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Sorting Out Reform Ideas

August 23, 2004

When R. Richard Hauck first went to Sacramento in the mid-1960s, he was a Coro Foundation fellow assigned to write a plan to consolidate California's scattered tax collection agencies into a new state revenue department. It was, like so many well-intentioned reform proposals, ignored. Now, four decades later, Hauck has a chance to see his idea go into effect.

Hauck, president of the California Business Roundtable, was appointed by Gov. Arnold Schwarzenegger to be co-chairman of the 21-member commission holding hearings on the California Performance Review, a long, long list of proposals to reform state government and make it more efficient and responsive to the people. Among its more than 1,000 ideas is the consolidation of tax-collecting functions of the Board of Equalization, the Franchise Tax Board, the Employment Development Department and the Department of Motor Vehicles into one new state tax commission.

The 275 state workers and outside experts who conducted the review correctly found -- once again -- that the current tax collection system is duplicative, inefficient and confusing for the taxpayers. Their solution is good as far as it goes, though it leaves alone the Board of Equalization, which deals with property taxes, because it would take a constitutional amendment to change it. The review, in its picking and choosing, is far short of the overhaul that state government really needs, as described on Sunday's editorial page. But it is full of doable ideas, no small feat in a government as polarized and often paralyzed as California's.

Review's Limited Reach

First, despite its heft, there is much that the review doesn't do. It overlooks parts of government most in need of reform, especially the relationship between state and local governments and how they are financed. The review only vaguely calls for "a new partnership." Also missing is a serious discussion of the state's outdated, inefficient tax system.

In the name of efficiency, the review often proposes to fold regulatory bodies into the bureaucracy. This makes sense in the case of tax regulators, but not where publicly visible independence is important. Consider the successful California Air Resources Board, which has been a national leader in developing programs to reduce and eliminate pollution. Offering thorough public debate of new clean air proposals is one of its chief strengths. There is a legitimate fear among environmentalists that cloaking the process in the bureaucracy would make it easier to relax cleanup efforts.

The review deserves applause for proposing the elimination of the Workers' Compensation Appeals Board and the Unemployment Insurance Appeals Board, which have mostly served as well-paid sinecures for political cronies and spouses-of and termed-out legislators. Their functions would be folded into a new and presumably more professional department of labor and economic development. Dozens of other boards that license and oversee single professions (like barbering) should, and would, also be folded into a larger consumer protection agency.

Long Experience in Reform

Hauck has more experience in government reform than perhaps any other Californian, having also been chairman of the California Constitution Revision Commission in the 1990s. (More good proposals, including a revenue department, ignored).

Hauck sees the current commission's role as hearing the comments of the public and experts and synthesizing them for the governor. It should go further. Hauck and his fellow commissioners should also sort out logical priorities. Which proposals are important and worth having Schwarzenegger spend his political capital to achieve? Some require constitutional amendments, and many would need legislative approval. Others, such as recruiting and training a more responsive state workforce, coordinating state purchases, providing driver's license renewals and other services online and building a better state website, can be ordered by the governor.

Schwarzenegger has talked of submitting his plan to the voters in a ballot initiative if the Legislature balks. That would be difficult because although the state Constitution allows amendments by initiative, it prohibits "revisions" to the document by initiative. One more reason for trying again to rewrite and slim down the Constitution.

"We need restructuring to get state government out of the 19th century," Hauck said. If Hauck, his commission and state government can muster the vision, political will and attention to detail to put the performance review in order, they could prove themselves capable of the bigger changes California needs.


To Take Action: A schedule of the commission's remaining hearings are available at

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