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Yes there is a solution to California’s budget woes and no there isn’t a solution

2009 November 20
by Ian Welsh

It seems there is no solution to California’s budget shortfalls (via Digby):

“I think that there will be across-the-board cuts again,” he said at a San Jose news conference….

“I can’t think of any good solutions,” said Assemblywoman Noreen Evans (D-Santa Rosa), who chairs the budget committee. Although the projected deficit would be smaller than the last one, she said, “the cuts are going to be harder to make because we’ve already made such substantial cuts.”

This is, in one sense, false.  The solution to California’s budget woes is to raise taxes, primarily on the rich, and to allow municipalities to raise property taxes.  The solution is dead simple.

However, in a more real sense, there is no solution.  Because California’s constitution allows a minority rump of Republicans to veto the majority, no such tax rises can pass.  And since California’s proposition system is what made property tax rises impossible, and since a proposition to remove the limits is unlikely to pass, there is no solution.

Californians are going to have grow up.  They can’t have low taxes and services.  It is simply not possible.

  • The constitution needs to be rewritten to allow budgets to pass on a majority vote
  • The proposition system itself needs to be ended, and any proposition now in effect should be able to be nullified by the legislature, on a simple majority vote.
  • Taxes need to be raised, both income taxes on the rich, and property taxes.  If necessary put limits on tax raises for primary residences only for as long as they are owned by one owner, with a reset when they are sold or passed on, but otherwise, taxes can be raised.
  • Grow up.

I feel very little sympathy for Californians as a group though I recognize that many Californians are individually blameless.  This has been coming for decades, and whenever given a chance to make things worse, Californians have done so, as when they kicked out the last Democratic Governor and installed the Governator, a man who never saw a budget problem which couldn’t be solved by floating more bonds and cutting services to the poor.

You get what you pay for.  For years, Californians thought they could have government services without paying for them.

As goes California, so goes the country.  Americans as a group still think they can have things they won’t pay for, and that they can have lots of billionaires and widespread prosperity.  Has never happened.  Will never happen.

Period.

24 Responses
  1. November 20, 2009

    You see this same sort of nonsense up here in Washington, too. I once saw a guy with bumper stickers in favor of the latest tax-cutting initiative (we have one nearly every year thanks to this clown, and another that criticized charging tolls on a big new bridge that was being constructed to relieve congestion on the current one.

    We haven’t quite made it impossible to run the state yet, but we’re working on it.

    There are just lots of people out there that think that any money that’s spent on things that don’t benefit them directly right now is wasted money. You’re never going to change these people. The only hope is that you make everyone else realize how utterly stupid and selfish they are.

  2. November 20, 2009

    While the federal government is not revenue-constrainted, being the monopoly provider of a non-convertible currency of issue within a flexible rate regime, the individual states are revenue constrained. But there is a around this limitation.

    Bill Mitchell sent a missive to Arnie last July telling him how the Gov. could solve the budget problem instantly by issuing state IOU’s accepted as payment of California state taxes and fees.

    Letter to the governor

  3. S Brennan permalink
    November 20, 2009

    Solution amend Prop 13 with Prop 13.10 – Make a distinction between residential and business property.

    “Twenty years later it is important to remember how the tax rebellion began. It was about people living in the little houses they bought in the 1950s for $15,000 who suddenly faced property tax bills based on real estate prices ten times that. They grabbed onto Proposition 13 for protection and two decades later they are still holding on. What we’ve forgotten, or never understood, is the massive corporate giveaway that tagged along for the ride.”

    “Jarvis and Gann made no distinction between residential and business property. As a result of a simple drafting choice made by two gadfly tax activists, two thirds of the $6 billion tax cut would go, not to homeowners, but to commercial and income property. At stake was an unprecedented, multi-billion dollar tax cut that California’s corporate leaders hadn’t even asked for, but one with colossal, long-term implications for California’s schools and other public services.”

    “Corporate skyscrapers, however, have a loophole. As long as the same corporation holds title, as long as the logo on the door remains the same, the building continues to be taxed based on what it was worth more than two decades ago. The respected Center on Budget and Policy Priorities has estimated that this one loophole in Proposition 13 costs California schools and local governments between $3.5 to $5 billion per year.”

    S Brennan here, what a lot of people don’t understand is there are many ways for corporations to “sell” property without “selling it” so unbelievably most corporate property has never changed hands since Prop 13.

    http://www.democracyctr.org/library/california/prop13.htm

  4. November 20, 2009

    When your state’s constitution starts to resemble that of 18th century Poland, I think the problem goes a little beyond property taxes.

  5. November 21, 2009

    The California budget disaster is a result of gaming the California electoral system, not the will of a majority of Californians. Prop 13 was passed by 18% of California’s population in the off year of 1978. Even of registered voters, it only got 45% of the vote. The tax cutting is not the will of the majority of Californians–never was. Such laws do not usually pass with even a majority of registered voters, and probably would not even pass in Presidential election years, even counting only that percentage of voters who turn out. So don’t go blaming the citizens of California. Don’t tell me they deserve it, or asked for it. An overwhelming majority never asked for any such thing.

  6. Ian Welsh permalink
    November 21, 2009

    If you choose not to vote you choose to accept what people who vote choose.

  7. anonymous permalink
    November 21, 2009

    I used to audit small businesses in California for youknowwho. And yet I kept getting audits of partnerships and S corporations owned by multi-millionaires and even one billionaire. The amount of money in that state is absolutely staggering. Yet as a percentage of their income or wealth, rich Californians pay a fraction of the taxes that working class Californians pay. They have no one to blame but themselves. I lived there during Arnold’s recall. The guy won in a massive landslde, and the attitude of people who voted for him was so unserious. Their greed and stupidity knows no bounds. F*ck ’em.

  8. November 21, 2009

    anonymous, I’ve had a love affair with California since I went there after graduating from college. I’ve lived there on and off, but I was never able to stick it for long because of the Californians. Of course, there are some nice people, but by and large they are a shallow bunch. It’s really sad that an environmental paradise has been turned into cultural hell.

  9. S Brennan permalink
    November 21, 2009

    I love California, I love Californians and…God Willi’in, I’ll return.

    I want to add that everyplace I’ve lived with the notable exception of Seattle/NW people have been generally good natured and generous.

    Maybe I just can’t work up much hate for groups/people not tied to odious morals and philosophy. Being a libber-al can be a pain in the ass, but it is not a smorgasbord, it’s a philosophical outlook and it requires discipline.

    Bill Moyers was great last night, I sure as hell hope some folks watched the last president, who could play the game, but loved and wanted the love of the American people. Extraordinary Television.

  10. November 22, 2009

    “If you choose not to vote you choose to accept what people who vote choose.”

    Must one be a doctor to object to medical malpractice?

  11. Celsius 233 permalink
    November 22, 2009

    S Brennan
    I want to add that everyplace I’ve lived with the notable exception of Seattle/NW people have been generally good natured and generous.
    =================================

    Yes, you are correct, I moved there from NY and wow; those NW people are one strange group socially.

  12. anonymous permalink
    November 22, 2009

    Why the hate for Seattle and PNW? They are a bit aloof, passive, and not especially worried about their looks (or lack thereof), but definitely the most polite and considerate place I have ever lived. Not in a fake friendly way like twofaced southerners or selfcentered southern Californians. It doesn’t surprise me that someone from aggressive NY would find them puzzling though.

  13. S Brennan permalink
    November 22, 2009

    “I want to add that everyplace I’ve lived with the notable exception of Seattle/NW people have been generally good natured and generous.”

    “Why the hate for Seattle and PNW?” – anonymous [aka PC Police]

    Uhm…Anon I’m having a hard time finding the hate? Just because I don’t praise the Seattle/NW culture as I do others? Is “Seattle and PNW” praise now mandatory? Is the absence of praise now to be conflated with hate? And when you actively bash others in the same comment that you condemn my unwillingness to gratuitously compliment Seattle/NW folks as “hate speech” do you mean to make a farce.

    If I didn’t know better, it would seem to me that you are a confederate, trying to make Seattle/NW folks look bad by acting like an ass in defending them?

    Was that your purpose? Were you being clever trying to make Seattle/NW folks look bad by pretending to be a thin skinned resident? Shame on you for trying to make all those Seattle/NW folks look like thin skinned asses.

  14. November 22, 2009

    Fight! Fight! Fight!

    But getting back to the matter at hand, I like the two uses of the word “solution” up there. There is “solution” in the sense of Correct Technical Fix that is the best policy all around and will likely bring an end to the problem, and there is “solution” in the sense of Available Option.

    California’s problems are the USA’s problems writ small in so many ways. Note the pernicious effect of the supermajority requirement.

  15. November 23, 2009

    “The proposition system itself needs to be ended.”

    Right. We should end voting, too, because after all Bush got elected in 2004, and the Governator was elected twice.

    We also need more censorship. When Germany had to face the fact that, post-WW2, Nazi concepts were not alltogether discredited at all, they just made all public expression of it illegal. *That* sure changed people’s minds.

    You do democracy with the people you have, not the people you wish for. Or you don’t do democracy. The Senate was born out of the “protect the people from themselves” approach, and we can see how that worked out.

    The problem is not the proposition system. The problem is the sovereign, and if the sovereign does not learn, then it does not matter how democractic or undemocratic a system channels the sovereign.

    You know, for being idiots and all, the teabaggers at least go outside and yell. There is far too little of that going on, and maybe *that* is the root of the problem. For all its faults, the proposition system is at least inspired by the concept that voting matters. The fools could recall the Governator if they wanted to, and repeal the propositions – the problem is that the fools still do not want to.

    Maybe declare martial law and “make them do it”?

  16. Ian Welsh permalink
    November 23, 2009

    Direct democracy doesn’t work well. Representative democracy has its ups and downs, but I can’t think of any place larger than a city state where direct democracy has worked.

  17. Formerly T-Bear permalink
    November 23, 2009

    Direct democracy doesn’t work well. Representative democracy has its ups and downs, but I can’t think of any place larger than a city state where direct democracy has worked.

    Canton’s of Switzerland ring any bells?

  18. Ian Welsh permalink
    November 23, 2009

    And the population of each is?

  19. November 23, 2009

    Best choice, IMO: some variant of proportional representation in a British-style Parliamentary system.

  20. Formerly T-Bear permalink
    November 23, 2009

    Wiki population of Switzerland stands about 5,990,000 Swiss, 1,60,000 Foreign (estimated 2007, next census 2010)

    Wiki politics of Switzerland: http://en.wikipedia.org/wiki/Politics_of_Switzerland

    See wikipedia for detailed explanation of political structures and workings of Swiss Federal government. IIRC the cantons and local governing is by direct democracy, the federal structure is built upon that (by representatives).

  21. Ian Welsh permalink
    November 23, 2009

    yeah, the Cantons are direct democracy, but the higher structures aren’t, and the cantons aren’t that large. Mind you, 5.9 million is still a a fair bit less than California’s population.

    I think there’s also something for the statement that it takes an educated population that takes the responsibility seriously to run a democracy. This is even more true, I think, for direct democracy.

    Certainly America’s founders believed that, in any case.

    I think a case can be made for breaking California up into 3 or 4 states. Let the wingnuts have their own state or states. Northern California would start off Republican, but I bet you it’d become Democratic pretty fast.

    Another option is to simply have the Federal government declare that it’s not a Republican form of government since a small minority has hijacked it, and take over for a few years. The problem with giving aid to California from the federal level is that they won’t make fundamental changes.

  22. Formerly T-Bear permalink
    November 23, 2009

    An Educated population is required for just the republic form of government which may be explanatory for the vote being restricted to property owners in the early republic, your probability for finding educated voters in that segment would have been the highest at the time. The blood sacrifice of the Civil War extended the suffrage to all males and introduced and fixed “democratic principles” to the republic. That suffrage was later extended to all citizens, the last knowledge based barriers to the vote fell as a result of civil rights abuses. This condition allowed the conjunction of religious and political belief that usurped governmental power, abdicated governance, and destroyed consensus of the political process thereby empowering their bankrupt ideology, the shambles of which plague the body politic today.

    It may be the only solution to be had, but restricting the vote to educated, capable citizens should be looked at. It is certainly detrimental to the republic to allow those rationality is overwhelmed by belief to have any hand in any decisions of a republic. Let those so overwhelmed have their voice heard in their denomination. The choice: Citizen or Believer, your call.

    Suspending the California constitution until it can be re-written and bring the state back into order does seem to have merit. Political hijacking by a minority must be strongly rectified. The fear is, the level of education, (let alone maturity) is totally insufficient to establish let alone run a democracy, just the fact of valley girls says it all.

  23. mommybrain permalink
    November 24, 2009

    Fix the potholes.
    No new taxes.
    Educate my child for free.
    No new taxes.
    Save my house from the flames.
    No new taxes.
    Incarcerate the bastards forever.
    No new taxes.
    Save us from ourselves.
    No new taxes.

    Shame on us.

  24. December 3, 2009

    “Direct democracy doesn’t work well.”

    Granted. Representative democracy, at that, does not work well either. As Churchill had it, even “democracy” is not doing that well, except for all the alternatives. The only times “democracy” and “republic” worked reasonably well was in slaveholder societies (Athens, Rome), where an enslaved majority facilitated the full time citizen.

    “The proposition system itself needs to be ended.”

    Now that is a somewhat different statement than the first. Direct participation does not work well, granted – does that mean you give up, or try to fix the structures?

    This is really the key question – how stable is your open society? I view this with respect to its ability to reform itself in the absence of crisis – electoral college, Senate, ranked or rated voting – its ability to reform itself during or following a crisis – is there a corporation-proof representative democracy – and the likelihood that it will sustain after the generation that build it fades.

    James Kwak over at Baseline made this point about Too Big To Regulate and lobbying-proof regulation, and it is a textbook case of open societies requiring “evolutionary stable constitutional strategy” – mechanisms that prevent the inevitable rot leading to money counting as “free speech” for corporate “entities”.

    The founder’s key idea was that accountability is the key to counter power accumulation. Accountability requires transparency and the ability to intervene – maybe not to make the law, but to abolish it, maybe not to replace the representative, but to impeach him. Transparency requires a fourth branch of government – an Information Age/Information State structure building on the FOIA that replaces a commercial “free” press and mass media, mandatory record keeping and disclosure, constitutional prohibition of long term state secrets etc. But intervention, ultimatel, has to be in the hand of the people – the example of Issa leveraging the California mob to facilitate the replacement of one corrupt governor with another. In your verdict on direct intervention in democracy, you are not distinguishing between the arduous process of creating policy – which requires experts and representatives, and all the corruption and need for accountability that travels with it – and the unfettered, unhampered ability of the people to end the career of a representative.

    Yes, it might still not work, but then, nothing else will. In the land of the morons, the crooks will always rule. No structure, no constitution is fool-proof. I do not believe that Bush would have been impeached if impeachment had been in the hands of the people, but I do believe that if only a sizeable minority would have been required to launch a nationwide referendum on Bush, we would have at least seen that vote, and all it implies.

    Right now, the problem is that the representatives are ignoring the people, even when the people are actually maintaining some kind of strenuous hold on comprehension of their own interest. That problem has to be solved before there is reason to worry about any actual or perceived imbecility of the voting majority. That does not mean we have to do away with the idea of representatives, but in my view it means that we should extend, not end, the ability of the people to censure, recall, and ruin representatives. Those that strive for power do not deserve our protection – the decent, even if mistreated, do not require it, and the bad could have it only at our peril. If you commit to civic duty at the highest levels of power, know that it is a self-chosen duty, not a privilege, and know that you are placing yourself outside civilized society.

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