California, once a dream state, strives to get back its groove

As it has slid, the state's citizens have begun to focus on its core dysfunctions.

Perhaps more than any state in America, California represents the end of the rainbow. Generations of fortune-seekers have seen it as a place of almost magical light and color where they could obtain, if not a big pot of gold, at least a good living in a climate where oleander bushes and innovation thrive equally as well.

That storied vision, fading for some time, is now in danger of disappearing altogether.

From drought to high taxes, from overcrowded classrooms to overflowing prisons, California confronts a perfect storm of troubles – one that elected officials here seem unable to navigate with any surety, as last week's herculean effort to simply produce an annual budget demonstrated to all of the nation.

But even as California's woes multiply, compounded by the broader recession, there are stirrings of reform in the land. Longtime observers of political and business trends here see a somnolent giant awakening and realizing that it is wrapped in something of a political straitjacket.

For one thing, state voters, who flocked to the polls in the last election, have begun to tackle election reforms, which many say are crucial if government is to function more effectively.

"Californians are finally sick of all this. There's never been such conversational currency with the intricacies of government by the average citizen," says Barbara O'Connor, director of the Institute for the Study of Politics and Media at California State University, Sacramento. Noting that California voters in November approved redistricting reform to help end political gridlock, Ms. O'Connor says, "The era of the disengaged voter is over."

Activism is bubbling up in two formal moves to recast government, echoing the move by state Sen. Abel Maldonado (R), who finally cast the vote that broke the long budget deadlock after winning assurances of support for an election reform he says is needed to bring more moderates into office.

One is a bid to amend California's constitution.

"This state has a crisis everywhere you look.... California has slipped from first or best in country to the worst," says John Grubb, spokesman for the Bay Area Council, which spent the past year building a coalition to push for a constitutional convention that would craft a new California constitution. Political, economic, and citizens groups are slated to meet in a first-time summit Tuesday in Sacramento.

"The thing that drives this coalition is the great fear of the status quo – that we could be stuck like this forever," says Mr. Grubb. "People desperately want change, and we feel that a constitutional convention is probably the most foolproof way to get the reforms we need in the quickest amount of time."

Another group, California Forward, has been holding focus groups across the state for nearly a year to find bipartisan, citizen-driven solutions to end the structural problems that plague the state.

"The reality is we can't exist this way anymore. We can't just keep plugging a hole until the next year," says Jim Mayer, executive director of California Forward, which includes leaders from business and labor, on the left and right, from around the state. The group was co-chaired by Leon Panetta, before President Obama tapped him to head the Central Intelligence Agency.

"There is a huge gap between the innovation that is out there and the government. The ideas never get translated into policy in California," Mr. Mayer adds. "California has to step back and reinvent its government to meet the challenges of this state and the ambitions of its people."

The challenges are daunting.

Contributing to lawmakers' fight to close a $42 billion budget deficit – the largest budget gap by any state in American history – is a litany of other problems: crumbling infrastructure, water shortages, prison overcrowding, gang crime, traffic congestion and smog, illegal immigration, and sliding school performance.

Some California watchers say the state's political rules also handicap the government that serves the nation's biggest population, at 34 million, and its most diverse.

Those include the often-used citizen referendum process, which allows ballot initiatives to spring from the grass roots but which, some say, has also had the effect of limiting officials' budgetary options. Term limits for elected officials may also contribute, making it difficult for new and relatively inexperienced officeholders to understand the needs of a mammoth government that oversees 58 counties, 480 cities, 1,050 K-12 school districts, and 72 community college districts.

"California has a governance structure that is too rigid, not just in regard to fiscal spending but in political matters as well," says Mark Baldassare, executive director of the Public Policy Institute of California. On a ballot measure, he says, "a 50 percent vote can get ... embedded in the constitution both tax and spending requirements that are difficult to maintain and don't have much flexibility."

The state's tax system, which relies heavily on personal income and capital gains has proved to be unstable again and again, he adds. Political districts drawn by the party in power, moreover, create too many "safe" seats that allow candidates and legislators to forgo learning the art of compromise. Instead, they dig in, and gridlock ensues.

In several lists and indexes comparing states' performance, the Golden State seems to have some leaden weights around its ankles.

It's never done particularly well on the one that rates tax favorability for businesses, but now it comes up 48th for fiscal year 2009, according to the Tax Foundation. Next-door neighbors Nevada and Oregon are among the best 10 in terms of business tax climate, which is an incentive for businesses to locate or relocate nearby. As for taxes on individuals, the state has the highest sales tax in the nation, and its income-tax rate ranks toward the top, too.

Moreover, a California Faculty Association report last month warned that the state "is on course to wreck its own economy" because of failure to invest in higher education, and a US Chamber of Commerce "State-by-State Report Card on Educational Effectiveness" gives California an F on academic achievement.

In December, California had the fourth-highest jobless rate of states in the US, at 9.3 percent, according to the US Bureau of Labor Statistics.

California Forward wants to establish a network of regional, private-public partnerships to pursue long-term recovery from the current economic challenges.

One example is prisons, says Mayer. A panel of three federal judges found Feb. 9 that overcrowding in state prisons has deprived inmates of their right to adequate healthcare and ruled that the state must reduce its prison population. California's 33 prisons were designed for 84,000 inmates but now hold 158,000.

"Our state's prison budget has been growing faster than any other outlay for a decade, not because of the prison system itself, but because of costs," says Mayer. In 2001, California spent $26,556 per inmate, ranking 23rd in the nation. By 2005, costs per inmate had increased to $34,150, sixth in the nation. By contrast, 31 states reduced costs.

The Bay Area Council, in its bid to hold a constitutional convention, hopes to limit ideas to four categories: budget reform, election reform, more local control of locally collected funds, and the establishment of an oversight commission to examine and make recommendations on the function and viability of every state agency.

"It's modeled on the very popular Texas system," says Grubb. "They will investigate every state agency and make suggestions on whether or not it should be continued, disbanded, or merged in some other form with another agency. We feel this is a great way to get better efficiency out of government."

Although some sociologists and writers predict continued decline for Californians' quality of life, historian Kevin Starr, who has writen seven volumes about the state, has described California as an open-ended experiment in "global ecumenical civilization." "The state is increasingly difficult ... and aware of enormous challenges that are forcing its citizens and institutions to struggle mightily," he said in a 2004 interview with the Monitor. "The typical American dreamer can no longer merely say, as he once did, 'The solution is that I have come to California.' The ante has been upped."