Utah's lessons for California

California is facing a budget crisis unlike anything any state has seen since the Great Depression. That crisis deepened this week when several large banks announced they no longer would accept the IOUs the state was using as payment to contractors, vendors and regular taxpayers expecting refunds. Unless lawmakers and the governor can agree on how to close a $26.3 billion gap, no one knows exactly what will happen next.

This may be happening two states to our left, but the collapse of government in the world's eighth largest economy is bound to ripple to Utah, perhaps in ways no one has yet considered. Beyond that, however, California's problems serve to vindicate how Utah has chosen to govern itself.

The first lesson from California is that it's a good thing to require a balanced budget each year. Utah lawmakers face criticisms for a variety of reasons each year, but their fiscal conservatism has served the state well. That may be tried again next year as the economy continues to eat into tax revenues, necessitating difficult decisions.

Unfortunately for California, its problems aren't as easy as just making difficult cuts or raising taxes. The second reason it is in a mess right now has to do with populism. It's common to blame Proposition 13 for tax woes there. That was the ballot measure in 1978 that put a limit on property tax hikes. Once you buy a house, your property taxes remain the same until you sell. However, despite Proposition 13, California remains somewhere in the middle of property tax rates nationwide. The bigger problem has to do with ballot initiatives run wild.

For California voters, it is not uncommon to face dozens of initiatives on a ballot, each having the force of law if passed. Voters often complain about politicians being irresponsible, but the voters themselves have passed several initiatives that require ongoing spending, without ever providing the revenue to cover that spending. One initiative, Proposition 98, requires 40 percent of all state revenues be spent on public schools and community colleges, putting lawmakers and the governor in a fiscal straitjacket during difficult times.

Some have criticized Utah lawmakers for making it difficult to place initiatives on the ballot here. But while they may have done so to prevent any usurpation of their own authority, it is clearly better to set tough requirements than to open the ballot up to the whims of various factions that exist among the public.

Term limits also hurt California. Again, Utah lawmakers took heat for repealing term limits here after having passed them to avoid a ballot initiative. And again, they may have done so to preserve their own power. But California's experience is instructive. The constant churn of new lawmakers doesn't just empower full-time state bureaucrats, who become the keepers of institutional memory. It empowers lobbyists, who often are much more experienced and savvy than the political newcomers they seek to influence.

California also requires a two-thirds vote to approve a budget, which almost guarantees a stalemate.

We like the tough stance Gov. Arnold Schwarzenegger is taking. He wants no new tax increases and he wants deep cuts. That's the only way for California's economy to recover quickly, minimizing its drag on the rest of the nation. But it wouldn't solve the state's systemic problems. For that, California ought to look two states to the right for some lessons.