Do one thing.
By Frank Holland
Published in the San Francisco Examiner
May 31, 2022
“You’ve never seen a number like this,” Governor Gavin Newsom recently told reporters as he unveiled his revised 2022-23 budget proposal. The state would enter the next budget year with a face-melting surplus of nearly $100 billion.
That’s a one followed by 11 zeroes. It’s more than the entire operating budget of any state except for New York and Texas. If California wanted to pick up the entire tab for both France and Germany’s annual military/defense spending, it could. By law, about half of the windfall goes to schools and other mandated spending categories, leaving $49.2 billion completely untethered for lawmakers to spend as they wish.
This is … a lot of money.
I realize I may lose some folks with this scorching hot take, but having money is good. As someone who remembers the budgetary bloodbath of 2009, including $45 billion in cuts, I prefer the current scenario. At the same time, having money is not determinative when it comes to the ability to solve problems. There are ample reality TV shows that illustrate this point.
California’s largesse presents a different challenge. It’s like pulling into an empty parking lot. What should you do? Do you park right up front or near an easy exit point? Sun? Shade? Near the shopping cart return? Conversely, when you pull into a big parking lot with only one space available, you’re just happy you didn’t have to circle for 15 minutes. Scarcity not only focuses the mind, it also fosters gratitude.
I blanched as the parking lot scenario unfolded mere seconds after Newsom announced the gigantic surplus. There are so many places to park cash! And no shortage of interests wanting a piece of it. Debt repayments, cash reserves, money for drought and wildfire initiatives. And as proof that irony is not dead, proposals to give people cash “inflation relief.”
Most of these ideas are good, although I will reserve judgment on the inflation relief money. The overwhelming majority of the governor’s proposals for the extra cash are reasonable. What’s more, they attempt to address many problems equitably and intelligently, primarily via one-time expenditures and putting away more in reserves for a rainy day.
But on balance, it feels like a missed opportunity.
Since California emerged from the Great Recession, the state has boasted a juggernaut economy that dwarfs pip-squeaks like Texas and Florida, with the tax receipts to match. Meanwhile, homelessness has exploded. Another drought wreaks havoc. Housing affordability has become an obscene joke. Educational outcomes have hardly budged.
Last year, state legislators deployed a then-record $38 billion surplus on these and other needs. Did it put a visible dent in any of the issues most important to you? Outside of journalists, policy wonks and government-adjacent professionals, how many people could name the transformative initiatives that took shape?
To be clear, this is not some revanchist anti-tax screed or a hidebound tirade about government waste. It’s certainly not a case against spending money on important things. Please, spend the money!
It’s an argument for courageous focus.
Conventional wisdom — and political fear — holds that when there is extra money to be spent, it must be spread among various political fiefdoms and interest groups, pushed toward a giant constellation of problems. But if everything is important, then nothing is.
Consider the late Steve Jobs.
When Jobs returned to the ailing Apple after 12 years away, tech pundits were tolling the company’s death knell. Lagging sales, poor quality control and financial chaos inspired a 1997 cover story in Wired that depicted the Apple logo as a sacred heart bound by a crown of thorns. The one-word headline read, “Pray.”
The same year, in a product review meeting that has since become Silicon Valley legend, Jobs finally lost his patience with the haphazard array of computer models and peripherals Apple was churning out on the way to a $1 billion loss. As recounted by Walter Isaacson in his seminal biography of the tech legend:
“Stop!” Jobs shouted. “This is crazy.” He grabbed a Magic Marker, padded to a whiteboard, and drew a two-by-two grid. “Here’s what we need,” he continued. Atop the two columns he wrote “Consumer” and “Pro”; he labeled the two rows “Desktop and Portable.” Their job, he said, was to make four great products, one for each quadrant. All other products should be canceled.
Each of the dozens of products Jobs felled with a stroke of his Sharpie had a constituency. Each had its champions and zealots. But to put Apple on track to become the world’s most valuable company, Jobs first had to demonstrate the organization’s ability to succeed, which began with clarity of purpose.
Deeply ingrained political realities suggest that it’s unlikely, but Newsom and his counterparts in the state legislature would be well served to take a page out of the Jobs playbook. Yes, there are a lot of big problems that need to be addressed, but here’s an idea:
Stop wringing your hands about homelessness and approach it as an existential threat to the state. Create a Homelessness Eradication Office and wipe out the fractured and ineffectual spider web of programs administered at the county level. Reestablish the state Department of Mental Health. Collect consistent data and demand accountability. Take a massive chunk of the surplus and start rebuilding the state hospital system. Do it like you’re storming the beaches of Normandy to save the free world.
Execute a hair-on-fire effort to smash our endless cycles of drought by investing billions in desalination plants and recycled water projects. Cut the red tape, litigious delay and the abusive use of CEQA to get it done. Do it now. Talk about it relentlessly. Show the world just how innovative and responsive California’s government can be. Better yet, show Californians.
Or launch a moonshot housing production initiative that ignites development with incentives, predictability and right-sized regulations. Make it as simple and easily communicated as possible. Subsidize small local investors to turn distressed buildings into economic engines and infill housing. Show struggling Californians that housing affordability is a core priority, not just another problem in the portfolio.
I almost don’t care what the issue is, just demonstrate clear, unassailable success on one big issue. That doesn’t mean you can’t address everything else on your list — there’s an entire $200B+ budget available for that. But if California is going to regain its swagger and the confidence of its residents, scoring at least one major, lasting policy goal will go a lot further than sprinkling money throughout the state in an effort to please everyone.
“Focusing is about saying 'no,'” Jobs explained at Apple's 1997 Worldwide Developers Conference. “You've got to say 'no, no, no,' and when you say 'no,' you piss people off.”