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.