Time For The Fright Lists


Posted on 11 April 2011

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By Peter Schrag

So now all of Sacramento is going to have budget crisis road shows – Jerry Brown, the Democrats, even the Republicans. And they’re all going their separate ways, literally and figuratively.

But at bottom there’s still the same old question: How much pain and inconvenience will taxpayers have to suffer before they understand that there’s no such thing as a free lunch? How many potholes and unsafe bridges; how many cancelled university classes; how high the tuition; how short the school calendar; how slow the response from the fire department, how long the wait at the DMV? Or do we simply not care?

The governor, said GOP Assembly leader Connie Conway, is trying to scare people by trying to tell them that the budget deficit either requires even more severe cuts than the state has already made or the tax extensions the governor wants.

That’s a false choice, quoth she, "It's disingenuous to scare people." You can fix it all with fiddles and efficiency.  And pigs can fly.

The governor and his fellow Democrats say they’re not trying to scare people, just going to tell the facts, though he’s also said -- as he did at a meeting of the Service Employees International Union the other day -- that the worst case scenario [meaning no tax extensions] would be really ugly. He also says he’s going to focus on Republican districts and is urging his backers to “hug” a Republican. That’s not quite like saying kiss a frog, hoping he’ll turn back into a prince, but close enough.

Darrell Steinberg, the president pro-tem of the Senate, meanwhile, is saying he won’t support closing all of the remaining $15 billion budget gap with just cuts alone. That almost sounds like he may be preparing to sidle up to yet another round of gimmicks, denials and deferrals.

In truth, they should be scaring people. A lot of people on what’s now called the left (and once would have been centrists) say the mistake was made back in 1978, the last time Brown was governor, when the state bailed out the locals after Proposition 13 cut property taxes by some 57 percent.

Maybe if the voters had felt the effects of the tax cuts they voted themselves then, they might have had a different perspective. Instead, the governor and legislature launched a thirty-year era that taught voters (1) that they could cut taxes with impunity, as Howard Jarvis, the curmudgeon who co-authored Proposition 13 promised and (2) that the local governments had a moral right in perpetuity to the state’s largesse.

And so instead of hugging Republicans, the governor and the Democrats now seeking those modest tax extensions – and, were they real realists, a lot more – should be reminding all Californians of these other things. Among them:

  • That like the rest of the country, the wealth and income gaps between the richest and poorest Californians have grown dramatically in the past thirty years, and that public policy, rather than restraining that growth has helped drive it. Contrary to the conventional wisdom and right wing rhetoric, Californians in the lowest income brackets pay a larger share of their income in taxes than the most affluent. In the vernacular, we are screwing ourselves to protect the rich.
  • That California differs from all but a handful of other states in the fact that Proposition 13 requires a two-thirds majority in each house of the legislature to raise taxes (and it seems even to submit tax extensions to the voters) but only a simple majority to lower them. Inevitably that creates a ratchet effect which tends over time to lower taxes. And as we must all know by now, that gives a legislative minority a veto on policy, produces uncertainty and gridlock, and invites irresponsible behavior by both the majority and the minority.
  • That California is unique among the states in the degree to which the state generates revenues that are then handed to the locals to spend. As political scientists Bruce Cain of the University of California and Roger Noll of Stanford recently put it in a recent article in the on-line California Journal of Politics and Policy:

The state spends less than the average for other states, but local governments spend much more. High local expenditures are financed by revenue transfers from the state that account for about 40 percent of the state’s budget. The cause of California’s unusual fiscal relationship is decades of initiatives that more severely constrain local revenues than state revenues.

The state has responded by creating a system of state-local transfers that allow local governments to face a form of soft budget constraint, leading to excess local spending and lack of clear accountability for the state’s recurring fiscal crisis.

That “unusual fiscal relationship”, too, is an invitation to governmental irresponsibility and something that Brown, political reformers and “realists” of all stripes should be talking about. The governor wants to realign state and local governments, and eliminate local redevelopment agencies, but seems to have forgotten that crucial fact.

By now the list of possible – or even necessary – cuts to get the budget in balance without the taxes is hardly news, though one reporter still described it as “surreal”: close one or more UC campuses; fire thousands of teachers and  shut down the schools a few weeks early; cut cops, close prisons.

Republicans call it a fright list. Yet even Legislative Analyst Mac Taylor last week made a proposal, first advanced by Pat Callan, the former director of the National Center for Policy and Higher Education, years ago that might make sense even in good times: Convert some UC campuses into liberal arts colleges and stop trying to maintain full service Berkeley-type research universities  in ten different places. That should get a little attention down Merced and Riverside.

What’s certain is that these are not surreal ideas, and they’re not fright lists. If California means to get off its treadmill of fudges and deferrals without taxes, there’s no way other than the bloody road. The faster those road trips can bring that home, the better.

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Peter Schrag, whose exclusive weekly column appears every Monday in the California Progress Report, is the former editorial page editor and columnist of the Sacramento Bee. He is the author of Paradise Lost: California’s Experience, America’s Future and California: America’s High Stakes Experiment. His new book, Not Fit for Our Society: Nativism, Eugenics, Immigration is now on sale.

Victor Hanson presents a contrasting viewpoint in his article of yesterday, The Razor’s Edge - California in the Balance. Look it up.

With regard to Californians in the lowest income brackets paying a larger share of their income in taxes than the most affluent, it should be asked which group actually contributes more to the government coffers after government services are factored in. It is telling that liberals only see one aspect of the situation. If from the total taxes (property, sales, income, etc) put in by each group are subtracted the costs of services - education, welfare, health care, public safety,etc - what is the result. Until I see those numbers, I'm not at all swayed by the Fair Share refrain. You can add in the products and services contributed by each group - the result will not be different.

California's problems didn't exist 60 years ago when the state had half - less than half - its current population. What happened?

OK then. lets ask ourselves how much the rich benefit from a functioning government...

1. they don't have to worry about the rabble coming and forcibly taking their physical or intellectual property
2. they have a functioning court system that adjudicates their disputes
3. they get an educational system that ostensibly provides them with a future workforce (and future demand).
4. they get infrastructure investment.

in short they get lots and lots and need to pay more.

Good start, Alex. You've laid out some points for discussion. So - suppose that:

1. With respect to the rabble taking their property, suppose that the rich agree to fund law enforcement? Of course, in the 19th century, they hired Pinkerton. Not that I'm recommending that approach today. How much would it cost to fund local law enforcement? Not much.

2. With respect to Courts, again, it wouldn't cost that much. And with money, Courts can be bought.

3. Education (K-12) is an entirely different matter. First, public education is frightfully expensive, inefficient, and ineffective. Second, the rich send their children to private school. Third, the inner city public schools are not a prime source of workforce talent. What possible benefit is it to those on the peninsula to fund schools in Oakland, inner city Los Angeles, Richmond? 60 years ago each community funded its own schools, and things worked out well. After Serrano, it was one disaster after another.

With regard to higher level education: that is a really complex matter involving social engineering, highly compensated professors, open admissions, . . . Later.

4. With respect to infrastructure, what are the numbers?

My take is that the shift in control of taxation and spending from the local community to the state is at the root of California's budget problems. Just one example. Madison, New Jersey - a quite wealthy community of 18,000 people - is more or less self contained. Property taxes pay for schools, courts, law enforcement, etc. The citizens of Madison in April 2010 voted down - by 19 votes - a proposed school budget. At least they had a school budget. Can the citizens of San Rafael do that? Glendale? No. If you search for San Rafael or Glendale school budgets, you find that the money comes from the state. The Glendale School Board says "As a result of cuts in State funding, GUSD faces a $50.3 million deficit in 2012-13 if it does not address budgetary issues." It is fiscal insanity to have the state that involved in local school funding.

California needs to start over, with home rule for local expenses, and with minimal state interference. Someone wrote a book to that effect. California Crack Up, I think.

But at bottom there’s still the same old question: How much pain and inconvenience will taxpayers have to suffer before they understand that there’s no such thing as a free lunch? How many potholes and unsafe bridges; how many cancelled university classes; how high the tuition; how short the school calendar; how slow the response from the fire department, how long the wait at the DMV? Or do we simply not care?

The question is the same but the answer has changed. It's not that we don't care, but that we have realized that there is no end to Sacramento's spending. They (the assembly) acts like its their money, and they can blow it any way they want. They have been doing that for 60 years. Earl Warren's legislature was the last one with any sense of fiscal responsibility.

Now it's too late.

I like Peter Schrag's columns, but he is trying to pass on the old canard that state programs have laready cut to the bone and they need every penny mthat has been cut by the legvislature and the more cuts that will be implemented if the tax increase does not materialize. Not one word about having a peerformance audit of ecagh and e very prfgram to se ow each is spending it's money now. He mentions UC. They waste billions on high administrtative salaries and perks (runaway for the dog of the lover of one Santa Cruz's chancellor??); the also pay near a million salary for a basketball coach--why even have inter-maural sports?

There is waste in each and every program.

The canard is never ending talk about waste as if by underfunding government and enhancing private business we cut "waste". We destroy programs that often work well putting employees on the street where they lose their skills and become part of the huddled masses wanting to not be homeless. Local government where I live is privatizing as fast as their wealthy friends can absorb their gifts of public property. If Brown truly wants to cater he can pick a number to apply to corporate tax cuts and cut an equal amount of programs for the poor, sick, young, unemployed. That is the pattern followed by all the GOP documents produced by their think tanks and used by all GOP representatives in this age of "deconstruction" of government and enhancement of multi-national corporations (who are actually people according to the Supreme Court). Or Brown, like Obama, can feel he is being held hostage and accept repeating never-ending demands from the right. What is missing is our conception of democracy requiring thinking people able to establish values and negotiate in good faith with some commitment to "public" values for the weakest in our "society". If that requires some default on public debt, I would consider it. First I would raise taxes on those who have had a free ride for 30 years.

Who are they who have had a free ride for 30 years ?
How do you define Free Ride?

One "free ride" has been commercial properties owned by multi-national corporations who can change ownership without triggering a reassessment meaning they are still assessed at 1978 values. This correction would raise enough to cover most of the deficit. The "free ride" is forced in place by the 2/3rd rule. Going to a proposition, as was done with Prop. 13, is difficult, but may be necessary before CA is totally bankrupt as well as dysfunctional.
Most families, when balancing their budget, cut spending, but also try to increase revenue. The latter option has been removed and needs to be reconsidered.

Thanks