, counties, cities, master plan educational institutions and leaders from business, labor and the environmental community would work together on a sustained strategy that transcends election cycles, partisanship, limited organizational boundaries, and short-term thinking. to fulfill its role the council would have the following powers: Placing initiatives directly on the ballot
members and four ex-officio non-voting members. nine members would be appointed by the governor. the senate Rules committee would appoint two members, one from each of the states two largest political parties. the speaker of the assembly would appoint two members, one from each of the states two largest political parties. at least two of the governors appointees would not be registered in either of the states two largest political parties. the four ex-officio and non-voting members would include the director of finance, the state treasurer, the state controller, and the attorney general, whose duties would include the analysis of initiative proposals. the council would seek cooperation with all state agency heads. terms would be limited to two six-year staggered appointments. a model for setting up staggered membership can be found in article Vi, section 8, subsection (c) of the california constitution, which governs the commission on Judicial performance. the length of the term is designed to encourage a long-term perspective on issues affecting our state and to cross electoral cycles so as to insulate against political influence or patronage. members of the council would receive per-diem compensation and would be reimbursed for all reasonable and necessary expenses incurred in the performance of their duties.
The Council would be empowered to develop and place initiative proposals directly on the ballot. This would assist the residents of California in developing a more active voice regarding the longterm future direction of the state, rather than be faced, as is currently true, with only disconnected single-issue or special interest choices. The Council would also work with elected officials, receiving and monitoring information, and proposing legislation. Authorization to direct the Secretary of state to publish the councils comments and positions on relevant proposed initiatives and referendums on the election ballot
The Council would be authorized to comment on relevant initiative proposals with respect to their long-term impact on the states strategic priorities. Subpoena power
The Council would be granted the same subpoena power currently held by the Little Hoover Commission i.e., to issue subpoenas to compel the attendance of witnesses and the production of books, records, papers, accounts, reports and documents. as such, the council would not be an added layer of bureaucracy, but an extended voice and proactive watchdog for the long-term public interest and for quality control of government. 3. MEMBERSHIP/TERMS/VOTING RULES: the Council would be composed of 13 voting
a simple majority of the council vote would be required to place a statutory initiative proposal on the ballot and a two-thirds vote would be required for a constitutional amendment. any member of the council could be removed by a two-thirds vote of the senate for malfeasance or corruption. 4. QUALIFICATIONS: at-large appointees would be distinguished residents of california with varying experience such as prominent scholars, former governors, legislative leaders, former justices or judges, university presidents and leaders from industry, labor and community affairs, as well as young business or social entrepreneurs who have demonstrated a commitment to the state
and are broadly reflective of the economic, cultural and social diversity of california. strict conflict-of-interest rules would apply to prevent actual or perceived improprieties. the state has explicit conflict-of-interest laws (California Government Code section 87103) that apply to public officials, and the council would be required to comply with those laws. thus, its members would be required to file annual reports, as well as statements of economic interest disclosure documents, both upon assuming and leaving office. appointees would be subject to restrictions modeled after the code that apply to judges regarding avoiding the appearance of political bias or impropriety, specifically section A(3) of Canon 5 of the California Code of Judicial Ethics. to this end no appointee shall personally solicit funds for a political organization or candidate; or make contributions to a political party or political organization or to a candidate in excess of five hundred dollars in any calendar year per political party or political organization or candidate, or in excess of an aggregate of $1,000 in any calendar year for all political parties or political organizations or candidates. 5. PUBLIC PARTICIPATION: the council would hold regular hearings to obtain public input on its policy proposals and also maintain a social media window for direct public consultation and participation. In short, the residents of California would have direct input in the Councils policy-making and thus in the Councils decisions regarding which of the Councils initiative proposals would be placed before the electorate. finally, the council would facilitate public participation by making use of available technology, including new advances in cloud computing, to render all government operations more accessible and transparent to californias residents. 6. STAFF: the council would employ its own independent staff, exempt from civil service
hiring regulations, and have the ability to draw on loaned executives and analysts (public and private) to ensure adequate expertise and integration with state and local agencies. 7. FUNDING: the council would have a continuous base appropriation of no less than $2.5 million indexed to inflation each year, and this sum would be included each year in the governors proposed budget. this amount is deemed necessary for the council to attract and maintain a high-quality professional staff. council members would only receive per-diem expenses. in addition, the Legislature would be able to appropriate whatever additional amounts it deems necessary. this approach a guaranteed base amount would protect the independence of the council because it would not be subject to threatened reductions by the governor or Legislature. 8. Integrating Foresight The Golden State Strategic Agenda: california is burdened with numerous planning agencies and planning requirements. the value of the resulting disparate efforts is limited. they are not integrated into a unified plan, and do not drive decision-making, because they are not championed by effective leadership. the council would therefore be charged with reviewing regional and statewide plans on an on-going basis and making recommendations for prioritization so these plans are integrated into a common roadmap the Golden State Strategic Agenda. the council would be able to draw on the resources of the various governmental institutions involved in planning. to this end the committee proposes that the following institutions be charged with working with the council in developing the golden state strategic agenda: Infrastructure. The Council, with the support of the department of finance, would be given responsibility for coordinating the california infrastructure plan with the overall state strategic plan.

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Environmental Goals and Policy. The Office of planning and Research is required to produce a report to guide the states growth and development, and this responsibility would be coordinated with the council and integrated into the overall strategic plan. Workforce / Human Capital. The Council would coordinate with the relevant education and workforce agencies to develop a workforce that meets the needs of industry, social services, labor, education, non-profits and other sectors of the economy. Energy. The Energy Commission is required every two years to produce a comprehensive energy strategy. this plan should be developed in coordination with the council, and the council should integrate the energy plan into the overall state strategic plan. Water. The Department of Water Resources is required to produce a state water plan (bulletin 160) every five years. dWR should develop the plan in coordination with the council, and the council should integrate it into the strategic plan. Transportation. The Department of transportation produces a comprehensive transportation plan for the state with a 20year time horizon. caltrans should develop this plan in coordination with the council, and the council should integrate it into the strategic plan. Strategic Growth Council. This cabinet-level body coordinates executive branch activities related to smart growth, administers grants, and provides technical support to local governments. it would advise the council on creating an overall integrated plan.
to encourage the commission, as part of its reviews, to assess the effectiveness of agencies, including their efforts to achieve the goals and objectives of the councils strategic agenda. Bureau of State Audits. The Bureau, as part of its audits, would be encouraged to assess the effectiveness of agencies, including their efforts to achieve the goals and objectives of the councils strategic agenda.
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Purpose
A BROAD-BASED TAX SYSTEM FOR THE FUTURE
this initiative is designed to position california for future economic growth by reforming the tax code to improve the business climate, create budget stability and increase funding for state programs critical to long-term economic growth. Problem there are many causes for californias chronic budget shortfalls. some of these are beyond the control of state policy makers, such as the international and national business cycle and the spending pressures that result from an aging population. state government itself, however, bears some of the blame because of its volatile and outdated tax code and its inability to make sound, long-term budget decisions. together these problems helped create a boom-andbust budget cycle in perennial crisis, massive state debt and anemic economic and jobs growth. over the past 60 years, californias economy moved from one that was fueled by agriculture and manufacturing to one that is increasingly driven by services. as this occurred, our tax revenues became less reliant on sales and use tax and more driven by Personal Income Tax. In 1950, Sales and Use Tax comprised almost 60 percent of all state revenues; today, it accounts for about 25 percent. Personal income tax accounted for a little more than 10 percent of total state revenues in 1950; today, it accounts for more than 50 percent.
9. Integrating Oversight: the council would be assisted by the Little hoover commission and the bureau of state audits in obtaining detailed review of state programs. the following is therefore proposed: Little Hoover Commission. The Commissions authorizing statute would be amended
Figure 1 california state Revenues by source
beyond national and international conditions, californias recovery from recession is being impeded by the states high corporate tax rate in part and because of the uncertainties created by the states budget debt and structural deficit. today, california has the highest corporate tax rate when compared to the top tax rates of other western states. in the longer term, economic growth also depends on stable and adequate funding of services such as education and public safety.
Figure 2 comparison of top marginal corporate tax Rates
SOURCE: California Department of Finance
This came to a head in fiscal year 1999-2000 when the dot-com boom resulted in massive, but temporary, increases in capital gains and stock options. in this environment, a tax code overly reliant on the most volatile component of the economy high-end earners caused revenues to soar by 23 percent in a single year. state policy makers made the mistake of bad practices in good times by using the temporary surge in revenue to permanently expand spending commitments and further narrow the tax base. When the inevitable crash came, the state resorted to one-time fixes, borrowing and gimmicks to address the shortfalls that plagued california for the remainder of the decade, thereby helping to create what governor brown has termed a wall of debt and a long-term structural budget deficit. Between fiscal years 2007-08 and 2008-09, just as the latest recession was starting to be felt, the states economy, as measured by personal income, grew at an anemic 3 percent, but General Fund revenues plummeted by 19 percent. This was the flip side of the revenue volatility associated with a tax code overly reliant on one segment of the economy.
SOURCE: Federation of Tax Administrators, February 2011
Solution to find a way to reduce the wall of debt, reduce budgetary volatility and improve the states business climate while increasing revenues to ensure a return to stable and adequate funding of critical services, the think Long committee believes that we need to reform and update the present tax code. Californias $2-trillion economy is no longer dominated by manufacturing and agriculture, but is primarily composed of services and information activities. yet, californias tax code is so outdated that nearly $1 trillion that is, roughly half of the states economic output is not taxed.
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While we tax the sale of a donut eaten in a coffee shop, we dont, for example, tax the sale of legal, consulting, accounting or architectural services. in essence, those who produce goods such as donuts or machinery are subsidizing those who produce services and information. to address these issues, the committee proposes to broaden the tax base while reducing personal income taxes across the board and bringing the corporate rate down to a competitive level in line with other states. however, the new tax code will have to produce a sufficient increase in revenues to reduce the states budgetary debt and in the longer term provide stable and growing funding for the services that are essential to long-term economic growth such as education, public safety and investment in infrastructure. With these goals in mind, the think Long committee proposes the following reforms: Broaden the tax base to include services.
Broaden the tax base by reducing deductions from the Personal Income Tax (PIT) and lowering tax rates on the PIT, the corporation tax (Corp) and the sales tax on goods
the measure would eliminate most credits and all itemized deductions except for mortgage interest, property taxes, charitable contributions and R&d. taxpayers would receive an expanded standard deduction, equal to $45,000 for joint filers ($27,500 for single filers). it would also make mandatory the use of the single sales factor formula to apportion multi-state corporate profits.
Reduce marginal tax rates in the PIT while simplifying the code, reduce rates imposed under the corporation tax and the sales tax on goods.
the new sales tax on services would be at a rate of 5 to 5.5% and would apply to all services, to businesses as well as to consumers, except for health care and educational services. current projections show that the rate will need to be 5 1/8% to achieve the revenue gains targeted in the initiative. if the revenue increases turn out to be more robust than estimates, the rate could end up being less than 5%. to ease the transition to the new tax system, the tax rate would be phased in over a twoyear period as follows:
the current tax rate structure would be streamlined, with the number of tax brackets being reduced to two. Under the revised structure, beginning in 2014 there would be no personal income tax on joint filers with incomes up to $45,000 because of the standard deduction ($45,000 joint; $27,500 for single filers). A tax rate of 2 percent would be applied to income of joint filers up to $95,000, and a 7.5% rate would apply to incomes above that amount. the 1% surcharge for mental health on those with incomes over $1 million would remain, making that effective rate 8.5%. Low-income households would receive a sales tax rebate offsetting most of the direct and indirect impact of the new sales tax on services on the average household with similar income. the tax rate on corporate income would be reduced from 8.84% to 7% below the national average.
3% effective July 1, 2013, allowing 7 months after the enactment of the initiative on the november 2012 ballot for tax officials, businesses and consumers to prepare for the new tax. 4 % effective January 1, 2014, but the rate could be as high as 4.5%. 5% effective January 1, 2015, but the rate could be as high as 5.5%.
the reduced pit rates will have a positive impact on small and mid-sized businesses, most of which are organized as proprietorships or pass-through
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businesses, such as s-corps and LLcs and thus pay personal income tax instead of corporate tax. While reducing all tax rates, these changes would retain the pits progressive nature. overall, the proposal would lower the pit paid across all income groups of taxpayers. the state sales tax rate on goods would be lowered from 5% to 4.5%. additionally, we would double the homeowners property tax exemption from $7,000 to $14,000 with an equivalent expansion of the renters credit. on average, households with adjusted gross incomes up to $1 million would pay additional direct and indirect taxes ranging from $71 to $806 per household. Households earning more than $1 million would pay an additional $11,478. the committees proposal would maintain the states progressive tax structure with the top 5 percent of earners paying 62 percent of all personal income tax collected by the state.
in the first year, revenue gains could only be used to repay the states budgetary debt in two key areas:
In 2005, the people authorized Economic Recovery bonds (eRbs) as a way to refinance the debt from the prior years. Ultimately the state sold the entire $15 billion of ERBs. the outstanding balance will be down to about $4.3 billion by 2013-14 and the first priority for the increased tax revenues from this initiative will be to retire the remaining balance of this budgetary debt. in the budget and cash-flow crises of the last few years, the state delayed payments to K-14 schools, required by Proposition 98, from one year to the next, totaling over $10 billion. the next priority for the revenues generated by this initiative will be to increase funding for schools by $5 billion annually, with the first years payment going to help reduce the amount of deferred payments.

Figure 3 estimated percentage of personal income tax that Would Be Paid by Top 5 Percent of Filers
Beginning in 2014-15, the additional $5 billion going to K-14 education will be provided in exchange for eliminating another major piece of the states budgetary debt, the proposition 98 maintenance factor. While the maintenance factor represents an obligation to permanently increase K-14 education funding by about $10 billion, this initiative exchanges that long-term and uncertain future obligation for a near-term, permanent, discretionary increase in funding for schools. this amount will grow over time as an improving economy increases the revenues from the new sales tax on services. Beginning in 2014-15, the remaining $5 billion in new revenue will be allocated as follows: Up to $2.5 billion for higher education. Up to $1.5 billion to counties for the recently enacted public safety realignment. Up to $1.0 billion to cities as unrestricted revenue
SOURCE: Think Long Committee
With the available new revenues which we expect to reach $10 billion when fully phased in we propose the tentative following uses:
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Figure 4 summary of additional funding (Total: $10 Billion)
Further, the review or oversight of state programs is insufficient to ensure that California taxpayers are getting the results promised by their representatives. The Legislature spends little time engaged in a constructive dialogue with the Executive Branch over the goals of state programs and how to ensure that programs are achieving those goals. The Think Long Committee has developed a set of budget reforms that aim to change the budget culture in Sacramento to focus on long-term results and performance. 1. Rainy Day Fund. the boom and bust cycle of californias revenue system creates a highly uncertain climate for business, leaves a frayed net of social services, and plays havoc with education funding. this system contributes as well to the reliance on budget gimmicks and temporary solutions during lean times because, as it has demonstrated repeatedly, the Legislature has little discipline when it comes to restraining spending when revenue growth is high. a Rainy day fund is a straightforward, commonsense answer to these problems. a pending ballot measure, assembly constitutional amendment 4, is scheduled to go before the voters in 2014. this measure seeks to accomplish two important goals: create and protect a Rainy day fund for the states budget and prohibit unexpected revenue spikes being spent for ongoing state programs. the reserve will, first, help to stabilize the budget, and, then, be available only for one-time purposes such as investment in infrastructure projects. the committee advocates the Rainy Day Fund as proposed in ACA 4 be included along with its other proposals on the ballot for November 2012, and not be delayed to 2014. 2. Multi-year budgeting. the committee supports efforts to adopt a long-term perspective on state budgeting. too often, a supposedly balanced budget is really a fiction and obscures the problems that will arise in later years due to the use of one-time solutions, budget gimmicks and rosy estimates. While multi-year budgeting has proven ineffective in the past because of the states highly volatile economy, in the future a
SOURCE: Think Long Committee
the remainder of the increased revenues will go to offset the revenue losses resulting from the tax reforms.
IV.
BUDGET AND OVERSIGHT REFORM
Californias budget and budget process no longer operate reliably to support critical public programs. The general fund budget, which is over-reliant on personal income tax and capital gains, is notoriously volatile. As Californias economy swings from boom to bust with the national and international economies, the states budget swings from being flush to multi-billion dollar deficits. Health, social service and education programs funded in good times have to be cut back in bad times when they are needed most. Instead of adopting common sense reform like a rainy day fund reserve already in place in many states California lawmakers have exacerbated budget problems through poor planning in good times, and through smoke and mirror gimmicks or borrowing in bad times.
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multi-year budget plan would establish a more predictable and stable budgeting process if used in concert with a Rainy day fund and the committees tax reform proposals. the committee is supportive of requiring the budget to be balanced over a two-year period, and of publication of revenue and expenditure estimates for the succeeding three years. Reform group california forward has developed a proposal that effectively addresses these objectives that the committee supports. the committee is also supportive of efforts to institute performance-based budgeting to ensure that the states revenues are expended as effectively and efficiently as possible. 3. Legislative oversight in two-year session. a constitutional amendment is needed to require the Legislature to focus on budget oversight. to insure that state programs are meeting their intended goals, the committee proposes having the first year of the two-year session focus on regular session legislation, and the second on budget oversight and performance review, with only urgency legislation allowed. an exception would be made for legislation that passes its house of origin in the first year. in addition, the committee believes that oversight and accountability in the legislative process would be improved by requiring that all regular session legislation be in print for 7 days prior to passage in either house. this would effectively establish an amendment deadline of one week prior to the end of a session, so that bills not amended by that deadline could only be considered by the house in their then-current form. the practice of gutting and amending legislation has become too prevalent and prevents any adequate vetting of legislation by affected parties. a shorter period in print of 3 days should be required for legislation accompanying the budget and the budget itself. emergency legislation could still be enacted in a special session without meeting these requirements, as has been done in the past, when necessary.
4. Pay-Go for legislation and ballot measures. california has trouble restraining its spending, both in the Legislature and at the ballot box. many proposals are enacted into laws that were never considered in the budget process, where ideally the tradeoffs and priorities of the state would be reconciled. in order to limit the damage caused to state finances by off-budget spending, the committee supports the concept of pay-go. the principle behind a pay-go proposal is that proponents of legislation or initiatives costing more than $25 million would have to include other provisions sufficient to credibly establish how the cost of the measure would be offset. for example, an initiative that required new spending for parkland operations might include a provision increasing vehicle license fees. a measure granting a tax credit might be offset by a provision eliminating another special tax credit of roughly the same value. in other words, if an initiative measure is determined to cost more than $25 million, after considering the proposed offsets, it would not be placed on the ballot. if a legislative measure is determined to cost more than $25 million because of insufficient offsets, it would not be allowed to pass either house. an exception would be made for legislative bond measures because of the importance of funding the states infrastructure plans. 5. Modify term limits. californias imposition of term limits, originally aimed at addressing problems the voters saw with having career legislators, has had a number of unfortunate side effects, including the present dearth of expertise and knowledge among elected leaders. allowing for longer terms for legislators, while still maintaining the voters desire for an absolute limit on service, will improve the experience of elected officials and the quality of their judgment but still keep them accountable to their electorates. a June 2012 ballot measure, sponsored by californians for a fresh start, a group including the Los angeles county federation of Labor and the Los angeles area chamber of commerce, would reduce term limits from 14 to 12 years, but allow an elected official to serve all 12

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years in either the assembly or the senate or a combination of both. this measure is consistent with the think Long view, and the committee will support it.
their contributions. in addition, in the months following publication of the ballot pamphlet, the office of the secretary of state should be required to update this information regularly on its website.
V.
2. Indirect Initiative/legislative review when
INITIATIVE REFORM
the initiative culture as it exists in california today may resemble James madisons worst nightmare. passions are inflamed rather than cooled. confrontation replaces compromise as minority factions (special interests) battle one another with rival initiatives. In 2009, Ronald George, at the time californias chief justice, worried publicly about the effect on liberty: has the voter initiative now become the tool of the very types of special interests it was intended to control, and an impediment to the effective functioning of a true democratic process? -The Economist, April 23, 2011 Abuse of the initiative process undermines the capacity of representative democracy to function effectively. The following proposals for reform are targeted at curbing these abuses to ensure that the initiative process remains a vital recourse of the public will not a tool of special interests or an unwieldy blunt instrument for budgeting at the ballot box. Set forth below are a series of reforms to the initiative process intended to improve the process and restore it as an instrument that can be used to serve the broadest interests of Californians. The Citizens Council for Government Accountability, proposed elsewhere in this report, provides for an innovative use of the initiative process also designed to further ensure that the initiative process remains a mechanism of good governance in the public interest.
qualified. given the complex issues faced by our society, efforts to bring about reform by initiative have inevitably been hampered by drafting errors. as history has shown, there have been a number of occasions when an initiative measure could have been better drafted and serious implementation difficulties avoided had it been possible to correct potential errors before placement of the measure on the ballot. the committee supports the principle that the Legislature should work with initiative sponsors in a collaborative instead of confrontational spirit to achieve the best policy outcome as long as the Legislature acts consistently with the objectives of the proponents. the committee supports a constitutional amendment to allow the Legislature to review pending initiative proposals and fix flaws, legal or otherwise, or propose an alternative version, contingent upon final approval by the proponents of the initiative measure. the committee is also generally supportive of a constitutional amendment that would allow the Legislature to amend an initiative after adoption by the voters, in a manner consistent with the objectives of the initiative. article Vi, section 10, subdivision(c) of the california constitution presently provides: the Legislature may amend or repeal referendum statutes. it may amend or repeal an initiative statute by another statute that becomes effective only when approved by the electors unless the initiative statute permits amendment or repeal without their approval. this constitutional provision should be amended to read: the Legislature may amend or repeal referendum statutes. it may amend an initiative statute by another statute in a manner that furthers the purpose of the initiative, and may otherwise amend or repeal an initiative statute by
1. Transparency. Voters are often unsure who an

initiatives proponents and opponents are. the public would be better served by having clear information regarding the sources of support and opposition for ballot measure campaigns. the committee proposes requiring the secretary of state to include in ballot pamphlets a list of the five top contributors of $50,000 or more in an initiative campaign (both in support and in opposition), and to provide the total amount of
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another statute that becomes effective only when approved by the electors unless the initiative statute permits amendment or repeal without their approval. the california supreme court made clear, in invalidating a legislative amendment to the initiative at issue in Amwest Surety Ins. Co. v. Wilson (1995) 11 Cal.4th 1243, that if an initiative states that any legislative amendment must be consistent with the purpose of the initiative, any action by the Legislature that constitutes an alteration rather than a clarification of the initiative, and does not further its purpose, will be invalidated. presumably the courts would follow the same approach if the furthers the purpose language were contained in the constitution rather than in an authorization contained in an initiative.
continue to appear on both primary and general elections, in order to avoid overloading the general election ballot.
JOBS, HIGHER EDUCATION AND ECONOMIC GROWTH

The Committee believes that restoring economic vitality and job growth to California requires both streamlining burdensome regulations on business and facilitating public investment in a well-educated workforce and infrastructure, from smart energy grids to the broadband information highways of the future. A guiding objective of the states long-term strategy should be to build a vibrant, job-creating business climate that can sustain a solid middle class while continuing to make California a welcoming place where families and individuals will want to reside. As it continues protecting Californias environment and working conditions, our state government must also be a proactive facilitator and partner for job-creating businesses, laying out the red carpet, rather than, too often, tying up potential growth with red tape. Such an approach is essential to re-establishing a manufacturing base in California and for expanding exports in the coming decades when most growth will take place in emerging economies led by China. The Think Long Committee proposes the following recommendations, drawn from its Jobs, Infrastructure & Workforce report (see Appendix), to start us down this path: 1. Streamlining / improving customer service. a significant hindrance to business in california, one that is both real and perceived, is a scheme of regulations that are onerous and conflicting. While essential regulatory and permitting functions must be maintained, the states multiple layers of regulation, overlapping jurisdictions and disparate agencies particularly when conjoined with federal and local regulation make expansion or location of businesses timeconsuming and costly.
VI.
3. Number of signatures to qualify based on

voters registered in the last general election. although the states population is steadily rising, the number of voters participating in the election process is not, so that it is becoming relatively easier to qualify an initiative measure. the number of signatures required to qualify an initiative should be based on 5 percent of registered voters eligible to cast ballots in the last gubernatorial election in the case of a proposed statute, and 8 percent in the case of a proposed constitutional amendment. the committee also supports electronic signature gathering if the secretary of state can credibly verify these signatures. the committee further supports legislation to extend the time period allowed for the collection of signatures from 160 days to 365 days.
4. Allow ballot measures that amend the

Constitution in general elections only. the committee supports the principle that amendments to the constitution should be submitted to the electorate only in general elections, where there is a likely turnout of voters higher than at primary elections. a constitutional amendment is by definition something too important to be considered at a low-turnout election. statutory measures should
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the state can reduce the costs of doing business by eliminating duplicative and outdated government regulations. User-friendly, transparent and consistent regulations can foster economic growth by building confidence and certainty while reducing costly lawsuits and lengthy regulatory processes generated by unclear or conflicting standards. to this end, we propose creating the position of a one-stop permitting ombudsman whose focus would be to improve the customer service experience of those doing or seeking to do business in california by simplifying permitting and cutting through red tape. The recent enactment of AB 29 (Perez) is a promising first step consistent with the committees proposal to consolidate disparate existing economic development functions into a strengthened central authority in the executive branch. enacting sb 617 to strengthen the administrative procedure act is another. serving as the single point of contact for business assistance, this new office would focus on offering one-stop service to companies seeking to locate and expand in california. other states have successfully employed this approach. this office would also work with the states diverse economic regions to encourage them to develop and implement customized strategies focusing on each regions unique challenges, mix of industries and distinct assets. it also would carry out the regulatory functions of an office of economic and Regulatory analysis, as suggested by the Little hoover commission in its october 2011 report, better Regulation. 2. Accelerating the CEQA permitting process. californias environmental Quality act (ceQa) is landmark legislation that has served over the years to protect californias most precious and treasured asset. Like any law or regulation, however, ceQa can be abused, and working through its regulations can be time-consuming and cause years of delay in job-creating projects.
the committee believes that the balance between ceQa and new or expanded business opportunities can be enhanced by a series of reforms to the current law. these include: Limit standing by tightening current requirements. petitioners should be able to bring a ceQa lawsuit only if they have, and can demonstrate in court, a legitimate and concrete environmental concern about a project, as well as the absence of a competitive commercial or economic interest on their part in the project. Allow challenges to local agency CEQA decisions to be filed directly with the courts of appeal. provide expedited access to quickly resolve ceQa lawsuit challenges in the same way the appeal of decisions by the state Public Utilities Commission are handled (Calif. Public Utilities Codesection 1759). Require that special training in CEQA matters be included in the mandatory continuing education already required for court of appeal justices. it would also be advisable that appellate research attorneys working with these justices on ceQa matters be required to have this subject included in their continuing education requirements. to fund this process, the state should authorize the appellate courts to adopt rules establishing additional fees be paid by those parties seeking expedited judicial review. Restrict CEQA alternative analysis projects to locations that are within the same jurisdiction and available for development, in order to avoid unnecessary and irrelevant studies and anywhere but here strategies.
many of these reforms are included in recently enacted AB 900 (Buchanan/Gordon/Steinberg) and SB 292 (Padilla), which create similar CEQA exemptions for a sports stadium and other large job-producing projects. In addition, SB 226 (Simitian/Vargas), which the governor also has signed, makes a number of improvements to ceQa, particularly with respect
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to renewable energy projects that contribute to low-carbon improvement in californias climate. california also should create plug and play economic zones that are pre-approved for ceQa and other land-use and zoning permits. Working with local zoning authorities, the state initially should target high-unemployment areas such as the central Valley and the inland empire to enable businesses to open, expand and cluster as soon as possible. 3. Aligning workforce skills with future jobs. a strong, well-educated workforce has long been one of californias key strengths, and has provided the state with significant advantages first in a national, and now in an international, economic environment. but that workforce has to have the right training for the right jobs. the predicted shortage of workers for many of the states best-paying jobs in the coming decades means california must begin now to match its workforce needs with the skills and training it provides its students and residents. to this end, the think Long committee will seek to work with the governor and his senior advisor for Jobs and business development, michael Rossi, on the following key areas: Aligning skills with jobs by promoting career technical training opportunities for students in high school and post-secondary graduates. partner with industry to develop programs and internships that demonstrate to students how education is connected to career opportunities. Encouraging Workforce Investment Boards (Wibs) and their partners to coordinate and collaborate within regional labor markets to avoid duplication and maximize the efficiency of scarce resources, while still maintaining the connection of local Wibs to their local economies. Recent collaborative efforts between Wibs in silicon Valley and the partnership for the san Joaquin Valley provide models for this type of coordination.
Establishing a jobs consortium of cutting-edge companies to create a mentoring/internship program for home-grown labor that connects stem (science, technology, engineering and mathematics) students in community college, CSUs and UCs to future jobs. The pipeline of rigorous stem programs in californias prek-12 curriculum needs to be increased. Pressing the federal government to expand access to h1b visas for qualified college graduates and develop a new category of expedited permanent visas for foreign students graduating with advanced degrees in stem fields to ensure we do not lose those we educate who want to become part of our workforce.
overall, workforce development across california needs to be better connected with rapid changes in private sector needs and be based on realtime economic expectations. skill gaps need to be identified and addressed and training and placement program need to be improved including through on-line sites and public information centers. 4. Renewing the commitment to higher education as a foundation for growth. for decades, californias higher education system has been the envy not only of this country, but of the world. more importantly, it has been the incubator for innovative, entrepreneurial thinking and has fueled the growth of cuttingedge technologies. in recent years, however, it has fallen victim to decreased funding from the state, which threatens its ability to attract and maintain quality faculty, provide accessibility and affordability for all students, and preserve its infrastructure. As noted above, $2.5 billion in new revenue from our tax reform proposal would annually go to california higher education (including California State University and the University of california). but money is not the sole solution. to enable the state to continue to develop a productive workforce and world-class industries, the committee encourages the state and higher education leaders to take the following action:
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Guarantee affordability. California should embrace a public policy supporting gradual, moderate and predictable fee increases for all three systems that strengthens the states commitment to higher education. california has been a national leader via cal Grants and college/university aid programs, but it is dangerously close to becoming a barbell state where access is dominated by high incomes at one end and low incomes at the other. financial aid packages need to continue to support low-income students. financially needy middle-income students should be able to receive sliding-scale benefits. Improve coordination between the Pre-K through high school system and the various segments of higher education i.e, University of California, California State Universities and the california community colleges. the transfer of students between highereducation systems needs to become a more seamless process. Remove barriers to college and university efforts to adopt technological innovations, including proven online learning programs. eliminate outdated classes, especially at the community colleges. Assess all secondary-school students for college readiness at the end of their junior year, as already begun by the cal state University system, and offer remedial classes in their senior year for those in need. Adopt policies to shorten student time to degree while maintaining the same learning outcomes and educational requirements. ensure that colleges and universities are providing classes essential for graduation, including on-line course options. prioritize class enrollment for those students on-track for their degree. consider an excess-of-units surcharge, such as has been adopted in north carolina, that would impose added fees on units taken beyond the credit hours required for graduation. (It is 50% in North Carolina.)
5. Addressing the $765-billion infrastructure debt. california faces a mammoth infrastructure challenge from building a smart energy grid to relieving traffic congestion, refurbishing ports and expanding the broadband information highways of the future. closing the states infrastructure deficit must be a coordinated effort so that the interconnections between localities, regions and the state as a whole are as cost-efficient as possible, even if necessarily driven by local demand. creative approaches will enable the state to close its infrastructure gap in the most cost-effective way. bonds. one way to improve local agency ability to plan for and finance infrastructure would be to adopt the same rules for local infrastructure and transit districts that we currently have for schools i.e., new funding could be approved by local voters by a 55% majority vote, rather than the current requirement of a 2/3 vote. However, consistent with the committees belief that costs must be transparent and not hidden, this option, which would be accomplished via an initiative, would also require that new dedicated funding sources for future state general obligation bonds be approved only if voters also approved a new funding source. USER FEES. The state should adopt user fees, when appropriate, for infrastructure funding. this can include tolls for peakhour freeway use and the use of publicprivate partnerships where the private sector finances and develops public infrastructure in return for user fees. the selection of infrastructure projects should be guided by an objective process and strict cost-benefit analysis. fast peRmitting. one goal of a strategic infrastructure plan would be, as suggested elsewhere in this report, to streamline and shorten the permitting process so the needed infrastructure and related job-creation can get underway without delay. bRoadband. the committee also believes the Public Utilities Commission (PUC) should encourage collaboration among providers to speed broadband penetration throughout the
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state and develop model permitting standards. the state should encourage industry to work with the PUC to expand the California Advanced services fund to assist the growth of broadband infrastructure, specifically in underserved regions of the state. PUBLIC INFRASTRUCTURE ADVISORY commission. the state should task a fully resourced public infrastructure advisory commission with establishing a framework for innovative funding mechanisms and developing partnerships. it should do so initially by restoring the balance among local, regional and state interests, which allows local and regional areas to control their own future when considering the approval of infrastructure projects; by incentivizing the 19 transportation self-help regions to leverage resources in ways that promote local/ regional infrastructure and economic development priorities; and by promoting legislation allowing for best practices (e.g., design/build, public-private partnerships, performance-based contracting) to expedite infrastructure development. the state should empower the commission to assist local agencies, as well as the state, with multi-sector partnerships. AN INFRASTRUCTURE SERVICE BUREAU. The state should also create a service bureau to work with the infrastructure and economic development bank to help state and local governments effectively negotiate complex public-private partnership procurement contracts and bundle small infrastructure projects, in order to lower transaction costs. this service bureau, working with professional trade organizations and organized labor, could be a center of excellence providing expertise on matters ranging from assistance with deciding whether a public-private partnership is appropriate to implementing and managing the public-private partnership agreement for a state or local government entity. ideally the service bureau would be able to charge the entity a reasonable fee for its service. the expertise that could be provided by the proposed service bureau would include:
Helping to retain experienced professionals to represent the state on any public-private partnership deal to ensure fair negotiations with the private sector. Conducting value-for-money analysis of each project to determine whether the project should be undertaken as a public-private partnership. Delineating the risks borne by each partner and identifying how the state has shifted risk to its private-sector partner when appropriate. Utilizing performance measurements that will allow evaluation of the results of each project. Calculating infrastructure costs for all projects, whether undertaken by publicprivate partnerships or otherwise, over the life of the project, taking into account all costs of building, maintaining, operating and owning the infrastructure over the projected life of the asset.
CONNECTION RENEWABLE ENERGY PRODUCTION. finally, the state should also encourage utility companies to pursue, consistent with state, local and federal policies, the construction of new power facilities in areas that have a high potential for renewable energy development (e.g., edisons tehachapi project.) employing a combination of incentives, policies and procedures, the state can significantly reduce barriers to entry for new renewable energy facilities by lowering the cost burden that would otherwise be imposed on interconnecting renewable facilities. doing so will speed construction of new power transmission lines and help the state meet its clean-energy goals by 2020.
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VII.
K-12 EDUCATION REFORM
Quality K-12 education is the foundation of any solid middle class society, providing opportunities for upward mobility. This is especially so in a knowledge economy that faces stiff competition globally and where students in other countries from Singapore to South Korea to China outperform Californias students. To ensure the states long-term competitiveness, California schools must be brought up to global standards. However, the issue of the states decaying educational system goes far beyond economic and business concerns. At a moment when some argue that the poor quality of Californias public schools is the civil rights issue of our time, serious, systematic and significant reforms are needed. Without improvements to learning outcomes, students in many of the poorer communities of California will remain on the wrong side of the Achievement Gap, trapped in some of the countrys worst schools. The Think Long plan would provide for a steady and growing flow of revenue to education over the coming decades $5 billion annually for K-14 schools and $2.5 billion annually for higher education at California State University, University of California, and Californias community colleges. We believe such new funding should not be automatically given to a system that is failing to educate millions of Californians. It instead should be tied to improving performance of K-12 schools, as a result of rigorous evaluation of teachers, as well as curbs on automatic teacher tenure and seniority. We further believe that new financing for education should be designed in such a way as to provide parents, especially the working poor, with the maximum choice over how and where their children are educated. In addressing these issues, the Committee spoke with a number of education leaders who provided their expertise and perspectives. They and many others have spent their careers researching ways to improve the educational system, and their collective knowledge provides the scaffolding upon which the Committee bases the following key reform priorities:
1. Teacher and principal effectiveness. modernize policies for recruiting, compensating, retaining and rewarding, and evaluating teachers and principals. policy changes should include: Meaningful teacher and principal evaluations. Non-seniority based layoffs (i.e., elimination of Last In/First Out hiring and firing). Earned tenure (i.e., based on effectiveness and moving from 2 to 5 years). Ensuring equitable distribution of teacher talent (i.e., equitable distribution of teacher salary dollars across schools within districts).
2. Promoting equality and opportunity for highquality public charter schools and providing additional high-quality options for students and parents. Utilize a Weighted Student Formula funding model to ensure equality of funding for public charter schools. this would also ensure that the funds are allocated to those in the best position to determine the needs of individual students. Provide financial incentives for growth of the highest-performing public charter schools that serve the most disadvantaged students (i.e., enterprise zones for education). Remove barriers to the expansion of digital learning opportunities (i.e., elimination of seat time requirements, funding based on achieving competency, etc.).
3. Providing for strong and useful state, district and school data systems. Implement statewide student, teacher and administrator data systems. Provide funds at the state level for the analysis of data to ensure that state resources are used wisely (i.e., analysis of professional development programs, identification of best textbooks, etc.).
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4. Improving accountability systems while at the same time increasing district-level autonomy to meet accountability goals. Create a meaningful school-level accountability system that accurately assesses both improvement in student performance and absolute levels of student performance, and use this system to hold all publicly funded schools accountable for results. Give districts greater authority in decisionmaking, including the flexibility to allocate state funds to meet district priorities. this would require that data on budget allocation and school- and district-level performance be widely disseminated and be easily publicly available. For highest performing districts in California, allow for maximum flexibility in utilizing state funds, including all categorical funds. Ensure robust state action when a school continually fails to educate students, including the closing of the poorest performing schools.
VIII.
PENSION AND HEALTH BENEFIT REFORM
Given the complex issues of long-term public pension and health benefit liabilities, it was beyond the scope and time frame of the Committees year-long deliberation to address this critical public policy matter. While pension systems are in various states of under-funding in different jurisdictions, they represent an unsustainable burden on many of these budgets, competing for funding with education, infrastructure, job creation and social services. Estimates of the total unfunded liabilities range as high as $500 billion. Unless resolved through negotiations between state and local officials and public employee unions all other reform progress is at risk. On October 27, as this report was being finalized, Governor Brown proposed a package of pension reforms including a hybrid 401k system, extension of the retirement age to 67 and increased contributions from employees that he indicated would save taxpayers about half of the projected costs of pensions and retiree health care benefits in the long run. We recommend that the Governor, Legislature and local government officials make it the highest priority to work with public employee unions to find ways to address the long-term costs of pensions and the unfunded liabilities that have already been built up.
These proposals are the result of a consensus by the members of the Think Long Committee for California. Having in common the ambition of a unanimous position, this report is therefore approved without implying that each member completely agrees with every individual proposal. However, what we all agree on is that, as a whole, these reforms, if implemented, will go a long way toward restoring good governance to California. Maria Elena Durazo abstained on the final recommendations. Matt Fong passed away during the course of the year.
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Appendix i
Think Long Committee Presenters and Participants Contributors to Jobs, Infrastructure and the Workforce Report
Think Long for California Committee

Nicolas Berggruen Berggruen Holdings David Bonderman TPG Capital Eli Broad The Eli and Edythe Broad Foundations The Honorable Willie Brown Willie Brown Inc. Former California Assembly Speaker Former Mayor, City of San Francisco The Honorable Gray Davis Loeb & Loeb LLP. Former Governor State of California Maria Elena Durazo Los Angeles County Federation of Labor, AFL-CIO The Honorable Ronald George Chief Justice, Retired California Supreme Court Antonia Hernandez California Community Foundation The Honorable Bob Hertzberg Mayer Brown LLP. Former California Assembly Speaker Eric Schmidt Google Inc. Terry Semel Windsor Media The Honorable George Shultz Thomas w. and Susan B. Ford Distinguished Fellow, Hoover Institution Former Secretary of State and Treasury Dr. Laura DAndrea Tyson S. K. and Angela Chan Chair in Global Management Haas Business and Public Policy Group University of California, Berkeley Former Chair Presidents Council of Economic Advisers
We are honored by the participation of:

The Honorable Matt Fong* Former Treasurer, State of California
*We were honored to have Matt Fongs active participation until his passing
Gerald Parsky Aurora Capital Group Former Chair UC Board of Regents The Honorable Condoleezza Rice Thomas and Barbara Stephenson Senior Fellow, Hoover Institution Former Secretary of State
And appreciate the participation of:

Leslie Miller Google, Inc. Rusty Hicks Los Angeles County Federation of Labor, AFL-CIO
Think Long Presenters and Participants:

Alan Auerbach Professor of Economics and Law University of California, Berkeley First Lady Ann Gust Brown State of California Governor Jerry Brown State of California James Canales President and CEO James Irvine Foundation John Cogan Senior Fellow Hoover Institution Diane Cummins Advisor to Governor Jerry Brown Nadya Chinoy Dabby Director The Broad Foundation, Education Joe Dear Chief Investment Officer California Public Employees Retirement System Amy Dominguez-Arms Program Director James Irvine Foundation Stuart Drown Executive Director Little Hoover Commission Hon. Ronald George Chief Justice (Retired) California Supreme Court Daniel Hancock Chairman Little Hoover Commission Doug Henton Chairman & CEO Collaborative Economics Fran Inman Past Chair LA Chamber of Commerce Hon. Bill Lockyer Treasurer State of California Jim Mayer Executive Director California Forward Gregory McGinity Managing Director of Policy The Broad Foundation, Education John Mockler President Mockler & Associates Hon. Gavin Newsom California Lt. Governor Hon. Roger Niello Governance Fellow University of California Center Sacramento Joe Nunez Associate Executive Director California Teachers Association Scott D. Pattison Executive Director National Association of State Budget Officers Aaron Read CEO Aaron Read & Associates Michelle Rhee Founder & CEO StudentsFirst Ed Roski Chairman of the Board & CEO Majestic Realty Co. Jean Ross Executive Director California Budget Project Hon. Arnold Schwarzenegger Former Governor State of California Senator Darrel Steinberg President Pro Tempore California State Senate Robert Stern President Center for Governmental Studies Joan Sullivan Los Angeles Deputy Mayor of Education Mac Taylor Legislative Analyst State of California Mayor Antonio Villaraigosa City of Los Angeles Tracy Westen CEO Center for Government Studies Julie Meier Wright Former Secretary CA Trade and Commerce Agency

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Contributors to Jobs, Infrastructure and Workforce Report:

Bill Allen President & CEO Los Angeles Economic Development Corporation Bob Balgenorth President State Building and Construction Trades Council of California Greg Blue Director of Governmental Affairs SunPower Corporation Victoria Bradshaw Former Secretary California of Labor and Workforce Development Agency Kathleen Brown Chairman of Investment Banking, Midwest Goldman Sachs Tony Brunello Former Deputy Secretary for Energy and Climate Change California Resources Agency John Bryson Retired Chairman & CEO Edison International Patrick Callan President National Center for Public Policy and Higher Education Rachelle Chong Regional VP of Government Affairs for California Comcast Governor Gray Davis Former Governor State of California Superintendent John Deasy LA Unified School District Governor George Deukmejian Former Governor State of California Michael Donnelly Sr. Vice President of Merchandising Kroger Co. Norman Emerson Principal Emerson and Associates Sarah Flocks Public Policy Coordinator California Labor Federation Mayor Bob Foster City of Long Beach Chris Garland Chief of Staff to Lieutenant Governor Gavin Newsom Russ Gould Chair Emeritus UC Regents Carl Guardino President & CEO Silicon Valley Leadership Group Ted Harris Principal California Strategies Christine Herron Director Intel Capital Bob Hertzberg Mayer Brown LLP. Winston Hickox Former Secretary of California Environmental Protection Agency Doug Hutcheson CEO Leap Wireless/Cricket Communications Irwin Jacobs Founder and Former Chairman Qualcomm

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Jeff Jonker Chief Business Officer Satori Pharmaceuticals Loren Kaye President of California Foundation for Commerce and Education Robin Kramer Commissioner Port of Los Angeles Stephen Levy Director Center for the Continued Study of the California Economy Sunne Wright McPeak President & CEO California Emerging Technology Fund Lenny Mendonca Director McKinsey and Company, Inc. Leslie Miller Office of the Chairman of Google, Inc. Becky Morgan Morgan Family Foundation Lt. Governor Gavin Newsom State of California Manuel Pastor Professor of American Studies & Ethnicity University of Southern California Noel Perry Founder Next 10 Art Pulaski Executive Secretary-Treasurer California Labor Federation Charles Reed Chancellor of the California State University
Fred Ruiz Chairman & CEO Ruiz Foods Peter Schwartz Co-Founder & Chairman Global Business Network Mayor Ashley Swearengin City of Fresno Dr. Laura DAndrea Tyson S. K. and Angela Chan Chair in Global Management Haas Business and Public Policy Group University of California, Berkeley Peter Uebberoth Founder & Principal Contrarian Group Mark Watts Principal Smith, Watts and Co. Peter Weber Chair, Executive Committee California Partnership for the San Joaquin Valley Meg Whitman Former CEO eBay Governor Pete Wilson Former Governor State of California Julie Meier Wright Former Secretary Ca Trade and Commerce Agency Mark Yudof President University of California

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Consultants to Think Long for California:

Nathan Gardels Sr. Advisor Nicolas Berggruen Institute Global Viewpoint Joanne C. Kozberg California Strategies Mike Genest Capitol Matrix Consulting Tim Gage Blue Sky Consulting Group Jason Kinney California Strategies Steven Cahn California Strategies Andrew Chang Chang & Adams Consulting Peter Schaafsma Capitol Matrix Consulting Brad Williams Capitol Matrix Consulting Shawn Blosser Blue Sky Consulting

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Maureen Dear Legal Advisor
Appendix ii
Californias Budget Woes: How is our Fiscal Health?

Legislative Analysts Office report, October 27, 2011
Californias Budget Woes: How Is Our Fiscal Health?

Legislative Analysts Office
Randall Lewis Seminar Series University of California, Riverside October 27, 2011
www.lao.ca.gov
LAO
Background
LAO
General Fund Spending By Program

2011-12
LAO
General Fund Spending By Object

2011-12
LAO
General Fund Revenues

2011-12
LAO
The Change in Our General Fund Revenue Structure
LAO
The Origins of Our Situation
LAO
Increasing Revenue Volatility

What Is Volatility?
State revenues change more dramatically than the economy.
From 1979-80 Through 2003-04, Revenues Were Twice as Volatile as the Economy From 1991-92 Through 2003-04, Revenues Were 3 Times as Volatile
LAO
The Capital Gains Roller Coaster

Net Capital Gains Income in California (In Billions)
LAO
Poor Budgeting Practices

Failure to Build Up Reserves During the Good Times Boom in Revenues Used for Ongoing Spending Commitments and Tax Relief
Did do some one-time spending (capital outlay).
LAO
Use of Debt to Finance Operating Shortfalls

2003-04: $10.7 Billion Deficit Financing Bond March 2004: Voters Approved $15 Billion Replacement Bond Measure
LAO
10
End ResultState Entered Recession in Poor Fiscal Shape

State Had an Underlying Out-Year Budget Problem in Excess of $7 Billion No Budgetary Reserve to Cushion Blow of Recession
LAO
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Addressing Our Budget During the Recession
LAO
12
Recession Devastated State Revenues

Percent Reduction in Baseline Revenues November 2010 Estimates Compared to January 2008 Estimates
LAO
13
Very Modest Recovery Forecast

Job Loss in Percent
LAO
14
How Big Have Our Budget Deficits Been?

(In Billions)
LAO
15
The 2011-12 Budget
LAO
16
Actions to Close the 2011-12 Budget Gap

Two-Year General Fund Benefit (In Billions)
LAO
17
Major Expenditure-Related Actions

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18
Major Revenue-Related Actions

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19
Revenue-Related Proposals Not Included in the Budget

Extension of Tax Rate Increases Adopted in 2009
Personal income tax (PIT), sales and use tax (SUT), vehicle license fee (VLF)
Tax Provisions
Mandatory single sales factor. Changes to enterprise zone credits. Sales tax exemption for manufacturing equipment.
LAO
20
Impacts on Local Government
LAO
21
RealignmentMajor Shift in Services From State to Counties

Transfers Over $6 Billion in Services
Adult and juvenile offenders and parolees. Mental health programs. Foster care and child welfare services.
Provides Counties With Equivalent Ongoing Funding Sources

Just over 1 percent of state sales tax. Certain VLF revenues.
LAO
22
RealignmentMajor Service Delivery Changes in Correctional Programs

Lower-Level Offenders, Parole Violators, and Parolees Will Now Be Served Locally Estimated to Reduce State Prison Population by 40,000 Inmates (About 25 Percent) by 2014
LAO
23
Redevelopment Agencies
One Bill Eliminated All Redevelopment Agencies A Second Allows Existing Agencies to Continue if They Make Payments to Other Local Agencies
State Savings of $1.7 Billion in 2011-12 and $400 Million Annually Thereafter
Currently Challenged in Courts
LAO
24
The Trigger
LAO
25
Mechanism Established to Address Revenue Shortfall

Given $4 Billion Revenue Assumption, State Adopted Cuts to Go Into Effect Mid-Year if Monies Fail to Materialize
Spending Reductions Would Cover About 60 Percent of Potential Shortfall
LAO
26
Trigger Reductions Fall Into Two Tiers

Tier 1: Revenues Fall at Least $1 Billion Short
$600 million in specific cuts (such as $100 million to the University of California).
Tier 2: Revenues Fall More Than $2 Billion Short

Up to $1,860 million in education cuts, primarily K-12. K-12 cut prorated, based on revenue shortfall.
LAO
27
Key Challenges
LAO
28
Closing Our Remaining Budget Gap

The State Made Much Greater Progress in 2011-12 in Reducing Structural Budget Problem We Are Still Likely to Have a Significant Problem Next Year Revenues will be key. Our Mid-November Fiscal Forecast Will Estimate Remaining Problem in 2012-13 and Out-Years
LAO
29
Deciding on the Size of the Public Sector

Much of the Debateat Both State and Federal LevelComes Down to:
What is the appropriate size of government?
Your Answer Determines Whether You Support New Revenues or Expenditure Reductions If Governor Has His Way, You Will Have a Chance to Vote on Revenue Increases This November
LAO
30
Addressing Budget-Related Obligations

The State Has Accumulated a Variety of Deferred Expenses Over the Past Decade:
LAO
31
Addressing Public Employee Post-Retirement Obligations

The State Has Unfunded LiabilitiesPension and Retiree HealthProbably Well Over $150 Billion Two Major Implications:
Increased state costs to begin to address these obligations. Continued pressure to modify benefits primarily related to future employees.
LAO
32
Addressing Our State Unemployment Insurance Shortfall

The State Currently Owes Over $9 Billion to the Federal Government Related to Our Unemployment Insurance Program We Will Need to Raise Employer Costs and/or Reduce Future Benefits to Bring Our Account Back to Balance
LAO
33
Making Choices on Infrastructure

The State Has Huge Infrastructure Demands:
Water, highways, universities, schools, etc.
Capital Outlay Spending Is Also One of the Only Ways for State to Contribute Immediately to Economic Growth The Tradeoff?
Every $5 billion in new bond spending generates $350 million in debt service payments.
LAO
34
Achieving Budgetary Reform

Key Is Addressing Revenue Volatility By:
Taking revenues off the table during good times. Building up and maintaining reserves that will be there in bad times.
Many Other Possibilities

Performance based budgeting. Two-year budgeting. Improved program reviews.
LAO
35
Considering Tax Reform

Incredibly Difficult Task With No Clear Consensus on What to Do Most Widely Discussed Topics
PIT: reducing volatility. SUT: broadening base and not taxing business-to-business transactions.
LAO
36
Visit the LAO website at: www.lao.ca.gov
LAO
37
Appendix iii
Jobs, Infrastructure & the Workforce

Think Long Committee report, September 2011
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Jobs, Infrastructure & the Workforce
This report was prepared by Doug Henton, Chairman and CEO of Collaborative Economics and Julie Meier Wright, retired President of the San Diego Regional Economic Development Corporation and former Secretary of the California Trade and Commerce Agency with the assistance of Steven Cahn, Joanne Kozberg and Nathan Gardels of the Think Long Committee for California. It is based on: Extensive interviews with current and past leaders of Californias economic development. Those interviewed include: Bill Allen, President and CEO of the Los Angeles Economic Development Corporation; Bob Balgenorth, President of the State Building and Construction Trades Council of California, AFL-CIO; Kathleen Brown, Chairman of Investment Banking, Midwest, Goldman Sachs; John Bryson retired Chairman & CEO of Edison International; Gray Davis, former California Governor; George Deukmejian, former California Governor; Michael Donnelly, Sr. Vice President of Merchandising, Kroger & former President of Ralphs Grocery Co.; Bob Foster, Mayor of Long Beach and former President of Southern California Edison; Chris Garland, Office of Lieutenant Governor Gavin Newsom; Russ Gould, former Director of the California Department of Finance and past Chairman of the University of California Regents; Carl Guardino, President and CEO of Silicon Valley Leadership Group; Christine Herron, Director of Intel Capital; Doug Hutcheson, CEO of Leap Wireless/Cricket Communications; Irwin Jacobs, founder and former Chairman, Qualcomm; Jeff Jonker, Chief Business Officer of Satori Pharmaceuticals; Stephen Levy, Director of the Center for the Continued Study of the California Economy; Lenny Mendonca, Director of McKinsey and Company, Inc.; Leslie Miller with the Office of the Chairman of Google, Inc.; Gavin Newsom, Lieutenant Governor of California; Manuel Pastor, Professor of American Studies & Ethnicity, University of Southern California; Noel Perry, Founder of Next 10; Art Pulaski, Executive Secretary-Treasurer, California Labor Federation; Charles Reed, Chancellor of the California State University; Fred Ruiz, Chairman & CEO of Ruiz Foods; Peter Schwartz, Co-founder & Chairman of Global Business Network; Ashley Swearengin, Mayor of Fresno; Laura Tyson, S.K. and Angela Chan Chair in Global Management of the Haas Business and Public Policy Group, University of California, Berkeley; Peter Uebberoth, Founder & Principal, Contrarian Group; Meg Whitman, former CEO of eBay; Pete Wilson, former California Governor; and Mark Yudof, President of the University of California. Discussion of the Think Long Committees Task Force on Jobs, Infrastructure & the Workforce held at Google, Inc. on May 6, 2011, and chaired by Lieutenant Governor Gavin Newsom. The following task force members were present: Julie Meier Wright, Sarah Flocks representing Art Pulaski, Christine Herron, Bob Hertzberg, Stephen Levy, Leslie Miller and Noel Perry. Becky Morgan attended as a guest. Discussion of the Think Long Committee at a meeting on August 10th, 2011, chaired by Dr. Laura Tyson. The Think Long Committee wants to thank Stephen Levy for his major contribution to this endeavor as well as the following individuals: Greg Blue, Director of Government Affairs, SunPower Corporation; Victoria Bradshaw, former Secretary California of Labor and Workforce Development Agency; Tony Brunello, former Deputy Secretary for Energy and Climate Change, California Resources Agency; Patrick Callan, President, National Center for Public Policy and Higher Education; Rachelle Chong, Regional Vice President of Government Affairs for California, Comcast; Norman Emerson, Principal, Emerson and Associates; Chris Garland, Chief of Staff to Lieutenant Governor Gavin Newsom; Ted Harris, Principal, California Strategies; Winston Hickox, former Secretary of California Environmental Protection Agency; Loren Kaye, President of California Foundation for Commerce and Education; Robin Kramer, Commissioner, Port of Los Angeles; Sunne Wright McPeak, President and CEO, California Emerging Technology Fund and former Secretary, Business, Transportation & Housing Agency; Mark Watts, Principal, Smith, Watts and Co.; and Peter E. Weber, Chair, Executive Committee, California Partnership for the San Joaquin Valley. The Think Long Committee applauds Governor Jerry Brown and leaders in the Legislature for their efforts to address Californias economic challenges and its double-digit unemployment rate. Finally, the Committee thanks Lt. Governor Gavin Newsom for chairing its Task Force on Jobs, Infrastructure & the Workforce and for his focus on improving the states economic prospects.
CONTENTS
INTRODUCTION..........................................................................................................................................6 KEY RECOMMENDATIONS...........................................................................................................................8 FACTS ABOUT THE CALIFORNIA ECONOMY............................................................................................12 FRAMEWORK..............................................................................................................................................14 RECOMMENDATIONS & GOALS................................................................................................................17 Investing in Infrastructure.........................................................................................................................18 Investing in People...................................................................................................................................23 Making Government Job Friendly and California Attractive to Private Investment....................................26 CONCLUSION............................................................................................................................................28 ENDNOTES.................................................................................................................................................29
INTRODUCTION
California and its economy enjoy many strengths and advantages compared to its national and global competitors. The worlds eighth largest economy, the state includes industries with significant long-term growth potential. California is the nations leading center of technology and innovation, capturing $1 in every $2 of the nations venture capital funding. It is the dominant entertainment center with 40% of the nations jobs. California also is the leading Pacific Rim center for exports, foreign trade and investment. It remains the nations largest agricultural producer and exporter, and tourism has solid long-term growth prospects as consumers around the world experience rising incomes. But, the competitive climate has become even more challenging for California and the nation. Other countries such as China, India and Brazil are producing strong economic growth and making rapid advances in technology while investing aggressively in infrastructure and education. No longer is America the only center of technology and innovation. Instead, both California and the nation are experiencing high rates of high school dropouts and failing to increase the number of college graduates, particularly in science, technology, engineering and math. California, and the nation as a whole, still can seize economic opportunities, but only if both overcome these multiplying sets of challenges challenges made even tougher by the ongoing economic downturn and lingering effects from the Great Recession. Failing to act with a real sense of urgency will threaten the essence of the California lifestyle, which is built on the states middle class, its workers and their families and is fueled by opportunity and innovation in an evolving global economy. Cultivating a healthy economy in California will provide the good jobs that pay family-supporting wages. In setting forth how California best can adapt to these challenges, the Think Long Committee for California Task Force on Jobs, Infrastructure and the Workforce first analyzed the results of 20 years of prior reports as well as conducted interviews and held discussions with more than 50 business, government, academic and labor leaders from regions throughout the state.
Think Long Committee for California - Jobs, Infrastructure & Workforce
From this work, a set of recommendations emerges around three key points: California is an economy of distinct regions Productivity and innovation are key to future growth and prosperity Public policy should promote productivity and innovation in both the public and private sector Since California is an economy of distinct regions, any statewide economic strategy that seeks to bolster broadbased prosperity and a healthy middle class of skilled workers must be built from the bottom up. Further, such a strategy requires both reducing the cost of doing business by streamlining our complex regulatory process and adding value to the business climate by investing in infrastructure, innovation and people. As it establishes an economic strategy, the state should focus resources and policies where its strengths and comparative advantages lie: its climate; the relative size of its market; a highly skilled workforce; regions that are hubs of innovation; and access to trade with Asia and Latin America. The Task Force also carefully reviewed the often repeated criticism that California is a terrible place to do business. These complaints have been around for decades, through good times and bad, and there are dissenting views. Here is where there is no dissent: Good customer service is essential, whether one is talking about a business or a government agency. California must provide that higher level of service in order to compete with other states and nations. As we recommend in this report, it can start by providing single points of contact for interested investors and businesses. Consolidation of duplicating agencies and streamlining regulations can save money over the long term, but the main immediate payoff will be in better customer service. Traditionally, the debate about creating an economic strategy for California has revolved around two competing definitions of a good business climate: Cost-Driven: In this view, a good business climate is defined as the absence of high taxes, excessive regulations, high labor costs and high utility rates. Businesses are assumed to be cost-driven and thus locate and grow in environments that provide the lowest-priced inputs (land, labor, capital) and the least interference by government.
Innovation-Driven or High-Road: In this view, a good business climate is defined as what is added to the environment for industries and companies. This includes a skilled workforce, accessible technology (often from a state university), capital markets, quality infrastructure and a network of suppliers. Government has an important role to play in helping to create and maintain this type of business climate. As noted, a competitive business climate for California requires both critical investments that add to productivity as well as policy reforms that reduce the costs and complexity of doing business. The key to high-road success is public investment to attract private investment. Californias strengths are its places and people. William F. Miller of Stanford summarizes the direction for a high-road state economic strategy: What works? What is effective are people and place policies. What does not diffuse away quickly are infrastructure and workforce. Although a few key people may be mobile, large numbers of the workforce are not. Polices that support the education and training of the workforce, that support research combined with education, that support a modern infrastructure, and support the development of institutions that facilitate collaboration between business, government, and the independent sector will have lasting effects of building capacity that does not diffuse away. Develop the people and placesthe habitat for living and working. Supporting the ongoing development of Californias people and places, its core strengths, should be the central approach of the states economic strategy. The Task Forces report is divided into three sections: An executive summary of priority recommendations for improving infrastructure, strengthening higher education / workforce development and streamlining regulation. Facts about the California economy that informed the recommendations. A full set of actionable recommendations and goals. Those include: education and budget strategies to reform and fund increased investment through strengthening local government, proposals to organize and fund critical infrastructure investments, and policies to streamline regulation.
KEY RECOMMENDATIONS
The Silicon Valley Leadership Groups 2011 CEO Business Climate Survey identifies the key challenges in developing an innovation strategy for California: Increasingly it is difficult for Silicon Valley companies to compete against other centers of innovation and entrepreneurshipboth domestic and abroad. Among the unique challenges are globalization and the international competition for talent. A deteriorating state infrastructure in areas ranging from public education to public transportation has added to the difficulties of recruiting the best workforce, finding them available housing, and educating their children to be tomorrows world-class workforce. The CEO survey reminds us that in competing for businesses we also must compete for talent, which means competing for people. Executive interviews conducted in recent industry studies for local workforce boards uniformly rank access to a skilled labor force as the number one reason for locating in California. Fortunately investments in people and places do double dutyproviding great places to work while simultaneously developing great places to live. The Think Long Committee has developed a series of recommendations for investing in California people and places to create communities and regions that say come here to live and work. PreK-12 education recommendations, while critically important to a strong California workforce, are not covered in this report as they are part of the Think Long Committees broader scope of deliberation. Key infrastructure, higher education and job/workforce recommendations are set forth below, as are recommendations for how to streamline customer service (one-stop shopping) and how regulations can be implemented to make California a more welcoming place for innovation and jobs.
IMPROVING INFRASTRUCTURE
Think Long has identified infrastructure needs of more than $765 billion over the next 10 years with nearly half of these dollars currently without a funding source. (For more detail see chart on page 18.) Planning for and funding infrastructure in California is a partnership effort involving the state, local and regional agencies; the private sector; and the federal government. The funding gaps are large but it is critical, given Californias continuing budget problems, that new investments are made strategically and wisely. Such investments also would address immediately one of the biggest contributors to the states high unemployment rate: the ongoing loss of construction jobs. Thoughtful investments in infrastructure as suggested in the Legislative Analysts report A Ten-Year Perspective: California Infrastructure Spending will have both substantial short- and long-term effects on the states economic strength. Before additional funds are allocated Think Long recommends the state: Develop a better process to insure that infrastructure investments are made wisely. Major ideas include rigorous evaluation of alternatives; devolution of planning and prioritization to the local and regional level where possible; and extensive reliance on user fees where feasible, including active promotion of public-private partnerships. The state also must ensure there are proper inter-regional and multi-modal linkages. Carefully evaluate alternatives to additional investment and identify innovative ways to invest. There are many ways to expand infrastructure capacity besides building. These approaches include conservation, metering for more efficient energy use and the use of prices such as peakhour pricing for energy and highways to reduce
peak demands and new construction needs. There are more efficient materials and construction process available, as well. The state should be devoting more resources to maintenance (versus repair, which is more expensive) and also should reduce bureaucracy to expedite projects. Implement the Water Innovation Roadmap by the California Council of Science and Technology, Department of Water Resource and other partners. Doing so will promote science and technology solutions to the states watersupply challenges by using IT and smart systems applications to increase water efficiency; reduce energy intensity of water systems; and assure that surface and groundwater use is monitored using remote sensing and satellite technologies. A funding strategy for Californias unfunded infrastructure gap should include the following: Require a new dedicated funding source for future state General Obligations bonds. This approach follows the well-accepted practice where local agency and school bonds are approved only if voters also approve a new funding source. Benefits include improved transparency and governance since voters will know that state bonds arent free and reduce debt-service costs, which will free up funds for other purposes in the state budget. Adopt user fees, where appropriate, for infrastructure funding. This can include tolls for peak-hour freeway use and the use of public private partnerships where the private sector finances and develops public infrastructure in return for user fees. The state should pursue opportunities for private-sector financing of infrastructure where possible although the review of infrastructure needs conducted by the Think Long Committee for California found that a large proportion of new investments such as road repair is not appropriate for the toll road/user fee model.
Follow the recommendations of the Legislative Analysts Office (LAO) and others to correct deficiencies in the current state fuel-tax system to provide funding that keeps pace with needs and inflation in an era when fuel efficiency and fuel use are improving rapidly and no longer able to keep pace with transportation funding needs. Improve local agency ability to plan for and finance infrastructure by adopting the same rules for local infrastructure and transit districts that we have for schools, where new funding can be approved by local voters with a 55% majority. Also implement the recommendations of the Think Long Committees tax-reform plan to broaden the sales tax base in a way that helps local transit districts.
STRENGTHENING HIGHER EDUCATION AND WORKFORCE DEVELOPMENT

Californias once world-class higher education system, which fueled much of the states innovation in the past, has fallen victim to decreasing discretionary spending in State budgets. Simultaneously, other workforce development pipelines, such as industry-supported apprenticeship programs, also have lagged or been too disconnected from industry needs. The result is that, by some estimates, California will be short one million highly skilled workers in the year 2025. The next generation of workers in California and the states businesses demand and deserve far better. To address this looming workforce crisis and to provide California workers with the skills needed for well-paying, stable jobs, the following reforms must be implemented: Guarantee affordability. California should develop a fee structure for its Community Colleges, California State University and University of California that is gradual, moderate and predictable. Financial-aid packages need to continue to support low-income students, and financially needy middle-income students should be able to receive sliding-scale benefits, as well.
Work with the federal government to expand access to H1B visas to meet current skills shortages, notably in tech industries, and develop a new category of permanent visas for foreign students graduating with advanced degrees in STEM fields. Improve coordination between the P-12 system and the different segments of higher education University of California, California State University and the California Community Colleges. Transfer among higher-education segments needs to be a more seamless process. Remove barriers to and increase concurrent enrollment for high school students among all higher education segments. Eliminate outdated classes, especially at the Community Colleges. Assess all secondary-school students for college readiness at the end of their junior year, as begun by the Cal State University system, and offer remedial classes for those in need during their senior year. Promote career technical training opportunities for students in high school and beyond. Partner with industry to develop programs and internships that show students how education is connected to career opportunities. Establish a jobs consortium of cutting-edge companies to create a mentoring/internship program for home-grown labor that connects STEM students in community college, CSUs and UCs to future jobs. The California Workforce Board should partner with local workforce boards to disseminate the best practices developed by local workforce boards in assisting existing workers who need both to understand the new world of job searches and rapidly changing employer expectations and assistance in acquiring new or updated skills. Local workforce boards should be encouraged to develop coordinated regional strategies with other boards in the same regional labor market and to develop stronger relationships with their privatesector partners. Develop real-time on-line jobs websites that link skills with employment for statewide and local use.
STREAMLINING GOVERNMENT
Without reducing its regulatory and oversight standards and by making organizational changes at the least cost to the state, Californias government can be a better partner and provide much better customer service to businesses. Several key changes will strengthen the business environment and help sustain and grow jobs, while encouraging trade and investment. These include: Consolidate disparate existing economic development functions into a strengthened Office of Economic Development in the Executive Branch. Serving as the single point of contact for business assistance, this office would provide onestop concierge service to companies seeking to locate and expand in California. This office would align the states economic development activities into one organization that would work with the states diverse economic regions; encourage them to develop and implement customized strategies; and enable action focused on each regions unique challenges, industry mix and distinct assets. It would use existing positions and budgets in current Executive Branch agencies and commissions. No new public money would be expended. Enacting AB 29 (Perez) is a promising first step and model that aligns with the call for consolidation. Enacting SB 617 to strengthen the Administrative Procedure Act is another. Create a Regulatory and Permit Streamlining Unit within the Office of Economic Development that would cut through red tape and organize red-carpet service to reduce the time it takes to navigate the permit process for job-creating projects. This group also would be responsible for conducting an economic assessment of all regulations with a fiscal impact greater than $25 million to provide policy makers with a baseline upon which to determine what additional reforms are needed. It also could carry out the regulatory functions of an Office of Economic and Regulatory Analysis as suggested by the Little Hoover Commission in its October 2011 report, Better Regulation.
10
Enhance CEQA. The uncertainty created by California Environmental Quality Act (CEQA) lawsuits continues to be a significant deterrent to investment and business expansion. Often developments that meet the strictest environmental standards, address Californias clean-energy needs or offer much-needed new jobs are stymied or halted by legal challenges with little or no merit under the law. Specific enhancements are needed that will provide more certainty to the development process and allow CEQA to serve its original, critically important purpose of protecting Californias environment. Improvements should include reforming the definition of standing for lawsuits and establishing streamlined legal proceedings and permitting processes. Create plug and play economic zones that are pre-approved for CEQA and other land-use and zoning permits. Working with local zoning authorities, the State initially should target highunemployment areas such as the Central Valley and the Inland Empire so businesses can open, expand and cluster as quickly as possible.
CONTINUE CALIFORNIAS TRADITION OF WELCOMING ENTREPRENEURS AND TALENTED WORKERS AND THEIR FAMILIES
In addition to investing in Californias people and places and streamlining government to avoid duplication, minimizing permitting times and, in general, providing world-class customer service to residents and businesses, California can build on a strength that is often overlooked in discussions of 21st century economic competitiveness. That strength is Californias well-deserved reputation as a place where people are welcome. The competition for talent demands a welcoming attitude and California has a proud history upon which to build. From the days of the Gold Rush to the emergence of Hollywood and the explosion of innovation in Silicon Valley, California has welcomed people without regard to where they were born, their spiritual or religious beliefs, the color of their skin or sexual orientation. Mostly this welcoming attitude derives from the openness of Californias residents and businesses but there are places where public policy can support the message welcome to California.
DEVELOPING TAX POLICIES TO SUPPORT INNOVATION

Tax reforms that increase the attraction of California for innovation and private investment can improve the states competitive position in a challenging and increasingly world is flat economy. The most important reforms on tax policy proposed by the Think Long Committee involving broadening the sales tax while reducing personal income tax rates, thus favoring production over consumption are beyond the scope of this report. More specific tax or tax credit policies that would support innovation such as a sales tax exemption for manufacturers on depreciable equipment, increasing the R&D tax credit from 15% to 20% to conform with federal policy and reforming the corporate tax code to adopt a mandatory single sales factor for apportionment should be reconciled with the overall Think Long Committee tax recommendations.
11
FACTS ABOUT THE CALIFORNIA ECONOMY

There are characteristics about Californias economy that are important to understand when considering the states future. The overview presented below is a synthesis of a California Economy Update prepared by Stephen Levy, Director of the Center for Continuing Study of the California Economy, research by Collaborative Economics and other sources.
U.S. AND CALIFORNIA ECONOMIES RISE AND FALL TOGETHER
California is affected by most of the same factors that affect the national economyspending decisions by consumers, businesses and government and by world economic trends. Historically California grows a little faster in high-growth periods such as the late 1990s and typically trails U.S. growth in recessions. But the pattern of state growth closely follows the national business cycle. California experienced larger job losses than the nation during the recession, primarily as a result of nearly 600,000 job losses related to the sharp decline in housing and other construction. During the recession California had smaller manufacturing job losses compared to the nation and increased the states share of venture capital funding. Fewer than 20% of the jobs lost during the recession have been added back as job gains have been smaller than in a normal recovery, leaving unemployment rates high. Californias unemployment rate exceeded the national rate by as much as three percent after the Vietnam War, during the early 90s aerospace restructuring and again today. In the past, the states unemployment rate moved back in line with the national rate once the recessions were over.
There is much uncertainty in the global and national economy that will impact the California economy in the coming months. This results from external factors such as financial developments in Europe and Asia as well as federal fiscal and monetary policies that will affect overall economic growth. Californias economic future will be shaped by these forces and by how Congress resolves the current policy gridlock.
CALIFORNIAS ECONOMY IS DRIVEN BY ITS INDUSTRY STRUCTURE

The key factors that will affect Californias economic performance are the prospects for and competitiveness of the states key economic base sectorsthose industries that sell goods and services to markets across the country and world. In the period between August 2010 and August 2011, Californias percentage job gain was slightly higher than the nation1.2% compared to 1.0%. But the good news is that the job growth was concentrated in sectors important for future growth. Of the 171,000 jobs added, 35,000 were in professional and technical services; 24,000 were in information services; 20,000 in wholesale trade as exports reached a record level; and 17,000 in manufacturing. There were additional job gains in the tourism sectors and even a longawaited 7,800 increase in construction jobs. Overall job growth was and will continue to be restrained by a loss in government-sector jobs.
12
YEAR OVER PERCENT JOB CHANGE IN INDUSTRY SECTORS

August 2010 and August 2011
Information Educational Services Professional & Technical Services Wholesale Trade Administrative & Waste Services Accommodation & Food Services Arts, Entertainment & Recreation Health Care & Social Assistance Mining & Logging Construction Manufacturing Nonfarm Transportation, Warehousing & Utilities Retail Trade Finance & Insurance Managment of Companies & Enterprise Other Services Government Real Estate and Rental & Leasing
-4% 0% 4%
California U.S.
8%
12%
Data Source: Bureau of Labor Statistics, Current Employment Statistics (CES) seasonally adjusted Analysis: Collaborative Economics
CALIFORNIAS ECONOMY VARIES BY REGION

The California economy is a collection of diverse regional economies. With agriculture in the Central Valley and high tech in the Bay Area, entertainment and foreign trade in Southern California and tourism in coastal and mountain locales, the states regions are known for their distinct economies. These regions have different strengths, demographic profiles, housing prices, climates and unemployment challenges. The diversity of the states regional economies means that Californias economic strategies should be informed by and reflect the different industry and demographic profiles among the states economic regions.
Venture capital funding, critical to developing new goods and services, is growing again, and Californias share remains at 50%. Port traffic is returning to pre-recession highs and exports of goods made in California reached record levels in recent months. For every two dollars of goods exports there is roughly one dollar of service exports. The tourism sector will benefit from global demand as California attractions and the weather combine to provide enjoyable business and personal travel opportunities. Californias entertainment sector (especially creative work in production and post-production activities) continues to be the dominant center in the nation.
CALIFORNIA HAS ECONOMIC OPPORTUNITIES IN TECH, TRADE, TOURISM AND CREATIVITY

The largest pool of high-wage job growth is projected to come from professional services, including computer, R&D, scientific and consulting, and from information services, including software and the broad array of Internet-related activities.
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FRAMEWORK
Although California as a whole can be considered the worlds eighth-largest economy, conceiving of it as one monolith fails to highlight just what makes the state so economically strong: its distinct regions that take advantage of unique characteristics and assets to support core business sectors.
CALIFORNIAS ECONOMY IS ACTUALLY A SET OF DIVERSE REGIONAL NETWORKS OF BUSINESSES, FINANCIAL AND EDUCATIONAL INSTITUTIONS AND PUBLIC INFRASTRUCTURE
Californias economy is composed of several distinct regional economies or ecosystems. What we call the state economy is built on the relative strengths of the different regions of the state. San Diego, Los Angeles, Silicon Valley, the Central Valley and other regions of California have different industries, institutions and talent bases. that slow innovation. The key to competitiveness for California is creating great places to live and work places that say to entrepreneurs and talented workers and their families: Come be part of the worlds greatest center of innovation.
WHILE GROWING JOBS AND BUSINESSES SHOULD BE THE RESULT OF A SUCCESSFUL ECONOMIC STRATEGY, PUBLIC POLICIES SHOULD FOCUS PRIMARILY ON SETTING THE CONDITIONS FOR LONG-TERM, SUSTAINED INNOVATION AND PRODUCTIVITY
What matters most is getting the basics right and creating the right environment for innovation, entrepreneurship and growth. As noted in the introduction, the debate about creating an economic strategy for California has revolved around two competing definitions of a good business climate: Cost-Driven: In this view, a good business climate is defined as the absence of high taxes, excessive regulations, high labor cost and high utility rates. Businesses are assumed to be cost-driven and thus locate and grow in environments that provide the lowest-priced inputs (land, labor, capital) and the least interference by government. Innovation-Driven or High-Road: In this view, a good business climate is defined as what is added to the environment for firms. This includes a skilled workforce, accessible technology (often from a state university), capital markets, quality infrastructure and a network of suppliers. Government has an important role to play in helping to create and maintain this type of business climate.
IT IS IMPORTANT TO RECOGNIZE THAT THE STATE OF CALIFORNIA IS A POLITICAL JURISDICTION, NOT AN ECONOMY
Public policies by state government affect the economy by defining a framework of rules and public investments. In other words, they can set the conditions for economic change and private investment by establishing the ground rules for the economy, but they alone do not determine the outcome of Californias regional networks, which are driven by a complex set of both external and internal factors. What is often referred to as the business climate is a result of these ground rules.
THE GOAL OF STATE ECONOMIC STRATEGY SHOULD BE PROMOTING BROADBASED PROSPERITY ROOTED IN RISING PRODUCTIVITY
Productivity is a function both of the efficient use of human, capital and physical resources and investments in people and innovation. The result should be wellpaying jobs and thriving businesses in a wide variety of competitive industries. The keys to competitiveness in the global economy are continuous innovation in both products and processes as well as ongoing efforts to reduce factors that increase cost and to remove barriers
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KEY CHARACTERISTICS FOCUS
COST-DRIVEN ECONOMIC STRATEGIES Domestic competition Zero sum game More inputs (land, labor, capital) create more output The lower the costs of inputs, the higher the profitability of outputs Employment growth Incentives to attract or retain cost-driven firms and industries Lead industry attraction and marketing efforts to firms and industries Quantity of jobs, number of firms attracted/ retained
INNOVATION-DRIVEN ECONOMIC STRATEGIES Global competition and collaboration Positive sum game More efficient and innovative use of highervalue inputs (physical, human, knowledge resources) creates more profitable output Increasing productivity and per-capita income Investments in talent and infrastructure to support innovation-driven clusters Broker innovation networks, connecting inventors, financiers, and transformers, to produce results Quality jobs, wage and income growth, innovation (e.g. patents, commercialization, start-ups, etc.)
LOGIC
GOAL APPROACH ROLE OF ECONOMIC DEVELOPMENT PRACTITIONERS PERFORMANCE METRICS
Developing the effective people and place policies that will sustain Californias innovative business sectors and support the strengths of its regional business ecosystems requires looking at economic strategies in ways that are appropriate to the 21st century global economy. The table above shows the key characteristics of costdriven and innovation-driven economic strategies. Most California regions are combining both depending on their regional needs while focusing on higher-value activities, talent, prosperity and competition that support collaboration and global linkages. The State must be a partner in these regional strategies. As we look to the future, California and the nation face new economic challenges in a rapidly changing global environment. A recent McKinsey Global Institute report on prospects of growth and renewal in the United States points out that to deliver economic prosperity for this generation and the ones that follow, the United States needs to retool the economys engine so that it can run at higher, sustainable growth rate for decades to come. The key to achieving this is productivity.
To achieve this, the McKinsey Global Institute outlines seven recommendations for the nation that are equally relevant to the California economy, which, after all, is similarly diverse and expansive: 1. Drive productivity gains in the public and regulated sectors 2. Reinvigorate the innovation economy 3. Develop the U.S. talent pool to match the economy of the future and harness the full capacities of the U.S. population 4. Build a 21st century infrastructure 5. Enhance the competitiveness of the U.S. business and regulatory environment 6. Embrace the energy productivity challenge 7. Harness regional and local capacities to boost overall U.S. growth and productivity
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Productivity in the public sector, education and health care has consistently lagged productivity gains in the private sector for the past several decades. McKinsey Global Institute has estimated that if this productivity gap were halved, it would generate annual savings of up to $300 billion. This could be done by more extensive use of technology, applications of managerial innovations and productivity best practices that are consistent with the broader goals of improved health and education outcomes. McKinsey Global Institute also recognizes that economic regions, such as those that define California, matter. If we understand the diverse economic ecosystems in our state and how they can provide solutions to our challenges we can promote innovation and productivity from the bottom up. As McKinsey points out, while cities and regions have markedly different growth and productivity trajectories, there is a rich pool of experimentation with solutions at both the regional and local level. California enjoys the resources people, education, environment to be a leader in this experimentation and the beneficiary of its successes. .
REDUCE COSTS AND ADD VALUE TO PROMOTE PRIVATE-SECTOR AND PUBLIC-SECTOR PRODUCTIVITY AND INNOVATION
The appropriate type of business climate depends in large measure on the characteristics and specific needs of individual firms. A manufacturing firm with heavy capital requirements and a need to produce commodity products at low cost in order to compete will be more interested in a cost-driven business climate. On the other hand, a high-value firm that needs a skilled, technical workforce and a high quality of life to attract and retain its workers will be interested in an innovation-driven business climate. A competitive business climate for California requires both critical investments that add to productivity as well as policy reforms that will reduce the cost of doing business. California will have to continue to compete on innovation as well as cost to maintain a high standard of living rooted in rising productivity. In short, the proper economic strategy for California reduces cost and adds value both, not either/or. This is the right economic approach for policy, and it is what informs the Task Forces goals and recommendations.
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RECOMMENDATIONS & GOALS

Developing a high-road innovation-oriented economic strategy for California is a partnership effort. Government partners include the state and federal government, of course, but the major government partners for planning and implementation in many cases are local and regional agencies. Here California starts with an advantage. The state has wellestablished regional planning agencies in most parts of the state including SCAG in Southern California, ABAG in the Bay Area, SANDAG in San Diego, and SACOG in the Sacramento region. These agencies have ongoing responsibilities for transportation planning, regional housing and land use planning and recently have been given responsibility for greenhouse gas emission reduction and sustainable community strategy development by the Legislature. Many are now developing regional economic strategies and they will be principal regional partners in implementing high-road strategies for competitiveness. California also has a strong network of public-private regional partnerships including the Los Angeles and San Diego regional economic development corporations; the Bay Area Council and Joint Venture Silicon Valley; Valley Vision in the Sacramento region; the Orange County and Fresno business councils; the San Joaquin Partnership; and many others. These organizations can be vital partners in informing and championing regional economic strategies.
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INVESTING IN INFRASTRUCTURE
California is in need of more than $765 billion in infrastructure investments, not including those required by local governments and school districts. CALIFORNIAS INFRASTRUCTURE NEEDS EXCEED $765 BILLION
Public Transit - $222.7 billion Highways1- $159.6 billion Local Roads1- $129.4 billion State Buildings & Capital Outlay - $111.3 billion CA Community Colleges 3- $35.8 billion Other Transportation1- $25.9 billion Water - $21.7 billion Freight Rail - $21.4 billion Airports 1- $15.9 billion Electrical Grid - $12.3 billion UC/CSU - $5.3 billion K-12 Education 7- 2 x $2.1 billion TOTAL - $765.5 billion
6 5 1 4 2 1
As explained previously, infrastructure development in California is generally a partnership among state, local, regional and federal government agencies and, at times, the private sector. Funding comes from a variety of sources. State General Obligation bonds are funded by state General Fund taxes while school and community college construction bonds are funded through local property taxes and often matched by State bonds.
Fuel taxes, local transit district taxes and the state budget provide funds for local and state road maintenance. The majority of the funding needs are in these categories and are funded by federal, state and local sources. Some infrastructure funding is provided by public and private organizations, such as energy and water utilities, and by public entities such as our ports and airports where user fees pay for most of the service and infrastructure funding. As a result, residents and businesses are already an infrastructure funding partner through the user fees they pay.
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INVESTING EFFICIENTLY
The funding gaps are enormous, but it is critical, given Californias continuing budget problems, that new investments are made strategically and wisely. Before additional funds are allocated, California must do the following: Employ new technologies to manage demand for infrastructure: There are many ways to expand infrastructure capacity besides building. These approaches include using new devices to meter for more efficient energy use and to implement the use of peak/off-peak hour pricing on highways. Develop and maintain Californias Strategic Growth Plan to enable well-planned investment in the states infrastructure. The states infrastructure needs are vast and often projects compete for funding against each other. Californias Strategic Growth Plan will prioritize our most important projects across regions and across policy areas to rationalize our needs and fund the most important projects first. Spend 2006 voter-approved Proposition 1B money on trade infrastructure projects outlined in the states Trade Corridor Improvement Fund. Completing the gaps that remain in the states rail and highway transit corridors will address two state needs: to speed the through-put of goods moving via Californias ports between the Midwest and Eastern parts of the United States and the growing markets in Asia and Latin America and to facilitate the movement of agricultural products from the Central Valley. Both are key to maintaining the states preeminent role in global trade. Encourage public pension funds to invest in California infrastructure projects, such as CalPERS announced in mid-September it will be doing over the course of the next few years. These are dollars generated in the state that should, following proper guidelines and meeting all investment protocols, be reinvested in the state.
Better use the Infrastructure and Economic Development Bank, which is being reorganized under the Department of Finance to direct lowcost loans for local government infrastructure projects and manage bonds for public and publicprivate infrastructure projects. Encourage utility companies to pursue construction of transmission and generation intertie facilities to areas that have high potential for renewable generation development consistent with state, local and federal policies as Edison is doing on its Tehachapi project. Using a combination of incentives, policies and procedures, the state significantly can reduce barriers to entry for new renewable generation facilities by lowering the cost burden that would otherwise be imposed on interconnecting renewable facilities. Doing so will speed construction of new power transmission lines and help the state meet its clean-energy goals by 2020. Realign the State Transportation Improvement Program into a grant program that would send more of the annual funding directly to the SelfHelp counties and regional transportation authorities. Doing so would make counties and regional transportation authorities the decisionmakers on transportation projects and give them the resources needed to be most flexible in completing the projects. CalTrans would remain the owner and operator of the state highway system and ensure consistency among regions. The goal of this rearrangement is a cleaner division of responsibility and more efficient delivery of funds and services. The States role should focus on integrating infrastructure among regions as well as ensuring inter-regional and multi-modal linkages. Even with conservation, demand management and rigorous evaluation of infrastructure proposals, new financing policies will be required to close the infrastructure funding gap.
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PAYGO for State General Obligation Bonds This proposal would require any new expenditure to be budget neutral or offset with reductions in expenditures from current programs. The goal is to encourage the prioritizing of expenses and the exercising of fiscal restraint. It would: Respond to calls that new spending should be fully funded. Follow the existing and familiar local school and government practice of paying for bonds when they are approveda good government practice. Eventually reduce state debt-service payments and free up funds for other General Fund uses at least $3-4 billion per year even if not fully implemented. Add transparency so voters will never see ballot arguments that voting yes will not raise taxes and so voters will realize the State has to fund what they approve at the ballot box. Lower the Voting Requirement to Pass Local Bonds and Taxes to 55% This proposal would follow the existing practice for school bonds and increase passage rates while continuing super-majority decision-making principles and be part of the proposal to transfer responsibility and funding to local governments. It also would allow local governments to be a more significant infrastructure funding partner.
Adopt More Public Sector User-Fee Funding The public sector already collects user fees from bridge tolls and fuel taxes and is embarking on a series of projects for user fees related to high-occupancy vehicle lane use. These facts point out that fee-based infrastructure maintenance and investment can be in the public sector as well as in so-called public-private partnerships. The idea of user fees is appealing when a direct tie to beneficiaries can be developed because: They are demand-management tools. They are a market-based approach of using prices to measure demand. They provide funding for infrastructure maintenance and construction. Broaden the Sales Tax Base This proposal will be detailed in the Think Long Committees final recommendations on tax reform. It will be part of a broad package of fiscal reform and produce additional funding for local governments and transit districts, part of which can fund infrastructure. Reorganize and Increase Vehicle-Related Funding The LAO and many other organizations in California and across the nation have pointed out that gasoline taxes are consistently falling behind vehicle use and provide a funding source that lags behind car usage and infrastructure repair and construction needs. Some combination of higher taxes and related taxes to use (especially in an era where higher mileage standards are reducing fuel use relative to car use) would: Help fund transportation maintenance and construction. Help local governments.
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The Private Sector Component of Infrastructure Funding Private companies already build and manage construction for much of the public infrastructure in California. In addition residents are familiar with privatesector providers of services in areas such as energy and water, and they pay for these investments with their monthly utility fees. California and other states are looking to new types of private sector involvement in financing infrastructure through what are called public-private partnerships. The most common type of public-private partnership are toll roads, such as the SR-73 / San Joaquin Hills Toll Road, which are financed and built by private investors and paid for by users through tolls. A major advantage when these projects are feasible is that the capital for investment is provided by the private sector at a time when public infrastructure capital is scarce and voters are reluctant to approve large new bond issues. Another potential for public-private partnerships is for the states major employee pension funds to invest in some of the states future infrastructure projects. For example, CalPERS recently targeted $5 billion for multiyear investments in infrastructure and in midSeptember pledged to spend $800 million over the coming three years on in-state projects. In support of exploring public-private partnerships, the Think Long Committee recommends the State: Task a fully resourced Public Infrastructure Advisory Commission to establish a framework for innovative funding mechanisms and partnerships to address Californias massive infrastructure deficit. It should do so first by focusing on restoring the balance among local, regional and state interests that allows local and regional areas to control their own future when considering the approval of infrastructure projects; by incentivizing the 19 transportation self-help regions to leverage resources in
ways that promote local/regional infrastructure and economic development priorities; and by promoting legislation allowing for best practices (e.g. design/build, public-private partnerships, performance-based contracting) to expedite infrastructure development. The state should empower the Commission to assist local agencies, as well as the state, with multi-sector partnerships. Task a project team made up of Public Infrastructure Advisory Commission (PIAC) and Business, Housing and Transportation Agency (BTH) staff with focusing on accelerating three projects to financing by December 31, 2012 and extend legislative authority for public-private partnerships indefinitely. Support PIACs coordination with the Infrastructure and Economic Development Bank to help state and local governments effectively negotiate complex public-private partnership procurement contracts and bundle small infrastructure projects in order to lower transaction costs and leverage economies of scale. This service bureau could be a center of excellence that could provide expertise from assistance with deciding whether a public-private partnership is appropriate to implementing and managing the public-private partnership agreement for a state or local government entity and should be able to charge the entity a reasonable fee for its service. The expertise that could be provided as a resource include: 1. Helping to retain experienced professionals to represent the state on any public-private partnership deal in order to negotiate fairly with the private sector. 2. Conducting value-for-money analysis of each project to determine whether the project should be done as a public-private partnership.
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3. Delineating the risks borne by each partner and how the state has shifted risk to its privatesector partner where appropriate. 4. Utilizing performance measurements that will allow evaluation of the results of each project. 5. Calculating infrastructure costs for all projects, whether by public-private partnerships or otherwise, over the life cycle of the asset, taking into account all cost of building, maintaining, operating and owning the infrastructure over the projected life of the asset. Federal Funding California recently has been receiving about $5 billion per year for transportation infrastructure, and local/ regional agencies receive funding as well. The recent high-speed rail funding is another example of federal funding for infrastructure. Currently the nation is discussing increased federal infrastructure funding both as an anti-recession move and as a competitiveness proposal. California should help develop a national infrastructure funding strategy in collaboration with, not competition with, other states.
INFORMATION INFRASTRUCTURE
California has been a leader in broadband availability and adoption, but there remain wide swaths of the state particular rural areas and mid-sized cities with limited access or access only to lower-speed connections. Both businesses and consumers will benefit from even and full deployment that will expand educational opportunities, improve healthcare services, increase public safety resources, speed communication and, ultimately, provide the foundation upon which Californias future economy will stand. To enhance broadband penetration throughout California, the State should: Encourage the deployment of new information technologies such as high-bandwidth communication networks and expand high-speed broadband and wireless communications access to meet the growing needs of small, mid sized and large businesses and further attract businesses to California. Encourage industry to work with the Public Utilities Commission to expand the California Advanced Services Fund or California Emerging Technology Fund to assist the growth of broadband infrastructure and adoption in underserved regions of the state. Task the PUC with developing model permitting standards and encourage collaboration among providers to speed broadband penetration throughout the state.
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INVESTING IN PEOPLE
a productive workforce and world-class industries, it must ensure ongoing quality, access and affordability. The trend has been rapidly rising fees borne more heavily by students and their families and less and less by state government. Enrollment levels, which also have been curtailed in recent years, need to expand to meet future workforce needs. Higher education must embrace 21st century technology and tools that can make the education system more productive, while maintaining rigorous standards. The states higher education systems also need to increase their partnerships with the private sector to adjust more quickly to company workforce needs. The state should: Improve coordination between the PreK-12 system and the different segments of higher education -- University of California, California State University and the California Community Colleges. Transfer among higher-education segments needs to be a more seamless process. Remove barriers to and increase concurrent enrollment for high school students among all higher education segments. Assess all secondary-school students for college readiness at the end of their junior year, as begun by the Cal State University system, and offer remedial classes for those in need during their senior year. Guarantee affordability. California should embrace a public policy of support for gradual, moderate and predictable fee increases for all three systems. California has been a national leader via Cal Grants and college/university aid programs, but it is dangerously close to becoming a barbell state that is dominated by high incomes at one end and low incomes at the other. Financial aid packages need to continue to support low-income students, and financially needy middle-income students should be able to receive sliding-scale benefits, as well. Expand the college-savings program known as ScholarShare (a 529 plan) and support changes to California tax policy to make initial contributions tax-deductible and to ensure that ScholarShare savings do not cause a loss of CalGrant awards. Implement policies to ensure the returns are in
The goal of the recommendations below and those in the education section is to create a public education system, from preschool through 12th-grade and into community college and higher education, that will produce graduates with the skills the state will require. California must play a key role in the continuous education of a skilled and flexible workforce by improving basic skills, English proficiency, digital literacy, and overall STEM (science, technology, engineering and math) training. Our research and interviews have identified four workforce challenges in supporting a prosperous, innovation-driven 21st century economy in California: Increasing the number of college graduates to replace retiring baby boomers and to keep pace with the increasing skill demands throughout the economy. Increasing the number of Californians prepared for the STEM occupations critical for the state to remain the innovation capital of the world. Preparing students for and showing them the opportunities for middle-skill jobs paying good wages, which the economy needs and which can support families but do not require a four-year college degree. Remembering that 7 of 10 workers in 2020 are already in the workforce and providing them the assistance to understand changing employer needs and demands in terms of skills, attitude and passion; the changing world of job searches; and the ways that job seekers and employers are connecting. All of these steps begin with guaranteeing that students graduate from high school with an education that prepares them for lifelong learning and productive employmentthe subject of the PreK-12 reforms discussed in the Think Long Committees final set of recommendations.
MAKING HIGHER EDUCATION A PRIORITY

Californias once world-class higher education system, which fueled much of the states innovation in the past and has been a peerless incubator for technology, has fallen victim to decreasing discretionary spending in state budgets. To enable the state to continue to develop
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line with other states higher-yielding plans, such as Maryland. Work with the federal government to expand access to H1B visas for qualified college graduates, and develop a new category of permanent visas for persons with advanced degrees in STEM fields so that we do not lose people we educate who want to stay here. Make sure colleges and universities are providing classes essential for graduation, including online course provision. Adopt policies to shorten student time to degree while maintaining the same learning outcomes and educational requirements. Prioritize class enrollment for students on-track for a degree. Consider an excess-of-units surcharge, such as has been adopted in North Carolina. Maximize California Community College students use of Federal Pell Grant financial aid funding. California Community Colleges have left hundreds of millions of federal Pell Grant dollars on the table because of the failure of many students to apply for these funds. Poor outreach to students, inadequate support for student aid administration, an historical perception that community college is free and an anachronistic application system have contributed to Californias underuse of these funds. Remove barriers to college and university efforts both on and off campus, including proven on-line learning programs. Eliminate outdated classes, especially at the Community Colleges. Establish a jobs consortium of cutting-edge companies to create a mentoring/internship program for home-grown labor that connects STEM students in community college, CSUs and UCs to future jobs. The pipeline of rigorous STEM programs in Californias education curriculum needs to be increased. The McKinsey Global Institute report identified one more challenge for the nations education and workforce partnersa challenge that is true for California as well. The configuration of the labor force will not neatly fit the requirements of employers. While company executives in interviews expressed their enthusiasm for the strength and productivity of the U.S. workforce, they also indicated a strong need for workers with specific skills and educational
requirementswhich may be lacking in the labor force of 2020, absent changes in policies and institutions. A growing source of potential matching problems among workers with postsecondary education is the fields of study they choose. Many are not obtaining the skills that will be most in demand . . . Shortages are [also] likely in a number of specific vocations that students in community colleges and vocational schools could be training for . . . In general, workers of all ages need better information on which to base their educational and training decisions.
WORKFORCE DEVELOPMENT
Workforce policies and programs in California are a partnership effort among the states local workforce investment boards and one-stop centers for job seekers, their education and training partners and the private sector. Currently the states workforce investment boards are funded through the federal Workforce Investment Act (WIA), through some state funding and, increasingly in a time of budgetary constraint, through one-time grants and foundation support. These programs are the basic public system that helps existing workers to prepare for and find jobs and assists the private sector in helping existing workers meet their needs in terms of skills, attitude and passion. To improve the ability of the workforce system to serve job seekers and businesses the Think Long Committee recommends the state: Urge the California congressional delegation to support the reauthorization of WIA with sufficient funding to meet the challenges of preparing the state and nation to meet international competition in terms of workers, skill and preparation. Encourage workforce boards and their partners to coordinate and collaborate within regional labor markets to avoid duplication and maximize the efficiency of scare resources while maintaining the connection of local workforce boards to their local economies. Recent collaborative efforts by four workforce boards in Silicon Valley provide a model for combining local service provisions with regional analysis and connection to their business partners.
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Charge Californias Workforce Investment Boards with understanding the growth industries in the regions they serve and develop programs that respond to the workforce needs of growth industries, focusing on high-school drop-outs, underrepresented minorities and apprentice programs in job categories that provide long-term career growth and personal prosperity.
INVESTING IN INNOVATION
The goal of these reforms is to support entrepreneurship and innovation and to encourage the commercialization of research and development. The state must ensure a competitive business environment that drives productivity and innovation in companies and provides support to help new businesses succeed. For example, the state can work with strong banks and profitable companies as well as with charitable foundations to mobilize private capital into the hands of small businesses. Before July 1, 2012, convene an Annual California Economic Summit where regional collaborative teams present their regional strategies and industry leaders offer industry-wide plans as part of an ongoing effort to review and inform the states overall economic strategy.
REAL-TIME ECONOMIC INFORMATION

Workforce development to support the California economy needs to be better connected with rapid changes in private sector needs and expectations based on real-time economic information. Workforce boards should engage with private-sector employers to improve industry and occupational forecasts to ensure that regional workforce-development programs align with regional industry-cluster needs. Other steps can include: Publish research online concerning workforce shortages, skill gaps and proficiencies and evaluate existing education, training and placement programs for continuous improvement. Develop and market an employment website offering job postings, training and employment information specific to California regions and industry sectors. Establish public information centers to guide individuals into the appropriate career program.
INCREASE R&D
Leading statewide collaboration to seek more research funding for universities and research institutes is an appropriate and necessary role for government. In California, government should seek a more supportive infrastructure to facilitate the commercialization of research and provide needed services to entrepreneurs, focusing on competitive emerging industries. The state should: Establish an ongoing matching funds program for companies partnering with the four UC Institutes for Science and Innovation and encourage innovative manufacturing clusters. Provide incentives for universities and government research centers to make their technology available for commercialization and remove barriers to industry-university collaboration. Advocate to make the federal R&D tax credit permanent. Enact a state R&D tax credit based on full federal conformity.
REACHING MIDDLE AND HIGH SCHOOL STUDENTS BEFORE THEY DROP OUT
The public and private sectors can reduce the drop-out rate and reconnect high-school dropouts to educational training and opportunities. This is critical and can be accomplished by linking local community colleges, nonprofits and businesses with schools through formal partnerships. The state also should seek to increase the college-going rates for low-income, at-risk and minority children by supporting family education programs and after-school programs. Maximize existing incentives for hiring and training and set up co-op, apprenticeship and internship programs. The state should work on providing funding to develop career programs with industry standards directed toward highskill jobs. Strengthen apprenticeship programs in current and new industry sectors such as green technology.
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MAKING GOVERNMENT JOB-FRIENDLY AND CALIFORNIA ATTRACTIVE TO PRIVATE INVESTMENT

The State can reduce the costs of doing business by eliminating duplicative and outdated government regulations through a proactive policy agenda, and should act immediately to facilitate the interaction between government and business and lessen the added burden of redundant federal and local regulations where possible. The goal of these reforms is two-fold: (1) Without lowering standards, promote greater collaboration with the private sector, reducing time to market and enhance private-sector productivity and innovation and (2) Streamline the regulatory process to increase productivity and innovation in the public sector.
Our public policy leaders need to create a level of regulatory certainty and simplicity/workability such that those responsible for making capital investment decisions will tilt even more toward California than they already do. California has a number of features that will always help draw capital to our markets including a large market for products and services; good weather; near unparalleled natural beauty; a superior higher education system; the home base for some of the most creative and innovative firms in the world; and many other similar attributes. However, public policy needs to be stable and provide a more open and predictable environment for job-creating business investment. California needs to consolidate its economic development functions beyond what exists today and create a coherent one-stop shop for business. As other states and countries have become more competitive with California, the State needs to offer businesses real reasons to locate here, stay here and expand here. A key problem: More than 30 state agencies affect different aspects of economic development. Providing business with a single point of contact and a coherent set of procedures will strengthen the business community and help sustain and grow jobs while encouraging trade and investment. This single point of contact also should promote exports and connect California business to the global economy. A significant hindrance to business in California, both real and perceived, is onerous and conflicting regulations. While there are important regulatory and permitting functions that must be maintained, the states multiple layers of regulation, overlapping jurisdictions and disparate agencies particularly in concert with federal and local rules conspire to create a system that effectively works against critical business requirements such as speed, certainty and efficiency.
ORGANIZE FOR JOBS AND COMPETITIVENESS

While an attempt has been made to create a more proactive economic development strategy, there remains a need to consolidate disparate existing economic development functions into a strengthened Office of Economic Development in the Executive Branch. Serving as the single point of contact for business outreach and assistance, this office would provide one-stop concierge service to companies seeking to locate and expand in California. This office would align the states economic development activities into one organization that would work with the states diverse economic regions, encourage them to develop and implement customized strategies and enable action focused on each regions unique challenges, industry mix and distinct assets. It would use existing positions and budget in current Executive Branch agencies and commissions. No new public money would be expended. Enacting AB 29 (Perez) was a promising first step and model that aligns with the call for consolidation. Enacting SB 617 to strengthen the Administrative Procedure Act was another.
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Create a Competitiveness Commission, cochaired by the Lieutenant Governor and a private-sector CEO, to develop and implement an economic strategy with input from stakeholders from each of the states economic regions. This Commission would help plan for investments in infrastructure, innovation and the workplace to meet the broader needs of Californias regional economic clusters and lead the states longerterm economic strategy. The Competitiveness Commission would replace the Commission on Economic Development and the Economic Strategy Panel and would be staffed by the Office of Economic Development.
Create plug and play economic zones that are pre-approved for CEQA and other land-use and zoning permits. Working with local zoning authorities, the State initially should target highunemployment areas such as the Central Valley and the Inland Empire so businesses can open, expand and cluster as quickly as possible. Limit standing. California currently has the countrys most permissive standing requirements, which allow nearly anyone to file a CEQA lawsuit challenging almost any project. A CEQA lawsuit should be brought only if petitioners have, and can demonstrate in court, a legitimate and concrete environmental concern about a project as well as no competitive commercial or economic interest in the project. The abuse of the CEQA permitting process is delaying jobs at a time when Californias unemployment rate is the second highest in the country at more than 11%. Provide expedited access to the appellate courts to resolve CEQA lawsuit challenges more quickly. Similar to what is provided for the appeal of decisions by the state Public Utilities Commission (Calif. Public Utilities Code section 1759), this proposal would allow challenges to local agency CEQA decisions to be filed directly with the Courts of Appeal. Doing so would shorten significantly the process for many projects that have already complied with all of CEQAs requirements and received all of the necessary regulatory approvals. The State should authorize the appellate courts to adopt rules establishing fees to be paid by the party seeking the expedited judicial review to cover its cost. Many of these reforms are included in AB 900 (Buchanan/ Gordon/Steinberg) and SB 292 (Padilla), which makes similar CEQA exemptions for a sports stadium and other large job-producing projects. In addition, SB 226 (Simitian/Vargas), which the Governor also has signed, makes a number of improvements to CEQA, particularly with respect to renewable energy projects that contribute to low-carbon growth.
STREAMLINE THE REGULATORY PROCESS

Create a Regulatory and Permit Streamlining Unit within the Office of Economic Development that would cut through red tape and organize red-carpet service to reduce the time it takes to navigate the permit process for job-creating projects without reducing standards. This group also would be responsible for conducting an economic assessment of all legislation with a fiscal impact greater than $25 million to provide policy makers with a baseline upon which to determine what additional reforms are needed. It would monitor the Office of Administrative Law to ensure that the implementation of those regulations is done in a way that minimizes cost to business and maximizes economic and job creation. It also could carry out the regulatory functions of an Office of Economic and Regulatory Analysis as suggested by the Little Hoover Commission in its October 2011 report, Better Regulation. This Unit immediately should convene leaders from the cleantech industry and a cross-section of California industries, especially traditional manufacturers and labor, with state regulators at the California Air Resources Board and representatives of the Governors Office to ensure that regulations being enacted to implement AB 32, the Global Warming Solutions Act of 2006, are done in a balanced way that minimizes cost and maximizes environmental and economic cobenefits.
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Enact legislation to require that judges who hear CEQA cases, as well as Court of Appeal justices, receive special training in CEQA matters as part of their judicial education programs, as is specified with reference to some other areas (for example, family law). Restrict CEQA alternative analysis projects to locations within the same jurisdiction and that are available for development in order to avoid unnecessary and irrelevant studies and anywhere but here strategies. Establish streamlined planning and concurrent CEQA/NEPA permitting processes for transportation improvement projects to be constructed within existing right of ways.
proposed major regulations (e.g. potential impacts on California business enterprises likely to exceed $25 million a year) undergo a high-quality, standardized economic analysis that is based on industry standards and play an active role in courting private-sector employers. Require agencies to consider all reasonable alternatives to proposed regulation, describe reasons for rejecting those alternatives and select regulatory alternatives that are least costly and burdensome, if equally effective in achieving the purpose and comply with the statutory mandate. To improve accountability, require agencies to assess and report on all new major regulations every five years to determine if they are accomplishing their respective purposes and whether those purposes remain relevant and necessary. As part of the immediate creation of the Regulatory and Permit Streamlining Unit, charge the office with conducting an economic assessment of all regulatory legislation promulgated in 2011-2012.
MINIMIZE ECONOMIC IMPACT OF REGULATIONS ON BUSINESSES

It is imperative for California to ensure that regulations and statutes apply to all business in a predictable way. The ability of firms to absorb regulation costs and remain competitive is a significant issue and is particularly threatening to small companies. Require government officials to evaluate the economic impact of regulations that affect overall competitiveness, including requiring that all
CONCLUSION
In this report, the Task Force has sought to lay out the principles that should guide Californias economic strategy and offer an array of actionable items the Think Long Committee as a whole can consider for recommendation in its final report. Together with the Brookings/McKinsey report, An Economic Growth and Competitiveness Agenda for California which complements this report with a major focus on reinvigorating manufacturing and exports to the emerging economies, especially China the Think Long Committee proposals can help build the foundation for the states sustained long-term growth.
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ENDNOTES
Please note that this estimate of infrastructure need includes only the 12 categories specifically noted. A number of key categories, including local development needs for facilities such as libraries, are not included due to the unavailability of data. 1 Statewide Transportation System Needs Assessment, Public Draft: June 17, 2011, California Transportation Commission, Sacramento, June 2011. Other Transportation includes inter-city rail, seaports, land ports, intermodal facilities, and bicycle and pedestrian transportation needs. 2 2008 California Five-Year Infrastructure Plan, Office of Governor Arnold Schwarzenegger, March 2008. 3 2011-12 Five-Year Capital Outlay Plan, California Community Colleges Chancellors Office, July 2010.
4 Why California Needs Federal Funding for Water Infrastructure, Food & Water Watch, Washington D.C., April 2009.
5 33% Renewables Portfolio Standard: Implementation Analysis Preliminary Results, California Public Utilities Commission, San Francisco, June 2009. 6 California Five-Year Infrastructure Plan, California Office of the Governor, Sacramento, March 2008; Capital Outlay Program 2011/2012, Capital Planning, Design and Construction, Office of the Chancellor, September 2010. 7 The total accumulated and estimated unfunded approvals for school construction, modernization, seismic repair, overcrowding relief, and joint use, as of May 2011 per the California Department of General Services (DGS). DGS also stated they could not determine the outstanding infrastructure costs for building additional stories to existing school footprints under legislation offered by Asm. Julia Brownley because the bill specified an unallowed funding source (existing bonds). This is an estimate for all state and local funds; the estimate is based on current unfunded applications for state bond money with a 50 percent local match.
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THINKLONG
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Think Long Committee&#39;s Recommendations

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A Blueprint to Renew California:

Think Long Committee for California

THINK LONG COMMITTEE FOR CALIFORNIA

THINK LONG COMMITTEE FOR CALIFORNIA

nicolas berggruen, chair, think Long committee for california

Rebooting Californias Democracy:

THINK LONG COMMITTEE FOR CALIFORNIA

EMPOWERING LOCAL GOVERNMENT AND REGIONS

THINK LONG COMMITTEE FOR CALIFORNIA

THE CITIZENS COUNCIL FOR GOVERNMENT ACCOUNTABILITY

THINK LONG COMMITTEE FOR CALIFORNIA

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THINK LONG COMMITTEE FOR CALIFORNIA

A BROAD-BASED TAX SYSTEM FOR THE FUTURE

THINK LONG COMMITTEE FOR CALIFORNIA

Figure 1 california state Revenues by source

Figure 2 comparison of top marginal corporate tax Rates

SOURCE: California Department of Finance

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SOURCE: Think Long Committee

Figure 4 summary of additional funding (Total: $10 Billion)

SOURCE: Think Long Committee

BUDGET AND OVERSIGHT REFORM

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2. Indirect Initiative/legislative review when

THINK LONG COMMITTEE FOR CALIFORNIA

1. Transparency. Voters are often unsure who an

JOBS, HIGHER EDUCATION AND ECONOMIC GROWTH

3. Number of signatures to qualify based on

THINK LONG COMMITTEE FOR CALIFORNIA

4. Allow ballot measures that amend the

THINK LONG COMMITTEE FOR CALIFORNIA

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THINK LONG COMMITTEE FOR CALIFORNIA

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K-12 EDUCATION REFORM

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PENSION AND HEALTH BENEFIT REFORM

THINK LONG COMMITTEE FOR CALIFORNIA

Think Long for California Committee

We are honored by the participation of:

THINK LONG COMMITTEE FOR CALIFORNIA

And appreciate the participation of:

Think Long Presenters and Participants:

THINK LONG COMMITTEE FOR CALIFORNIA

Contributors to Jobs, Infrastructure and Workforce Report:

THINK LONG COMMITTEE FOR CALIFORNIA

THINK LONG COMMITTEE FOR CALIFORNIA

Consultants to Think Long for California:

THINK LONG COMMITTEE FOR CALIFORNIA

Maureen Dear Legal Advisor

Californias Budget Woes: How is our Fiscal Health?

Californias Budget Woes: How Is Our Fiscal Health?

General Fund Spending By Program

General Fund Spending By Object

General Fund Revenues

The Change in Our General Fund Revenue Structure

The Origins of Our Situation

Increasing Revenue Volatility

The Capital Gains Roller Coaster

Poor Budgeting Practices

Think Long Committee's Recommendations

Think Long Committee's Recommendations