Eight years ago, former Gov. Jerry Brown trimmed and reorganized California’s bureaucracy in an effort to help haul the state out of the Great Recession.

The Little Hoover Commission praised the plan for pushing the state toward a more “effective, efficient and transparent” government that would be more responsive to unfavorable employment and revenue trends.

Today, with a state budget surplus, Gov. Gavin Newsom is proposing to add new departments, offices, divisions and programs to the state’s government to bolster ambitious plans to improve everything from early childhood development to dysfunctional state technology.

The Jan. 10 proposal calls for a Department of Cannabis Control, a Department of Early Childhood Development and a Department of Better Jobs and Higher Wages. It calls for creating an Office of Health Care Affordability and building a robust program to carry out a new California consumer financial protection Law.

The departments would consolidate functions scattered across some of the state’s 150-odd departments, according to budget documents. The cannabis department, for instance, would consolidate marijuana licensing programs currently carried out by three different offices into one organization. The early childhood and jobs departments would group together programs and data from a range of offices.

The new departments would also provide launching pads for new functions focused on making government more user-friendly for residents, according to budget proposal documents.

Government growth is common in flush financial times, but it can make the inevitable downward adjustments more difficult when a recession arrives, according to government experts. Newsom has also expanded the governor’s office itself, increasing spending by 22 percent last year on top staff positions.

“During times of expansion it’s easy to do these things,” said Michael Shires, an associate professor of public policy at the Pepperdine School of Public Policy. “In the long term, when it’s time to adjust, it’s almost impossible to kill these things. And you’ve got to squeeze everyone else a little harder.”

Spending projections haven’t been finalized, but ongoing costs for five of the largest of the new departments and offices likely will be in the neighborhood of $50 million to $100 million per year, according to preliminary estimates.

That’s a relatively small portion of the $222 billion in proposed spending, but the money will form new interests and political constituencies that could push them to keep growing, Shires said.

The next recession

The combined costs of the Department of Better Jobs and Higher Wages and the Department of Early Childhood Development, along with the consumer protection program, total $32.1 million per year, according to budget request documents.

Detailed projections aren’t yet available for the health care office or the Department of Cannabis Control, according to a Department of Finance spokesman. A line item in the budget for the “Bureau of Cannabis Control” estimates it will cost about $25 million per year.

This year’s additions follow proposals from Newsom last year to create a $36 million Office of Digital Innovation and to convert the Division of Juvenile Justice to the Department of Youth and Community Restoration.

Top Republicans on the Legislature’s budget committees said the permanent costs of new bureaucracies could make the state less flexible in the future.

“This is certainly something that the budget subcommittees are going to be taking a close look at,” said Jay Obernolte, R-Big Bear Lake, vice chairman of the Assembly Budget Committee. “I remain concerned about the overall level of state spending and the expansion of state bureaucracies in this budget.”

Obernolte said his office has identified 25 new government entities, including departments, offices, divisions, programs and task forces, in the budget proposal.

State Sen. Jim Nielsen, R-Gerber, vice chairman of the Senate Budget and Fiscal Review Committee, said the government needs to reduce or move jobs if it is going to create new departments or offices.

“If we just pile it on and add a new agency, all we’re doing is creating more cost, and less efficiency and effectiveness,” Nielsen said.

Budget proposals indicate not every job in each new department will be new — some will transfer from other departments.

“The creation and consolidation of these new departments will better position the state to tackle key challenges and leverage opportunities today and into the future,” Governor’s Office spokeswoman Vicky Waters said in an email. “They will increase efficiencies and focus as we strive to serve Californians to the best of our abilities.”

Consolidation is sorely needed for some government services, including early childhood services, said Joanne Kozberg, a veteran of government reorganization efforts under past governors who served as former Gov. Pete Wilson’s secretary of State and Consumer Services.

“There are different revenue streams, rules and regulations; I don’t know that the people working within child development know where to go,” Kozberg said. “I applaud that effort.”

Similarly, Kozberg and Shires agreed the state needs a cannabis control agency to regulate the new industry. They likened the department to the state Department of Alcoholic Beverage Control.

Office of Digital Innovation

The Office of Digital Innovation, launched last year under a $36 million proposal, was created to improve the often “cumbersome and frustrating” experience of interacting with government, according to a proposal for the office.

Newsom announced the office last January and it launched in July. The office is described on its website as “a start-up inside state government focused on improving services for the people of California.”

The proposal called for hiring 50 people. So far, the department has hired just a few employees and is still searching for a director — someone who has both a Silicon Valley background and experience working in government, said Mike Wilkening, who oversees the department as the governor’s special advisor on digital and innovation projects.

The office has undertaken two main projects, Wilkening said.

One is alpha.ca.gov, an experiment in making California state government’s primary website more user-friendly. The stripped-down version of ca.gov loads faster, requires less data and is simpler, he said.

The other project is a portal that organizes state data according to geographic area and subject matter, rather than by department. For example, Wilkening said, a user looking for salmon migration data kept by the state can go to the portal and find a broad data set instead of guessing which state departments might have the information and trying to find it on their websites.

In the future, the office will be available to partner with state departments on their digital projects, working to help identify root problems and tailor solutions to them, Wilkening said. The office also will work under an “intervention model,” where top-level government officials may dispatch the office to address problems when needed, he said.

Wilkening said the department had been holding off on full-scale hiring for the department until it could find a director, but recently has shifted course. The department now is working with a consultant from the U.S. Digital Service to staff up for specific projects while the search for a director continues, Wilkening said.

Better data is also a focus of the proposed Department of Better Jobs and Higher Wages, which would consolidate existing workforce and training programs into one department, according to a proposal for the department.

The changes would create a “better environment for embracing bold ideas for improving the lives of Californians by supporting opportunities to create good jobs with a career pathway to upward mobility, according to the proposal.”

Sophia Bollag of The Sacramento Bee Capitol Bureau contributed to this report.

This story was originally published January 21, 2020 at 6:30 AM with the headline "Gavin Newsom’s budget would make state government bigger. Can California sustain the spending?."