The Opportunity Institute (OI) released today its Future of Fiscal Reform Policy and Future Scenario Report made possible by a grant from the California 100 Initiative. For several months, the research team, led by OI fellow Patrick Murphy, examined where California has been in terms of fiscal policy, where it’s at and what the future holds.
OI works to increase social and economic mobility and advance racial equity through partnership and collaboration with those seeking to promote systems change – starting with our education system and other child and family-serving agencies to ensure a whole child approach to supporting children and families as they endeavor to build a different and better future. Areas of focus at OI include whole child equity, adolescent learning and development and resource equity – with this latest report calling attention to resource equity issues and highlighting opportunities to strengthen the fiscal future of California for students and communities.
“Californians are committed to a progressive tax system and have supported a relatively
expansive social safety net. However, some fiscal policies are driving socioeconomic and racial inequities throughout the state. They also limit funding for schools and other programs with the biggest impact on students and families in underserved communities,” said Patrick Murphy of OI. “Our research findings show that there is an opportunity to set the state on a new path – one that accepts the responsibility of ensuring fiscal sustainability for all Californians for many years to come.”
Click here to read the Future of Fiscal Reform Policy and Scenario Report
The research proposes four alternative paths for the state’s fiscal future and provides policy options. Under the most optimistic scenario, a Golden State of Affairs, California experiences continued economic growth and embraces change. In this vision of the future, California’s thriving and diverse education and workforce development programs ensure that the state has a deep bench of creative talent and entrepreneurs, even as the state continues to attract high-skilled migrants from other states and countries. These elements combine to ensure that California has enough revenue to address looming concerns, like climate change or affordable housing. The state also pursues programs aimed at not only closing gaps in income, opportunity, and economic mobility — but ones designed to dismantle the accumulated effects of racial hierarchy.
At the other end of the spectrum is a future where the state’s economy slows down while the electorate and its leaders resist policy change. This scenario, Once a leader, now a follower, paints a picture of a California with a declining population – a place where tech innovators, lucrative corporations, and wealthy individuals leave for other states. A vicious cycle begins, with slow economic growth leading to fewer tax revenues to support existing programs and services. Policy makers are forced to make difficult choices about where to cut back on programs and services and there are no resources available to tackle issues like climate change. With fewer dollars to go around yet a higher demand for public services, California sees an increase in poverty, homelessness, and crime.
To put California on the path toward the most optimistic scenario, OI recommends the following policy solutions:
Modernize the state’s sales tax to include services. Doing so would acknowledge a long-term trend in how we consume, make a regressive tax more progressive, and decrease volatility.
Reform reserve policies to establish a sovereign wealth fund. Proceeds from such a fund could be reinvested in our higher education system and California’s business to support future economic growth.
Unwind the fiscal straightjackets created by provisions like the Gann limit and Proposition 13, both of which are well into their fourth decade. Prop. 13 continues to distort the residential and commercial real estate markets, skew the distribution of individuals’ wealth, and hamstring local officials’ decision making. It is difficult to understate the negative impact this single initiative has had on California’s governments.
“Californians value a community where individuals from a range of incomes are welcome and can afford to live, raise their families, and access well-funded public schools, but that goal has yet to be realized,” added Maria Echaveste, president and CEO of OI. “Ensuring our state’s financial future and more equity overall requires considerable foresight and investment. Each of the reforms proposed in this report would make the state’s fiscal system more equitable and sustainable.”
“After months of diligent research by our partners across the state, we are excited to share their findings with the public to kickstart a conversation about the policy options we can take to create an inclusive, equitable and sustainable California,” said Karthick Ramakrishnan, PhD, executive director of California 100. “Our research partners engaged a diverse group of stakeholders in their work and it will take all of them and all of us to take this work and make it actionable today – to influence tomorrow.”
California 100, incubated at the University of California and Stanford University, released today its next three policy and scenario reports focusing on the future of health and wellness, immigrant integration and public safety in the golden state. In July, California 100 announced grants to 18 centers and institutes across California to examine future scenarios with the potential to shape California’s leadership in the coming century, with a focus on 13 priority research areas (listed below). In March, California 100 released its first four policy and scenario reports focused on the future of advanced technology, energy, housing, and transportation.
These research reports were produced as part of California 100’s research stream of work led by Henry E. Brady, PhD, Director of Research for California 100, current professor, and former Dean of the Goldman School of Public Policy.
California 100 announced its diverse and intergenerational Commission in October and its Advisory Council in December. California 100’s core mission is to strengthen California’s ability to collectively solve problems and shape our long-term future—through research, policy innovation, advanced technology, and engagement—by identifying, mobilizing, and supporting champions for innovative and equitable solutions.
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