Golden State Blues

Just over three months into the presidency of Barack Obama, the mood of the country has shifted dramatically from the deep pessimism that pervaded the nation at the turn of the year. More Americans now believe that the country is heading in the right direction than in the wrong direction -- not because the economic storm clouds have passed, but because they see strong leadership taking on the nation's challenges head on.

Yet, in California, the voters' mood about the state's future remains decidedly sour. While Californians are increasingly positive about the nation's future, less than one in four of the state's residents believe that the state is headed in the right direction. It's ironic given the innovation, energy, and optimism that have always defined California. Yet, the vast gulf between Californians' perceptions of the nation as a whole and the state should hardly be surprising. For when they look to Washington, they see a president and a federal government forthrightly confronting the nation's ills. But, when they look to Sacramento, they see a governor and state government that have consistently failed to honestly address the state's chronic fiscal disarray.

In 2004, Governor Schwarzenegger promised voters that the state would rip up its credit cards and balance its books if they approved his deficit borrowing plan and rainy day fund proposal. The voters did just that and what they got in return were budget deficits in five of the next six fiscal years and a whopping $25 billion in debt. To add insult to injury, when the economy cratered and the state's failure to balance its budget in the boom times left the state with no running room, the governor pushed through a budget that gave billions in tax breaks to big corporations and stuck working families with a bundle of regressive taxes and cuts to education and critical services.

Against this backdrop of distrust and disappointment, Schwarzenegger and much of the state's political leadership are asking the voters to approve Proposition 1A on the May 19th special election ballot which they promise -- once again -- will ensure that the state never faces deficits again.

Yet, the voters are balking -- and, with good reason. Despite the governor's claims, Proposition 1A will not solve the state's structural budget problem and, in fact, will make it worse. The non-partisan Legislative Analyst is projecting that, even with the passage of Proposition 1A, the state will face an annual deficit of over $10 billion in 2010, increasing to a staggering $26 billion by 2013.

Instead of making it easier to balance the budget, the measure would put the state in a tighter fiscal strait jacket by locking complex and confusing autopilot budget language into the state constitution. There's no question that the state's outmoded budget rules have made it nearly impossible for even the best of legislative leaders to craft responsible budgets -- piling on more unworkable strictures makes no sense at all.

But the damage does not stop there. Proposition 1A will hinder critical investments in colleges and healthcare and will stop the state from restoring vital programs when the economy bounces back. And, by requiring that money be put aside in a rainy day fund even though the state is already taking in less money than it is spending, it will deepen California's budget woes.

Proposition 1A is not the change we need. If California is to resolve its chronic budget problems, there are two straightforward, real changes that are needed: replacing the requirement that budgets be approved by a two-thirds majority with a simple majority vote to end to tyranny of an extremist minority and then actually adopting a balanced budget that meets California's 21st century needs.

Our national sense of hope and possibility has been lifted by the new-found willingness in Washington to tackle big problems with real solutions and reforms. Only when Californians see Sacramento confronting the budget mess in the same way will the optimism so vital to the Golden State's resurgence be restored.

Phil Angelides served as California State Treasurer from 1999 to 2007 and was the Democratic nominee for Governor in 2006.

 

Follow Phil Angelides on Twitter: www.twitter.com/ApolloAlliance

Comments

[nee]

CA residents are the highest taxed in the nation. They need to cut the retirement pensions of all CA employees especially fire and police departments. We need to deport all ILLEGAL ALIENS and save the BILLIONS we are currently spending to educate and provide health care to people who don't belong here. VOTE NO ON 1A -1F!!!!!!!!

[The Ghost]

California is the GREATEST PLACE on EARTH!

If you don't support your state, MOVE!

[nee]

"support my state" Hell yes I support my state but I also have to support myself and my family. The state doesn't need anymore of my money. They need to make ends meet with the money they are given.

[larry278]

Don't even think of getting Mejico to take Ca back. The USA would have to give Mejico at least $300 trillion to even talk about it. Gov Perry of Tejas talks of seceeding from the USA during his increasingly frequent episodes of demential & foot in mouth disease. Then there are NM, AZ, CO, NV., CO Hold on, we'd be rid of Sen Reid & Sen McCain if we got rid of all of these states. That idea has possibilities. If Mejico would take these states, right now, we get shut of them, for good.

[zizyphus]

Just legitimize cannabis and tax it like any other commodity. Your budget shortfall would disappear.

[greg32]

"the governor pushed through a budget that gave billions in tax breaks to big corporations and stuck working families with a bundle of regressive taxes and cuts to education and critical services"

"Critical services"?? That is a joke, this state has been crippled with mass entitlement programs enacted by the far left democratic state congress. Businesses, small and big alike, are getting the heck outta dodge because the taxes implemented to pay for all these programs has gone beyond ridiculous.

[WASanford]

Good riddance, I say!

[The Ghost]

Don't let the door hit you on the butt, greg32 !

[Indubio]

Not so anyone would notice it. California has too many people and too much money. I don't expect many are going to leave and those that don't care to be socially responsible can leave as far as I'm concerned. They aren't going to find the grass greener anywhere else because every state is facing major budget issues and will have to raise taxes.

[nee]

If we deported all of the ILLEGAL ALIENS we wouldn't be as crowded.

[GodBlessAmerica]

What taxes?? I don't know what new taxes have been added, given the 2/3 rule, since Pete Wilson/Willie Brown made a balanced budget back in the 90's.

[inmyhumbleopinion]

I agree with the change to a simple majority, but it shouldn't stop there. We should repeal the whole notion of government by proposition, because all it does is tie up funds and perpetuates short-term thinking. And the first order of business is to throw out Prop 13--the biggest hindrance to the revenue shortfalls we consistently have. Right now, it's a complete shell game, re-allocating existing (but not sufficient) funds instead of figuring out ways to generate more revenue for the state to fund needed programs.

I vote no on all propositions because I don't believe in the idea that getting a list of 200,000 signatures to push an agenda is the way to govern. We elect our leaders in Sacramento to represent us--and if you don't like their performance, vote them out.

[zipowitz]

Repealing prop 13 is nonsense and it has not caused the problems you refer to. In fact it somewhat stabilizes the tax receipts as we would be experiencing huge fluctuations during this current boom to bust cycle. Imagine how much more tax revenue, in one of the HIGHEST taxed states in America, would have been available and our how our union beholden government would have spent had they had it and how much MORE trouble we would be in today.

"California governments at all levels, have more money, after adjusting for population growth and inflation, than then they did prior to the passage of Proposition 13, and this includes schools. For example, in inflation-adjusted dollars we spend 30 percent more per pupil than we did in what some advocates of taxing and spending wistfully refer to as the "golden age" just before Proposition 13."

Also, making it a simple majority would allow those same officials to have simply raised taxes all along without doing anything to control spending. We don't have a tax receipt problem here we have a SPENDING problem plain and simple.

[Indubio]

The only nonsense is any defense of Proposition 13. I was a California voter when this asinine law was passed and voters were told what would happen in the decades ahead. Proposition 13 isn't entirely to blame for the state's woes but much of the problems faced are the result of this law. And if you are going to cite statistics then you had better cite the source. Money issues aside, does anyone really believe that funding education and local governments through state dollars is a good idea? Not only is it inefficient but any semblance of local control is lost. Proposition 13 represents a throwing of the baby out with the bath water approach to governance and as far as I'm concerned California taxpayers are getting precisely what they were told to expect 31 years ago.

[WASanford]

I do agree with you, the voters in this state are so indiscriminate that you could pass a proposition to take the ham out of all the ham sandwiches sold here. But, we need to get rid of the super majority requirements to pass money bills, props 3 and 13, and a state proposition would be the easiest way to do that, otherwise we'd need a constitutional convention to accomplish that which would be too dangerous. When I see that prop, then I'll vote yes!

[Indubio]

A significant problem with California government is the proposition process so trying to correct existing problems with propositions seems patently silly. Several years ago, the Stockton Record editorialized that what we need is a Constitutional Convention and a new constitution but until the state defaults on its debts and state government collapses I'm not expecting political leadership to do anything so radical. Instead we get the crap listed on the 12 June ballot and make no mistake it is crap. If 1 voter in 100 has the foggiest clue what these proposition might do it would be shocking.

[GodBlessAmerica]

The Veggie proposition! just kidding

[MatoSka]

Having voted for several of the props, including 1A and 1B, I can't help but see how everyone in this state prefers to vote on the proposition that is not on the ballot, over the propositions that are on the ballot.

Earmarked funds in the budget for approved projects makes the task of balancing the budget next to impossible. Prop 13 needs to go. Local municipalities need to chip in for infrastructure costs to the state. Schools in this state are a disaster already. Seems like everyone gets to have their pet project implemented at the expense of student learning.

I agree that the State Legislature doesn't have any sense of accountability for the consequences of their actions and the budget is just one example. How about we make north-south state highways into toll roads? Now, that's a proposition I'd vote for. (insert ironic wink here ;)

[zipowitz]

This is what the Ca Teachers Association wants you to think. Between K-12 and Higher education together they eat up $53 billion dollars of our budget of which over 80% goes to salaries and benefits.

Prop 13 is protection against a state legislature that wants more and more money. As mentioned, had my property taxes quadrupled over the last 6 years my family would have been devastated. It also keeps anever increasing (my property taxes have gone up EVERY year since I bought) flow of cash going to our government which should help them avoid the boom/bust cycle. Imagine if they made budgets and fixed expenditures based on the income from a prop 13 less state 2 years ago. We would be well beyond the $42 billion deficit now as the revenues would have dried up. Imagine the losses as people re-assessed their properties and taxes went down.

Again, we don't have an income problem here, we have a SPENDING problem.

[nee]

Well my NO on 1A & 1B cancels yours!!!!!­!!!!!!!!!!­!!

[tibetanterrier]

I'm sitting out the special election. The wacko props make me question the need for elected officials

[nee]

Don't sit this one out. We are already the highest taxed state in the nation. We need to tell these jerks to stick to a budget with the money they have. They don't need anymore of our money - they need to use the money they are given wisely! NO on 1A - 1F!!!!!!!!­!!!!!!!!!!­!

[Kungfublood]

The Schwartz should go to prison for steeling the money that California voters said was ONLY to be used for the education of our children!

[JScott]

Everyone seems to have an opinion about Ca. but we have still more people living here than anywhere else in the country. The economic output is 16 largest in the world, it has the highest agricultural output per capita in the country. You can whine all you want but you know you all want to live here.

[mayzebra]

I know I do

[USMCDem]

Our ag output will shrink in the coming years if water isn't released back into the Central Valley instead of being diverted to the cities or wasted on restoration of natural waterways to save the delta smelt. The state is chronically mismanaged by both parties. Because of the gerrymandered districts I don't see any solution to the problems our state faces short of demographic change that will take decades.

[The Ghost]

"wasted on restoration of natural waterways to save the delta smelt"

What , exactly, do you expect the Salmon to eat?

[AnotherunhappyDemocrat]

In addition, Prop 140 needs to go. As much as we may not like entrenched politicians, inexperienced politicians, who must rely even more on lobbyists are even worse. Prop 140 is the dumbest initiative that California ever passed.

[cordyc]

Completely agree. Put an end to "term limits" and pass the budget by a simple majority rule.

When will these be on the ballot? That's change I can believe in!

[The Ghost]

Collect the signatures. Its NOT all that hard.

[overd0g1]

California needs to go bankrupt. Or whatever the equivalent would be for a state.

[Wake-up]

California is a mess because Dems... Liberal Dems have been running this state too long, just like Michigan..­. and that's a fact.

Arnold is a Dem... he only ran as a Rep. to get elected vs. Gray Davis - incompetent Dem...

[SeanOcali]

It always amuses me when people say "that's a fact" - usually they are lying.

[Wake-up]

Look it up... I say "that's a fact" because is indisputable. Dems have run this state. The last real Rep. was Gov. Pete Wilson, left in 1999...

Don't take my word for it, look it up.

[JailNeoconVicts]

Clearly you don't know what you're talking about. Year after year, a majority of the state legislature tries to pass reasonable budget solutions, but are thwarted by a right-wing contingent who have just enough votes to kill it; while their only solution is more tax cuts for the wealthy. Angelides is right. Until it only takes a simple majority vote, or until at long last the radical Republican fringe is minimized to a point it can no longer do damage, the state will not recover.

[Wake-up]

Wrong, just plain wrong...

Dems have run this state into the ground with stupid spends like breakfast for all kids, universal health care for anyone - legal or not and on it goes. Education here is a joke... the Teacher's Mafia I mean Union runs the state like thugs...

There's never enough money... Tax-cuts for the wealthy, give me a break! Sale tax just raised (that's everyone) car license fees just raised (that's everyone).­.. I could go on.

This is the highest taxed state in the US now and still, not enough money.

When will you people wake-up?

"Radical Republican" the only thing radical in this state are the Leftys... Look, this is the perfect Left Wing experiment - Calif. and it's a dismal failure, Chapter 11 is right around the corner.

[nee]

Jail - Here's a reasonable budget solution.- Take the money you are given and make the necessary cuts needed to make it work. Period! We have to do that everyday - the state needs to do it.

[nevergiveup]

Another Republican with no clue why California is in debt.

We are in debt because of the tax breaks that rich people have enjoyed, off shore tax havens and the 2/3rd majority required to pass the budget. Rethugs have been holding California's budget hostage for years with their measly 1/3 of the votes.

Why do Republicans hate their country so much?

[Wake-up]

See above...

You have that last comment backwards.­.. and I'd add - Why do Dems. think the Gov. is the answer? When has it ever been the answer?

Do you even understand how Politics works... boots-on-the-ground works? If you did, you'd be a small Gov. Conservati­ve...

[nee]

If the budget is a good one 2/3 vote would be easy to get. We should never change this law.

[greylox]

**Republicans aren't good for anything but shifting the tax burden from business concerns onto citizens. This goes for the state government as well as the federal government. They use the old "businesses will flee the state" if we don't give them everything they want. BULLSH*T!

[Wake-up]

You knuckle-heads so easily throw this around... "Evil Corporations" and all... it's just exhausting.

What is a corporation(BTW, in the US most of our GDP comes from small business)? It's people... workers getting paid, raising families, etc.

Businesses are fleeing California in droves, I know I live here...

We have the highest taxes in America, how much more would you like - we're already heading for Chap. 11 and the roads here are a mess, the schools among the worst in the US so sure, let's give the Dems in CA more...

You cannot legislate the poor into freedom by legislating the wealthy out of freedom. What one person receives without working for, another person must work for without receiving.

[tbrnotb]

Can I get a shout out for Howard Jarvis and Proposiiton 13?

[anandakos]

If you understood economics you'd know that Howard Jarvis should have been shouted OUT of the state.

[overd0g1]

He saved lots of retirees from being forced out of their homes.

[The Ghost]

What a load of crap.

[JScott]

Oh please all this RWNM revisionist history painting Howard as another saint like Reagain.

GET REAL-Calif. and the countrie's downfall began the instant Reagan became governor and proposition 13 passed and it spread to the rest of the country when Reagan became president.

It;s finally take this long to get some recovery.

[zipowitz]

Wrong again on Prop 13. This impact of it was a boon for CA. Here is an excerpt for an article that was posted at cato.org in July of 1998

“Proposition 13 Then, Now and Forever,” by Stephen Moore

"Proposition 13 ushered in a second California gold rush in the 1980s. California's economic surge in the years following Proposition 13 was to become the envy of the nation. In the 10 years after the passage of Proposition 13, incomes in California grew 50 percent faster than in the nation as a whole; jobs grew at twice the national pace. Even supporters of Proposition 13 never envisioned that it would unleash the spectacular entrepreneurial and commercial explosion that it did over the next decade. ** Did Proposition 13 really starve state and local services? Hardly. In real dollars, California's budget climbed from $55 billion in 1980 to $97 billion in 1992 -- a 75 percent increase above inflation! Only in government would a 75 percent real spending hike be considered inadequate and neglectful. What about revenues? In the 1980s state tax revenues as a share of Californian's incomes actually rose -- from 11 to 12 percent.

Imagine the spending that would have gone on had we not had the protection of Prop 13, as it is we are one of the HIGHEST taxed states in the US and we still have a $42 billion dollar deficit.

OVER spending is the issue here not revenue.

[yaworsja]

Ahhh, that great American liberal petri dish that is California. Like what's growing?

George Will called it out a few days ago. Its rare that you come face-to-face with your future (think the Stewie episode on Family Guy), but America can see its future in California if it accepts modern 3liberalism as a respectable intellectual and political movement.

[EvelynU]

This is a complete misconception about California. Remember what happened to Prop. 8 a few weeks ago--same-sex marriage was voted down. We've had republican governors for most of the past 40 years (Reagan cut his teeth here, remember? And the anti-tax crown tried their medicine here before going on to prescribe it for the rest of the country--Prop. 13. As a result, California is a fading remnant of what it once was. All the infrastructure is going to ruin and the colleges are universities are a mess. It is right-wing anti-tax Republicans who are running our state and ruining it.

[riona]

Isn't the main problem the fact that California legislates directly through referendums all the time, so the general public is legislating instead of elected officials. I lived in CA for a few years, about 8 years ago, and the state governance is basically anarchy. Why blame public officials when their power is so limited by the zillions of propositions the general public votes into law all the time. Specifically, the budget "woes" are part due to the fact that the legislature cannot change a lot of tax law. Property taxes are capped, etc. How, can they raise funds? Anarchy doesn't work-CA is a case study in that.

[plaidsportcoat]

The problem is just what he says. He knows way better than you. He was treasurer for 8 years after all, and if you read his reports, especially 2005 - you'll see. Get rid of the rule of Grover Norquist anti-tax, anti-American, anti-Constitution conservative Republicans who got power because of gerrymandering.
In 2003, Angelides warned that: “A long-term deficit bond runs both the risk of crowding out the state's needed capital investments and testing the capacity of the market”
That appears to be exactly what happened after Schwarzenegger borrowed up to 15 billion dollars in "Economic Recovery Bonds"
Read Angelides and you can see how Scwarzenegger ruined the state:
http://www.treasurer.ca.gov/publications/2005dar.pdf

[aofh]

The problem is that we voters are legislating through referendum and initiative, and have been since 1978 when we passed Prop 13. On its face, Prop 13 was about the steep upswing in property taxes (which should have been a red flag about rising property values but property owners were all too happy about their newfound wealth), but the killer was the 2/3 requirement to pass a state budget ensuring that a minority would control the budget process. The result has been smoke-and-mirror budgets ever since and constitutionally mandated expenditures. Brown, Deukmejian, Wilson, Davis, Schwarzenegger and their respective legistatures have all been playing the hand we voters dealt them and neither the politicans nor the voters have been honest about the reason Sacramento is broken. Fiscal responsibility has no chance of returning to California as long as the budgetary process remains oligrachic. Ideologues are not realist. The absence of compassion is a recipe for poverty.

[zagyzebra]

First, property taxes are not capped. They are restricted by the amount they can be increased each year. If I could get on the phone with the L.A. County Tax Assessor's office, I could tell you exactly by how much.

Second, thank goodness there is a limit to how much prop taxes can be increased on an annual basis. Otherwise, homeowners would be financially crippled by runaway property taxes based on extremely high property values.

[anandakos]

The problem is that you folks in California do the cap incorrectly. We have a population growth plus inflation plus 1% cap here in Washington, and it hasn't destroyed our state's education system as Prop 13 has California's. And we don't even have an income tax.

The difference between yours and ours is that ours applies to the cumulative taxation of all properties in a certain taxing district (typically counties, but also some of the larger cities). The sum of ALL property taxes cannot rise more than the limitation. So if every property in a given taxing district rises 20% in value, taxes don't also rise by 20%. The mill rate is reduced so that the amount levied does not exceed the limitation.

The limitation does not apply to voter approved levies: if valuations rise 20%, the voter approveds DO rise 20%. But they also fall when as now valuations fall. The general revenue levies do not fall when valuation fall; the mill rate RISES to allow the counties to continue functioning. But if population falls -- as it does in some rural counties -- the mill rate must contract since it doesn't take much population loss to beat the recent 1-3% inflation adjustment.

[anandakos]

Continuation of post below:

In California you limit the increase in the tax on a GIVEN PROPERTY. That means that on the same block in very similar houses one family may be paying 1/2 or even 1/3 the taxes their neighbors pay. If family "A" bought a house in the 1970's in which they still live their taxes can have risen only about 40% whereas the valuation has increased by several hundred percent in the coastal counties, even with the recent contractions. The neighbors of family "A" are paying based on the assessment when they bought, adjusted by the allowable cap.

This gives rise to endless bickering and jealousy between people, not to mention shameless gaming of the system through "leases" to what are really new owners.

[WRPrintz]

I voted for you Phil. If California had been smarter, you woudl be Gov. and Arnold would be in the next Terminator movie...I can take the hit on the movie. The state is harder to take.

[nee]

Tom McClintoc would have done a great job.

[Wake-up]

It'll never happen because he makes too much sense...