On Thursday, February 27, the Rose Institute hosted Michael Cohen, Director of California’s Department of Finance, at the Athenaeum on Claremont McKenna College’s campus. At the luncheon, Cohen overviewed the Governor’s proposed 2014-2015 budget, discussed the state’s fiscal progress and remaining challenges, and answered questions from students and faculty.
The bulk of Cohen’s presentation focused on the Governor’s 2014-2015 budget proposal, which the Department of Finance prepared under Cohen’s direction. For the second year in a row, fiscal responsibility was a central theme of Brown’s budget. The proposed budget sets California on track to fully pay down the wall of debt by 2017-2018, and devotes $3 billion to rebuilding the state’s rainy day fund. Regarding California’s wall of debt, Cohen noted, “Current services are supposed to be paid by the current state of affairs so that you’re not making future generations bear the burden.”
Echoing the Governor’s State of the State address, Cohen noted that California needs to be prepared for a future downturn: “This recovery, although it has been a very slow one, is in its fourth year. The possibility of an economic slowdown is certainly on our mind.” A growing proportion of the state’s revenues come from capital gains taxes, so the state’s fiscal health is increasingly tied to the boom and bust cycle of the stock market. To mitigate this volatility, Cohen and the Department of Finance have focused on multi-year budgeting. Cohen noted that in the good years, “we should be concerned with paying our debts, saving some of the money, and not making permanent ongoing commitments that really restrict our ability to balance the books when the next budget problems come.”
After his presentation, Cohen spoke about his life trajectory and shared some advice for students interested pursuing a career in California politics. After graduating from Stanford with a degree in Urban Studies, he pursued a Masters in Public Administration from the Lyndon B. Johnson School of Public Affairs at the University of Texas. He returned to California to take a job in the Legislative Analyst’s Office in Sacramento and then moved to the Department of Finance in 2011. When asked about starting a career in public service, Cohen noted that “the state can do a better job of modernizing our civil services to make it easier for outside folks to get their first job.” He concluded by encouraging students to consider Sacramento for a career: “As far as I’m concerned, we need tons of new talent in Sacramento.”