With the major downturn in the nation’s economy (recession, depression) state and local governments are in deep trouble due to falling tax revenue.
California is perhaps in the worst shape of all, failing to pass its budget by the June 30 deadline because it could not find the revenue to balance it and is now facing a $26.3 billion deficit. Now the state plans to start issuing its creditors and even some social program recipients, as I understand it, IOUs.
But the bad economy is more what pushed California over the edge than the main problem.
And I don’t know exactly what the problem is in other states, but perhaps they’re similar.
Why is California government so screwed up? Well here is some pretty good shorthand (or longhand) for how the state has wound up in the poor house and has become dysfunctional:
Back in 1978 a the majority of voters got sick and tired of various mostly liberal-inspired state mandates concerning the micro managing of local government that cost their local governments money in order to comply with and therefore made their property taxes skyrocket each year. Well actually, they were against the taxes, not sure about the first part.
So how do you stop the programs? Starve the beast. Take away the source of revenue. So the property tax limiting Proposition 13 was passed, and that started the ball rolling, with similar measures past in other states.
But the mandates did not stop. California state government still demanded that local governments comply. Basically it has do do with such things and how many jailers you must hire or what kind of service you must provide through your county health department, and there is much more.
Well now that the counties (and therefore all local government) had taken a major hit on their property taxes through Prop. 13, they pleaded inability to provide services. In turn, the state over the years came through to some extent with funding (not total funding, but a lot). Local government is supposed to be in charge of things local and directly answerable to its local constituency. Problem was, now that the local governments could no longer simply hike property taxes to fund their operations they had to depend upon state money and they had to comply with state mandates. Local governments began charging all kinds of fees for service, which were often challenged as illegal new taxes, a 2/3 vote provision having been passed to further limit taxes (I think that was part of Prop. 13). But the state does not just hand out money with no strings attached. It requires that money be spent according to its policy.
Schools are part of local government (in an indirect way), so they suffered from Prop. 13 as well. But over the years the state stepped in with more school funding and even guarantees in law that x amount of money must be spent on schools – I believe the state has had to suspend that at times.
Because money could no longer be raised at the level of government where it was needed, the state government became all powerful. At the same time various interest groups pushed through legislation that mandates a certain percentage of the state budget must be spent in specific categories. That of course is nonsense. If that was a workable scheme there would be no need for legislative bodies, from city councils to the state legislature itself. You could simply draw up a constitution and a thick code book that specified where each dollar is to be spent – no need for flexibility to meet changing circumstances, desires by the public, and realities of an ever-changing economy.
So what we have ended up with here in California is emasculated local governments, with the problem compounded by the fact we have a dysfunctional legislature where Republicans and Democrats flat out refuse to work together. California also has a strange habit of electing Republican governors with Democratic legislative majorities. Where I live in the hinterlands, Republicans rule, although Democrats once held some sway decades ago when there was more organized labor and fewer urban area transplants who have a habit of turning from fairly liberal to strongly conservative once they get theirs and decide the best way to keep it is make sure no one gets any part of what they have.
And when I write such a thing, readers probably think I am suggesting that someone should want to give up what they worked for through higher and higher taxes. Not so. I am just making an observation. I have talked to enough people and heard enough comments and read about this enough through the years to know this is a phenomenon. My most recent contact on this issue was with a retired fireman from the Bay Area. He said that during his working career he voted the union ticket, which was Democratic. The Democrats supported organized labor. He made big money, he brags. He bought property up here in the north land and enjoys the rural life and fishing Shasta Lake (and he fought cancer and recovered, thanks to liberal union insurance paid for by the public through tax dollars, and was automatically as a firefighter assumed to have suffered from job-caused illness, thanks to liberal interpretation of workers comp). He is also a solid tax-hating conservative now. Makes off-color Obama jokes. I think he is typical of the breed. Being liberal (supporting organized labor) was good when it helped him personally, after that, no so much, in fact, not at all. But whether I agree with his stance or not I understand it. Politics is politics and it is often not a bit altruistic. I once told someone who did not seem to understand why anyone would vote for a Democrat: sometimes you try to just figure out who would best represent your own personal interest, even if you think someone else might have good arguments, and vote accordingly – well I said something like that. He just nodded his head.
Okay, so I got off the point. But anyway I think a first step for California is to elect a new governor who is not afraid to use the line-item veto to balance the budget.
Then Prop.13 has to be re-examined. One major flaw in it is that there is a commercial property loophole that allows owners to circumvent re-appraisals that usually would trigger tax hikes (not sure in this economy), while there is none for residential property.
Actually Prop. 13 is terribly unfair, resulting in next door neighbors with homes of equal value paying far different tax bills. Property taxes have gone up each time a property is sold and re-appraised, whereby original owners pay tax bills that have been severely limited to a one percent increase each year (and Prop. 13 is complicated, so I may not have that exactly right, but suffice to say an old-timer pays a low low bill and a newcomer an extremely higher bill). But unfair or not, Prop. 13 seemed necessary back in 1978 because many folks on fixed incomes were being taxed out of their homes, partly because of those state mandates.
Of course the problem is that voters always want more than they are willing to pay for. And that’s another major problem. The state is indebted for massive amounts of money because of liberal spending combined with a reluctance or inability to raise tax revenue. And maybe I shouldn’t have used the word liberal. Both so-called liberals and conservatives pass spending bills without concurrent funding or they base financing projections on the ability to borrow.
It would help if more power, and that would mean taxing ability, were returned to local governments. Then local voters would have both the right and ability to decide at what level services would be provided and the direct responsibility for paying the bill that goes with it.
During most of the time I covered local government for newspapers it was a sad sight to watch elected officials throw up their hands and say: “we have no authority to cut services or raise taxes”.
And that is tragic, because local government is the only place where a citizen can appear and be heard and expect that someone might even listen. Once things go beyond that, it’s mostly in the hands of lobbyists.