Those Not-So-Independent “Independents”

Congratulation to the alter kockers over at Calbuzz for trying to push a big rock up a steep hill: showing journalists that “independent” voters aren’t the same thing as “moderates” or “Decline to State” voters.

Political scientists have been pointing out for many years that many “independents” vote more reliably for one party or the other than do many people who are party registrants or who identify themselves with a party. But the brain-dead media keep ignoring the evidence.

In a culture that denigrates partisanship and promotes the notion that sophisticated people should be seen as thinking for themselves, it’s easy to see why more people these days describe themselves as “independents.” But why do journalists, who are trained to get a confirming source even when their mothers say “I love you,” take them at their word? If DTS voters are really “independent,” why are there such a high percentage of them in San Francisco and other Bay Area counties that vote overwhelmingly for Democrats?

Now that California has abolished party primaries and adopted a two-stage general election, party registration has become essentially meaningless. Your party registration matters only in presidential primaries (and even there it matters little if the parties continue to allow DTS voters to participate in their primary.) We can expect that more and more voters, as they register and re-register, will list themselves as DTS.

And as they do, expect to read and hear breathless accounts reporting that California voters are becoming more “independent.” You can lead the media to data but good luck in making them think, especially if it requires breaking with the conventional wisdom.

Broken Government? Blame Your Readers

Stuart Leavenworth is baffled. Editorial editor page editor of the Sacramento Bee, my old stomping grounds, Leavenworth says he’s read all the recent literature on California’s governing disfunction, including California Crackup (“radical, but well-argued,” he calls it) and The Economist’s recent special report on the Golden State. And he wonders why none of the things he’s read explain why Californians, faced with that disfunction, seem so disengaged. “How has California changed in ways that limit civic participation?” he asks.

Which only goes to show that you can give a newspaper guy a book but you can’t count on him to read it.

Why might a typical Californian be cynical about the prospect of successful engagement in governing the state? Let’s consider what she faces if she were to get involved, say, in improving the state’s underfunded and underperforming public schools.

She might think to start in her own community and engage with the local school district and board. But she would quickly discover that the school board doesn’t have much to say about the big issues facing the school down the street. In fact, if she’s a young mother of school-age children, she would find that the biggest decisions about schools were made before she was even born or when she was still a child. Thirty-three years ago, Prop 13 took away the school board’s control over revenue and shifted all the power to the state Capitol. Ten years later, Prop 98 came along and put school funding on statewide auto-pilot. The school choices that matter most—funding levels, achievement standards, curriculum, testing, categorical uses of dollars—get made in Sacramento. School boards are for dividing up the scraps and transmitting the pain delivered from on high. Why would any smart young woman wanting to engage and improve the schools waste her time there?

Since the Legislature is now the School Board of the Whole, she might consider getting involved in legislative politics. But she would find few ways to effectively engage in that arena. There are few competitive election contests for the Assembly and Senate. Even where there is competition, the districts are so big (nearly a half million people in an Assembly district, nearly one million in a Senate district) that most campaigns are decided by money for media, not armies of involved citizens. Because of the success of “good-government” types like Leavenworth in weakening political party structures and ending party nominations for office in California, the normal channels by which Americans typically engaged in the past and people around the world continue to engage—through partisan political activity—barely exist here. Our young woman, desperately seeking engagement, would be well-advised to look elsewhere.

That leaves the initiative process. It was set up to 100 years ago to put citizens in charge, but it doesn’t offer many opportunities for engagement. It’s increasingly rare for groups of dedicated voters to band together to gather enough signatures to put measures on the ballot. In a state of nearly 38 million, money drives the process. The initiative is a world of paid signature gathers, high-priced political and media consultants, and million-dollar television ad buys. It’s no place for a nice young woman hoping to improve her children’s schools.

Leavenworth thinks Californians have checked out of politics because of our divisions and a lack of civic glue. But California’s history is a chronicle of division—Anglo vs. Chinese, labor vs. capital, Progressives vs. the railroad machine, Protestant vs. Catholic, white vs. black—often expressed in violence. As we tell in California Crackup, many of the big governing changes in the state’s past, from the 1878-79 constitutional convention to Prop 13, were products of those fights.

What’s changed is the way we try to govern ourselves. We’ve piled reform on reform, many of them directly aimed at keeping ordinary people from engaging in their own governance. The result is a strange and radical system, hostile to citizen involvement and too inflexible to be run by elites, the government version of the Winchester Mystery House.

There’s a good reason so few citizens want to engage with it. Having jobs to do and families to tend and lives to live, they can’t afford to waste their time on a system they know doesn’t work. And for making that rational choice, they get called “insular” and “cynical” by newspaper guys who get well paid to stroke their chins and blame their readers for California’s gridlock.

Is it any wonder that we’ve stopped reading newspapers too?

How California Can End Sports Extortion

The game is officially on. After weeks of playing playing footsie with Anaheim, the Maloof family, the owners of the Sacramento Kings, announced Monday that they’ll keep their woebegone basketball team in the capital city another year in hopes taxpayers will buy them an arena. The announcement is the opening whistle for the game of extortion that is at the heart of the National Basketball Association’s business model and that of other professional sports leagues.

The game works this way: The NBA creates an artificial scarcity by keeping the number of franchises low. That scarcity means there are always cities itching to have a team and foolish enough to be willing to lay out taxpayer money to subsidize an arena to attract one. Municipal foolishness sets up the opportunity for extortion. The NBA tells the city whose team has the least heavily subsidized or attractive arena that they must use tax dollars to build the team a new one, or risk losing the franchise to one of the eager wannabe towns. Build it, or we will go.

This extortion game is one driver of growing income inequality in America. It is a settled fact of economics that building a publicly financed sports facility creates no economic benefit to the community that pays for it. All of the tax dollars end up finally in the pockets of millionaire players and billionaire owners.

Unfortunately, sports subsidies are catnip to local politicians, who are boosters are heart and who love to live in the reflected glow of sports celebrity and enthusiasm. Local media rarely look critically at the flawed arguments offered for subsidizing sports franchises. From the sports page to the advertising and marketing departments, media have a big interest in keeping a sports team from moving. It provides prestige to those who report about it, what’s now called “content” to bring in readers and viewers, and more advertising dollars. When the extortion game begins, politicians and journalists alike find themselves powerless to resist playing.

What makes the game different this year is that it is being played mostly in California. Look around pro sports and you’ll notice that many of the big extortion plays are aimed at California taxpayers. There’s Anaheim vs Sacramento in basketball. Santa Clara is trying to move the football 49ers from San Francisco. The baseball A’s are looking to move out of Oakland toward Silicon Valley. Los Angeles is fighting over building an NFL football stadium, perhaps to lure the Chargers out of San Diego. And that concentration creates an opportunity to suspend the extortion game. If the Legislature were to step on the hose of dollars, the extortionists would be out of luck.

At a time when local governments are slashing budgets for police, fire protection, libraries, parks, recreation, and schools, it is insane for them to give tax dollars as subsidies to billionaire sports owners. As we point out in California Crackup, one of the defects of California’s current system of governance is the post-Prop 13 operating system that has centralized power in Sacramento. But here is a moment when the Great Centralization can be a benefit in providing one-stop stopping of the sports extortion game.

All that is required is for a majority of lawmakers to add control language to the budget denying any of the appropriated funds to communities that provide any taxpayer funds to subsidize stadiums or arenas. And how hard can it be to collect that majority? Republicans oppose tax increases. Democrats oppose cuts to public services. The goal of the extortion game is to benefit billionaires and millionaires by forcing what both Republicans and Democrats oppose. Surely both parties can agree that now is the moment to shut the game down.

The Economist Reads California Crackup→

California gets the full Economist treatment this week and it’s all California Crackup, all the way through.

You write a book hoping that others will come to see the story the way you do. But I have to admit it’s a little disconcerting when another publication finds your work so worthy that it uses many of the same arguments and same narratives. Joe Mathews and I set out to challenge the conventional wisdom about California’s troubles. Now it turns out that California Crackup is the conventional wisdom, at least in London.

For readers who have come here from The Economist to learn more about the book, you can purchase it by following the links elsewhere on this page. You’ll find, I think, that it’s much funnier in the original English.

Obsessing about taxes is bad for the future→

Over at Zócalo Public Square, I explain what makes the governor's wife scream.

Boom launches

The Oakland Museum of California is hosting a launch party today, March 11, at 6:00 p.m., for the new University of California Press publication, Boom: A Journal of California.

Joe Mathews and I have an article in the first issue, and we will talking about California's future at the event. Details and RSVP are here.

Waiting for the top-two revolution

If you are holding your breath, waiting for the top-two primary to work the revolution the New York Times proclaimed last June after the passage of Prop 14, it’s probably a good moment to inhale. As the Assembly District 4 election showed the other day, the revolution isn’t coming.

Assembly District 4 is exactly where the jungle primary is supposed to do its magic of electing more moderate lawmakers to the Legislature. Centered on the upscale Placer and El Dorado suburbs of Sacramento, it is one of the most Republican districts in the state. According to the theory of jungle primary boosters, Democrats and independents, understanding that a Republican is sure to win in such districts, will sniff out which of the GOP candidates is the more moderate. They will give the moderate Republican their votes instead of “wasting” them on a candidate who more closely shares their views but has no hope of eventually prevailing.

There are two problems with the theory.

First, if voters from the minority party are to sniff out the “moderate” in the race, there has to be one. In District 4, there wasn’t. In the current budget crisis, a Republican “moderate” might be defined as someone willing to vote for Governor Brown’s draconian budget cuts and accompanying extension of temporary taxes in return for pensions reforms and relaxation of business regulations. As far as I can tell, not a single GOP candidate in the field was prepared to vote for Brown’s budget, and certainly not the two well-funded frontrunners, John Allard and Beth Gaines, who vied to prove they were the most conservative.

Second, even if there were a moderate majority-party candidate to vote for, it’s not clear that many minority-party voters are willing to put aside their partisan views to vote for a second-best candidate. Without running a campaignThe Democratic candidate in the District 4 election won a plurality of votes in the March 8 election, his vote percentage almost exactly matching Democratic registration. He will likely get almost the same vote share in the May runoff, when Gaines, the second-place finisher, will take the seat.

“I will join the Taxpayer Caucus on my first day in the Assembly and look forward to working with them to protect California’s taxpayers from tax increases and extensions,” Gaines, wife of state Sen. Ted Gaines, wrote on FlashReport the day after the election.

Yes, that jungle primary is a real game-changer.

Jerry Brown's sad little speech

Even measured against the diminished expectations Gov. Jerry Brown has set, his 2011 State of the State message was a sad little speech.

Short on ideas, stripped of inspiration, and studded with clichés (“not a time for politics as usual”; “we owe it to ourselves and to our forebears—and to our children--to rise to this occasion”) the speech shoved everything else aside to dwell on what Brown called “Job Number 1,” the budget. By the time the speech limped to its conclusion, it had turned into Job All.

Brown’s explanation for his narrow focus? California is in fiscal crisis, “real and unprecedented.” But as Brown is old enough to know, the budget crunch is nothing new. It’s chronic. Ask Gray Davis and Arnold Schwarzenegger, who dealt with deficits of the same magnitude.

Better yet, look at Pete Wilson in 1991, who arrived to find a deficit of the same size, in percentage terms, as Brown inherited. In his first State of the State address Wilson acknowledged that California was in “heavy seas” and would have to cut the budget accordingly. He then went on to outline a program of “preventive” government to “give increasing attention and resources to the conditions that shape children’s lives.” Measured against Brown’s performance, Wilson today reads like Demosthenes and FDR rolled into one.

The saddest thing about Brown’s speech, though, was his attempt to turn his budget tactics into a matter of principle.

“Under our form of government, it would be unconscionable to tell the electors of this state that they have no right to decide whether it is better to extend current tax statutes another five years or chop another $12 billion out of schools, public safety, our universities and our system of caring for the most vulnerable,” he said in support of his call to put a tax extension measure to the voters this spring.

Even under California’s crazy system of government, there is no such right, of course. “The voters deserve to be heard,” he said. Didn’t they speak last November? Didn’t they elect Brown himself and put Democrats in control of the Legislature with an extra seat? In a representative democracy, aren’t such elections meant to establish the popular will?

The answers are yes*, yes*, and yes*. The asterisk means: not in California. Our state has a second form of government—its extensive system of supermajority vote rules and voter mandates on fiscal matters—that overrides the normal operation of democracy.

Everyone in Sacramento understands that the budget can be balanced only through a combination of spending cuts and tax increases. Voters know that. No one in the Legislature, including the Republican legislators who oppose the tax extension, is willing to vote for an all-cuts budget. But the current system of supermajority approval for taxes stands in the way of acting on what the voters decided in November. Republicans can block taxes without ever having to vote for the cuts that would inevitably result. It lets them be both irresponsible and unaccountable with little or no political risk.

The only reason to call a special election is to get around this broken system. For Brown, going to the voters is a matter of expedience, not principle. If he had truly wanted to be honest, and to help voters understand why California is in this mess, he would have said so.

Instead, California witnessed the spectacle of its newly elected governor, winner by 13 percentage points, begging the party that just got wiped out in November to let him hold a special election to ask voters to do the job that Brown and the Legislature just got elected to perform. That’s how California works now: First it makes men governor, then it makes them crawl.

Redevelopment: Grabbing other people's money

Two mistakes frequently mar news reports on the fight over Gov. Jerry Brown’s redevelopment proposals.

The first labels Brown’s plan a “state grab” of local redevelopment revenue. It is easy to understand how the media might make this error. “State grab” is how local officials like to spin the fight: They, the virtuous defenders of local government, are the victims, set upon by the big bad state. Many editors and reporters seem inclined to accept the local home-team spin as gospel truth. But in their uncritical acceptance of spin they confuse the public about who are the real grabbers and the grabbed in this fight.

Consider how redevelopment works. A local government, usually a city, designates a portion of its jurisdiction “blighted” and declares it as a redevelopment area. When that designation is made, the amount of property taxes that flow from land and buildings in the area to local governments—city, county, school districts—is capped.

Going forward, for the life of the designation, any increase in property tax collections from that area above the cap is diverted to the redevelopment agency, which uses it to fund infrastructure, subsidies to developers, and its own operations. This is true even if the increases are entirely the result of normal events—inflation, reassessment of properties at change of ownership, or new construction—unrelated to any of the agency’s activities. To put it baldly, the redevelopment agency grabs all the growth, known as the tax increment; the schools and county get nothing.

In practice, things aren’t quite so stark. When redevelopment areas get proposed, other local governments are often able to bargain for a share of the tax increment. And schools get made whole by the state, which backfills their lost revenue to the tune of $1.8 billion a year. But the essentials are clear: Redevelopment agencies are the real grabbers at the expense of other local governments and the state budget.

Brown’s budget seeks to end that grab. He proposes to abolish redevelopment agencies as of July 1, 2011. In the first year, this would make available $1.9 billion of tax increment above redevelopment agencies’ existing obligations for bond payments and pass-through agreements with other local governments, money Brown would use to close the budget gap. After that, all the property tax increment revenues would once again flow to school, city, and county coffers as they did before the redevelopment agency existed. No more grabbing.

The second common mistake is to report that Brown is proposing to end local redevelopment. In fact, Brown simple wants to change how redevelopment is financed. He has asked the Legislature to pass a constitutional amendment to permit local governments to raise taxes and issue bonds for infrastructure and redevelopment with the approval of voters.

This alternative would let cities to do everything they do today with redevelopment: erect parking lots for museums, subsidize mermaid bars, hand out goodies to auto dealers willing to move from the next city over, build sports palaces for millionaire athletes and billionaire sports team owners. The only difference? Instead of financing it by grabbing other people’s money, they would have to do it directly and openly, with public consent.

That’s why Brown’s proposal throws mayors and other city officials into such a tizzy. It’s a small but telling blow against their privileges under California’s dysfunctional Prop 13 operating system.

That system absolves local elected officials of any responsibility for raising the tax dollars they spend and reduces public scrutiny of how they spend it. It lets them buy the goodies their constituents and campaign contributors like—from shiny downtown buildings to bloated police pensions—without having to ask for the money to pay for it. When their irresponsible decisions lead to unbalanced budgets and cuts in day-to-day services, they just point their fingers at the state Capitol for grabbing “their” money. If the latest PPIC poll, in which voters approved of Brown’s redevelopment proposal by more than a five-to-two margin, is any indication, at least one small piece of that system may be tottering.

The fly—and the elephant—in the realignment soup

Joel Fox, editor over at Fox & Hounds Daily and godfather of the professional defenders of Prop 13, is warning about “The Fly in the Realignment Soup” of Gov. Jerry Brown’s budget. Yes, voters tend to be more friendly to local than to state government, he writes. “But given the outbreak of scandal and questionable judgment exhibited by local officials and reported across the state, the governor may face an unexpected hurdle in selling his realignment plan,” which would transfer more authority from Sacramento to local government.

The fly in the soup is real. The least justifiable public spending in California happens at the local level. Strange, though, that Fox fails to notice the elephant it rode in on: the unintended and unworkable operating system created by Prop 13.

Local governments everywhere have their share of scandal and wasteful spending. But as we show in California Crackup, Prop 13 makes California even more vulnerable to those things. Shorn of their taxing power, local governments ceased to be of much concern to business and taxpayer advocates. That has left local politics to those more interested in grabbing a piece of the spending. And because local elected officials are spending tax revenue they don’t have any political or legal responsibility for raising, they are less careful about how it is used. It’s always easier to waste somebody else’s money.

The scandals that Fox cites, from the City of Bell to Vallejo, have their roots in a system he helped create and now ardently defends. There will be flies in the soup until the elephant is taken away.

Boyarsky: “Brown’s right on redevelopment boondoggle”→

At LA Observed, veteran Los Angeles journalist Bill Boyarsky cheers the prospect of ending California’s redevelopment agencies: “Close down all the redevelopment agencies. Let redevelopment beneficiaries like billionaire Phillip Anschutz, who owns downtown’s LA Live and Staples Center, finance their own projects. If we end the subsidies, we can put the money to better use—the schools.”

The road to budget hell

California has spent many years in budget hell. Deficit has followed deficit, alarm has followed alarm. The temptation is strong to greet this year’s news of budget crisis with a shrug of the shoulders and a yawn: What else is new?

But this year looks different. The two-year budget gap is over $28 billion, the state has piled up debts of more than $85 billion, the gimmicks have been used up, and Washington is turning its back on the fiscal plight of the states. California, a victim of the bizarre and radical governing system it has imposed upon itself, piece by piece, over a century, has seemingly reached a moment of reckoning. It will not get out of budget hell until it makes itself governable.

To understand what’s required to escape budget hell, it helps to know how we got here. There are four big pieces that paved the road to budget damnation:

The Prop 13 operating system. The first of these, you will not be surprised to learn, is Proposition 13. But not in the way you probably think.

Yes, Prop 13 cut property taxes. But its more important long-run effect was to transform how California governs itself. As we show in California Crackup, “By slashing local property tax revenues, putting up higher barriers for local passage of taxes and bonds, and giving the Legislature the authority to divvy up remaining property tax dollars, Prop 13 was the Great Centralizer.”

In the wake of Prop 13, California’s leaders had a choice. They could let local governments readjust to the new fiscal reality of the 1978 Jarvis-Gann measure, which cut local property taxes by the equivalent of 22 percent of local spending by schools, cities, and counties. Or the state could step in and use its own revenue to soften the blow. Then-and-now-again Gov. Jerry Brown and the Legislature chose to bail out local governments.

California’s new Prop 13 operating system, and the state’s willingness to bail them out, have largely turned local governments into spending agencies. Those elected to run local governments have little control over, or political responsibility for, raising the money they spend. As Bruce Cain and Roger Noll have pointed out, this arrangement “creates perverse incentives…. Because so much of local services are paid for by the state, local officials are in a position to reap the benefits of expanding local services, but state officials bear the political costs of either raising revenues or sacrificing other programs in order to finance expanded local services.”

And that is just what has happened. Compared to other states, California local governments spend more than average, despite local revenues much lower than average. The state has made up the difference, deepening its own budget problems and, as we’ll see in a moment, skewing priorities.

Budget bondage. The second stone on the road to budget hell is made up of all the fiscal provisions, many of them requiring supermajority votes in the Legislature, that litter the state constitution. There is the familiar two-thirds majority vote requirement for passing budgets, which was finally repealed last November. And the state spending limit. And the balanced budget rule. And the rainy day fund in which money must be set aside in good times. And the limits on borrowing, both in the financial markets and from transportation accounts and local government. And the Prop 98 funding guarantee for schools and community colleges. And all the initiatives mandating spending.

But the most critical has been Proposition 13’s two-thirds requirement for raising taxes. Last November voters extended this requirement to fees and to any bill that has the effect of raising any taxpayer’s obligation. There is no similar two-thirds requirement for cutting taxes.

This imbalance creates what I’ve called The Ratchet. This ratchet turns one way only: revenue lost by majority vote can only be restored by supermajorities, which have seldom materialized.

The Ratchet was cranked most furiously during the dot-com bubble of the late 1990s. As the hot money from IPOs and stock options flooded in, the Legislature cut the corporate tax, income tax, and, most precipitously, the vehicle license fee, a property tax on vehicles, dubbed the “car tax” by its opponents. When the stock market collapsed in 2001 and the IPO and stock option revenue disappeared, California’s ratcheted-down tax base could no longer support the base of public services. Rather than restore the revenue cut in the good years, Gov. Arnold Schwarzenegger and lawmakers patched over the gap for most of the last decade with gimmicks and massive borrowing. But when the second bubble, in housing, burst in 2008, the economy and tax revenues plunged and the permanent hole in California’s budget was again exposed. Closing the hole would have been difficult under any circumstances. But the task was made immeasurably harder by all the supermajority vote requirements.

Something for nothing. Lawmakers are required, in theory at least, to balance the budget. The voters operate under no such discipline. A large part of California’s budget crisis arises out of the bad habit of California voters of enacting what I call “something for nothing” ballot measures. In the two decades beginning with Prop 98’s passage in the spring of 1988, California voters considered 259 ballot measures. Of these, 127—nearly half—proposed to have something for nothing: that is, they increased spending or reduced taxes, or both, without offsetting funds. Of the 127 measures, 80, or about two-thirds of them, passed. Many of these measures were initiatives, and they came from all points on the political spectrum. There was the Three Strikes sentencing measure and Jessica’s Law and the stem cell agency and the children’s hospital bonds and the park bonds and the water bonds. Even Arnold Schwarzenegger got in on the act with his initiative for afterschool programs in 2002, the prequel for his gubernatorial campaign.

We want, therefore we borrow. These something-for-nothing measures contributed to the fourth big source of budget hell, the growing overhang of debt. Over the last decade California voters have approved more debt than in any time in the state’s history. In the traditional fashion, some of these bond measures financed construction of long-term capital projects that benefit the general public, such as school and college buildings. But others were entirely new. The 2004 stem cell bonds are debt taken out to fund an ongoing program. The $15 billion in deficit bonds approved in 2004 papered over the state’s inability to deal with post-recall budget crisis. The infrastructure bonds approved in 2006 broke with the state’s traditional policy of having users and beneficiaries pay for investments in roads and flood control. They instead transferred the cost to the general fund, soaking up dollars formerly available to pay for education, healthcare, and public safety. The percentage of the general fund used for debt service has tripled over the last two decades, to over 6 percent, on its way to a projected 9 percent by 2014.

Where have these pieces left us? With a unworkable fiscal system and badly skewed priorities.

• State general fund spending, measured as a percentage of California personal income, is lower than at any time since Ronald Reagan was governor. California now spends less than the national average on state functions (but is at the top in transferring state dollars to local governments.) Yet because of past tax cuts and the effects of the Great Recession, state revenue, also at a 30-year low as a share of the economy, isn’t sufficient to cover the combination of spending on state functions, even at its reduced level, and transfers to local government.
• Without the discipline of having to raise their own tax revenues under the Prop 13 operating system, local governments have let the pay and benefits of their employees soar. As Cain and Noll show, California has only 11.8 percent of local government workers in the country, less than its share, but pays them 15.2 percent of the national payroll for local employees.
• California’s broken system of government has produced a major shift in spending priorities. Over the last 25 years, the share of the state general fund spent on criminal justice, mostly prisons and courts, has gone from 5 percent to 13 percent. Likewise, the share of the state’s output spent on local public safety has soared; state and local government in California is today spending about $10 billion a year more on public safety than if its share were at the same level as in 1989. This extra spending does not buy more public safety services. California cities generally have far fewer police per 100,000 population than elsewhere in the country, and the state has less than its proportionate share of prisoners. No, this $10 billion consists almost entirely of higher compensation for correctional officers, police, and firefighters, whose pay and pensions dwarf the compensation public safety employees receive in other states. The gold-plated pay in public safety has come at the expense of higher education, social services, and the fiscal stability of the state.

California’a politics is awash in calls for different budget results: more taxes, less taxes, less prison spending, less debt, lower pensions. But it has not awakened to the fundamental challenge. California doesn’t need just to change budget priorities. It needs to fix the broken system that generates these bad results—and that will keep delivering bad results until it is overhauled.