Who Ruined California?

Driving across the Golden Gate Bridge on a gorgeous afternoon, it's hard to imagine that California's economy - the world's tenth largest - is teetering on the brink of ruin. Nonetheless, California has a budget crisis that will drastically change the quality of life in the Golden State. Who's to blame?

Many observers fault Governor Arnold Schwarzenegger. Democrats and Republicans expected the "Governator" to bring legislators together on key issues, particularly the annual struggle to balance the state's budget. Sadly, the hulking movie star proved to be an untrustworthy negotiator, who often appeared to be looking out for his own interests rather than brokering a compromise beneficial to California. As a result of his ineffective leadership, the California budget crisis has deteriorated into a three-way battle, where neither Democratic nor Republican lawmakers respect Schwarzenegger.

On the other hand, many Californians blame the legislature. The latest California registration statistics show Democrats widening their lead over Republicans, 44.6 percent to 31.1 percent, with 20 percent "decline to state" and 4.4 percent scattered among other Parties. Republicans don't have a majority of registered voters in a single congressional or legislative district. As a result, Democrats have a commanding but not compelling majority in both the state Senate (25 to 15) and Assembly (51 to 29). In most states, this numerical superiority would permit Democrats to pass whatever legislation they desire, but California is one of only three states that require a 2/3rds vote to pass a state budget. Republicans have used this rule to block all attempts to pass budgets with tax increases. Typically they play a game of "chicken" with their Democratic colleagues and after days of a stalemate, Dems cave in and meet Republican demands.

Many political pundits believe California is ungovernable, noting that our coastline is 840 miles long and 37 million people are spread over the Golden State's 164,000 square miles. The coastal counties tend to be heavily Democratic, while those to the east favor Republicans. Voters in Berkeley view politics from a radically different perspective than do those in Palm Springs.

Nonetheless, while California's decline can be blamed on Governor Schwarzenegger, the legislature, and the size and complexity of the state, the primary responsibility falls on the voters.

Although Californians have historically been narcissistic, their self-centeredness didn't affect the state's finances until 1978 when Proposition 13 was passed. The "People's Initiative to Limit Property Taxation" capped property taxes at one percent of assessed value and mandated that increases would require a two-thirds majority at both the state and local level. The "taxpayer's revolt" signaled the beginning of "free beer" myopia, where residents of the Golden State believed they could continue to enjoy public services without paying for them.

The consequences of proposition 13 percolated throughout the state's economic and social systems. The California education system deteriorated to the point where it is now ranked 47th in the US. Pundits have characterized the consequences of proposition 13 as the "Mississippification" of California. For the past 30 years, governors and legislators have tried to keep California's financial house together by a series of tricks, most often borrowing in anticipation of future revenues. That worked as long as the California economy was strong, but the recession toppled the Golden State's house of cards.

Faced with a $28 billion budget deficit, California's Democratic legislators now have no choice but to dramatically reduce services. Given the necessity to have a two-thirds legislative majority to pass a budget, and raise taxes, Dems will be forced to make drastic cuts because it won't be possible to increase revenues. California's austerity budget will have draconian impacts on state services: school and park closings, suspension of road repairs, parole of thousands of inmates, cessation of medical and social support for the needy, and on and on.

While the budget crisis will eventually affect all Golden State residents, it will have the greatest impact on those who live in poorer communities. Residents of Beverly Hills will find money to repair their streets, pay their public-safety personnel, and retain reasonable class-sizes in their public schools. That's unlikely to happen in poor communities such as South Central Los Angeles. As a result, the differences between the rich and poor will be accentuated.

There's a way out of this mess, but it will take time. In 2010, Schwarzenegger will leave office and Californians will have an opportunity to elect someone who is actually a leader, as opposed to an actor who occasionally plays the part. In the same election there will be a ballot measure that changes the budget rules to allow passage with a simple majority. Those will be necessary but not sufficient conditions to halt California's descent into mediocrity.

Californians have to open our wallets and pay for schools, parks, roads, public safety, and all the other perks we've long associated with living in the Golden State. Our choice is to either to act like adults or resign ourselves to living in a third-world country. Albania here I come.

Comments

[TJCole]

Californians Dude..that­'s who...?

[joetherealist]

"...Dems cave in and meet Republican demands." That's it in a nutshell, folks. By the way, I blame Darell Issa, he is the repub that got the ball rolling to recall Governor Davis, who by the way looks like a genius now compared to Uncle Ah-nold. Bring on Governor Newsom!

[prdZ3]

I'm an outsider (PA), but Schwarzenegger is the only one who makes any sense to me. You already have the highest, or at least one of the highest, state income taxes in the US. You raise taxes, anybody with any money will move to Nevada or Washington, which have 0% state PIT. In short, you guys are up a creek. Hopefully your fiscal irresponsibility doesn't spread East.

[Osusuki]

Somehow, we could tell. Personally, I could stand it if some of the freeloaders here moved to Nevada or Washington--only in those two states, their corporate income tax, property tax, sales tax and generally unfriendly business climate would send them screaming back in a day or two. And in case you missed it, the "freeloaders" noted above are the fat cats who have all but killed this state with their voter initiatives.

[joyf1]

Years ago a family member who lived in a quaint town in Massachusetts voted to roll back property taxes. The measure passed. The celebration ended quickly when their 3 times a week garbage pick-up was reduced to once a week. (they screamed about the smell in their garage.) The very nice park in town was shut down. They also turned off the street lights. Now they walked the dog with a flashlight. What did they think??? These services were free? All this stuff costs money. I told this family member that if they couldn't afford the taxes, then they couldn't afford the house. Pogo said, "We've met the enemy; it is us."

[nee]

Who the heck needs their garbage picked up 3 times a week????????

[MajorKong]

So how's that Gray Davis recall thing working out for you guys?

[wm1066]

Well to be fair, that was a right wing takeover of Democracy, Cheney and his secret meetings were responsible for the Arnold takeover. I don't think the Cailifornia voter had a chance to stop it.

[Osusuki]

I disagree. Certainly, the Bush-Cheney-big oil mafia pushed hard and did some things that would make Nixon blush to get Schwarzenegger elected, but in the end, the sheep in the cheap seats have to take the blame. They messed up, and most of them are still too busy clinging to their guns, religion, and tax shelters to realize it.

[DoTheMath]

Hey, it wasn't my idea. I didn't vote for it. And unlike some mathematically challenged California Democrats, I voted for a Democrat in part two of the recall, the part that allowed everyone to vote on a replacement for Davis, even if you voted against the recall.

[dynwitch]

The only moral thing to do is pay more taxes. Otherwise you are passing on massive debt to your children and grandchildren.

[nee]

The only "moral" thing to do is CUT SPENDING! Is it "moral" to spend more than you have?

[Osusuki]

It is certainly "immoral" to turn down the increases in revenue you need to cover your debts.

[upton]

"The consequences of proposition 13 percolated throughout the state's economic and social systems. The California education system deteriorated to the point where it is now ranked 47th in the US. "

Which implies that, as a result of 13, spending on the CA school system was cut drastically leading to the poor ranking.

So Bob, how much money was cut from the school budget as a result of prop 13? (I'll give you a clue, less than zero)

[The Ghost]

How many students have been added in the last thirty years?

You're logic is fundamentally flawed. One would assume you are being disingenuous.

[nee]

The number of students enrolled in CA schools has dropped.

[research]

and California went from #1in education to

47th k-12 and similar across the board.

Mission accomplished.

[Chernynkaya]

Some of the commenters on this story claim that "California is the highest taxed state already," and that we should not waste taxpayer dollars.

So I wondered if that's true and Googled it and Forbes says that the highest taxed states are (I forgot the order): HA, VT, PA, CTN, WY,MN,NJ, MA,WA, and NY. Not even in the top ten! Get your facts straight, Republicans.

[upton]

The WSJ rates CA #2, behind NY

[The Ghost]

If that were true, we wouldn't be broke.

[aofh]

California ranks very high in tax rate but in collection it ranks about 17th. The greatest part of what is collected is paid through income tax with the wealthiest paying the greater portion followed by the rest of us and then business (about 8%). Looking at the tax rate is probably misleading. Looking at the collection rate probably does better in explaining California's tax problem.

[Chernynkaya]

Thank you.

[johnqsittinzen]

Could we get a voter initiative on the ballot to end voter initiatives once and for all?

[The Ghost]

It's part of the constitution, put there to counter the influence of money on legislators. A Constitutional Congress must be called.

[upton]

Just so i understand the thesis. CA, currently the state with the second highest tax rate, will solve its budget issues by increasing its tax rate?

[The Ghost]

Anyone who thinks money is more important than people is immoral.

[Rayme]

Anyone who thinks that government can act responsibly with other people's money has not been looking at our country's deficits. Higher taxes will just give them more money to waste.

[DoTheMath]

Listen up, folks. What is happening in California could happen to you, too. The basic force behind the events described in this article is the refusal to admit that we need government to provide shared protections and services that we cannot effectively provide for ourselves individually.

Whether you are rich or poor, the government is doing something that you would miss if it did not exist. Or maybe you wouldn't miss it because you wouldn't be here to miss it.

The idea that we can just oppose taxes, in general, in advance, without stopping to look at what we need, how much it costs, and much we have, does not make any sense. You can't even SAVE money that way. You save money by managing it well, not by making sure you don't get any or use any.

California is threatening to stop paying for children's health care. If that happens, California will lose two federal dollars for every state dollar it would have spent, and children will still need health care. Their health care will cost more because they will end up in emergency rooms. This is just one example of penny-wise pound-foolish budgeting.

What is happening in California now is the logical consequence of the anti-government, anti-tax movement. Keeping taxes as low as possible and making government efficient are worthwhile causes. Pretending we don't need government at all is stupid.

[Chernynkaya]

California will not overcome voter apathy until, like an addict, we hit rock bottom. Forgive the biblical reference, but look how bad things had to get with pharaoh until Moses could incite the Hebrew slaves to leave Egypt.

We are almost there. Our schools are an outright disgrace, and almost all social services are being cut to the bone. Wait 'til there are NO services at all, no Medical, no teachers, no infrastructure, polluted coastlines, no state disability, longer and longer lines at the DMV, no state colleges, no departments of building and safety, etc.

Maybe then we (or a simple majority of us) will wake up from our warm-climate torpor and decide that paying taxes for what we need isn't such a bad deal after all. Oh, and throw the bastards out.

[Breakwind]

California is a classic example of big government run amok! Dump your welfare, kick out your illegals, and spend within your means. No public servant should have medical insurance or pensions better than the ordinary average working stiff. California needs a big dose of reality.

[sammydad]

I'm a teacher (a public servant) and I have a Masters degree. I don't deserve to have a pension or insurance for all of my hard work? What kind of job do I have to have to prove to you that I deserve to have benefits?

[nee]

He didn't say you don't deserve one he said." No public servant should have medical insurance or pensions better than the ordinary average working stiff. " Police, fire, and prison guards get around 100% of their pay when they turn 50. Is that fair?

[1sparrow]

i have lived in california all my life. the california college i graduated from had palatial buildings that were built to last 700 years. one of the most desired jobs when i went to school was to get a job in that school. i was aware of high state taxes, and i witnessed incredible growth of churches and non-profits because of simple non-taxable status. i also scrimped and saved all my life -never had kids- never believed they would have a future. in hindsight i was correct. every decade living dwellings become smaller and walls become thinner. i could not afford to go back to that college now, all prices and costs are unattainable. obviously it is all about greed. i don't believe any higher taxes will help anything. we don't know where all the money goes now. i just wana smoke some good legalized bud and dream i live in a college studio- soundproof, bugproof, and the walls or ceiling will never crumble and fall.

[ejhickey]

Why are States necessary anyway? If we did not have State governments, then we not not have an extra 50 governments getting themselves and the rest of us into financial trouble. Personally I think the Federal government should just take over California ad put some people in charge who could straighten things out. This approach seemed to work fine for GM and Chrysler. Why not try it with a State government?