California's Office of Privacy Protection on Budget Chopping Block

In these times of budget deficits and the unfortunate embracing of austerity measures in California and across the country, its not a big surprise that California's Office of Privacy Protection has been targeted for elimination.

But, as with so many other programs on the chopping block, there's a strong case to be made that eliminating this office does more harm than good, both in financial terms, and privacy terms.

Let me explain why I believe this to be the case by posting our (Consumer Federation of California) support letter for the office recently sent to the Assembly Budget Subcommittee 4, where this issue will be debated next.

The Consumer Federation of California opposes the item on Page 114 of the Governor’s May Budget Revision that would eliminate funding for the Office of Privacy Protection. We believe the net effect of the elimination of this agency would be increased state government costs and decreased state government revenues – more than offsetting the $500,000 savings the proposal seeks to achieve.

This small agency, located in the State and Consumer Services Agency, is the nation’s first state agency dedicated to advancing consumer privacy. In the ten years since it was created, it has provided important assistance to tens of thousands of California consumers, including many victims in need of guidance in mitigating the negative effects of identity theft. The Office of Privacy Protection assists small business and government agencies in better understanding privacy laws and best practices, and it conducts education outreach to thousands of Californians each year.

As technology rapidly evolves, new avenues for invasion of privacy are created. This increases the need for a state agency that has as its mission the protection of personal privacy. The Consumer Federation of California has recently worked on privacy impacts of online commerce, deployment of the smart grid, internet tracking, automobile insurance rate setting, and electronic medical records. These are all areas where the demand for the kind of expertise available through the Office of Privacy Protection will only increase.

The Office of Privacy Protection has been substantially reduced over the past few years. Ten years ago, this agency had a budget of some $1,100,000 and a staff of nine FTE employees. Today its budget stands at about $500,000 and seven positions.

We understand the extraordinarily difficult decisions lawmakers must make to balance the state budget during this protracted economic recession. But some reductions have the unintended consequence of increasing government costs or diminishing state revenues beyond the level of short term saving that the cuts may achieve.

A closer examination of the role that the Office of Privacy Protection provides to California’s economy militates against the elimination this agency as a cost cutting move.

California’s modest investment in privacy protection produces a much bigger positive contribution to our state’s bottom line. The improvements to the state’s balance sheet include assistance to law enforcement agencies in combating and enforcing against identity theft. This reduces expenditures by state and local agencies for staff training and hiring of outside consultants to provide this expertise.

The Office of Privacy Protection also provides assistance to California businesses in developing practices that comply with state privacy law, reducing business costs in litigating and settling lawsuits that arise from inadvertent violations of privacy laws. This in turn enhances taxable California business profits. The Office assists taxpayers in avoiding and mitigating the effects of identity theft. This reduces the tax deductions that ordinary Californians would claim for losses resulting from this form of criminal activity.

In other words, the services of the Office of Privacy Protection more than pay for themselves in the form of greater state tax revenues and reduced state and local government agency costs.

We respectfully urge you to restore funding to the Office of Privacy Protection.