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Thursday, June 11, 2009 | What’s to become of us? Six years ago we recalled from office a Democratic governor who had increased taxes to finance a state budget deficit and brought in a Republican who repealed the tax increases. Today, we have just rejected the tax increases called for by that same Republican to close an even larger budget deficit.
Maybe the problem isn’t the governor.
We complain about schools, roads, health care, unemployment, traffic, prisons, drugs, criminality, lack of police, lack of fire protection, but don’t want to pay for any of it. California is in the same situation as General Motors only without Washington to bail it out.
What to do? By population alone, we are a state unlike any other. At nearly 40 million people (counting the illegals) we are 80 times the size of Wyoming, but have the same number of senators, which doesn’t help. We are twice the population of New York, the third largest state. We have 12 million more people than the second largest state, Texas, whose governor wants to secede from the union. We have twice as many illegal immigrants as any other state.
And we’re broke.
Nations with our population (Spain, Poland, Argentina) have various ways to cope with deficits. They can print money, raise taxes or change governments. They can cut expenditures. If things go really badly, they can have coups, revolts, civil wars and foreign wars.
California can’t print money. It can’t raise taxes because Proposition 13, passed in 1978 (when our population was 21 million), requires a two-thirds majority of the legislature for tax increases, impossible to achieve. California tried changing governors, put a Republican in place of those spendthrift Democrats and nothing changed except that the deficit is now twice as big.
We can’t have a coup, revolution or civil war because those things are reserved for independent countries.
Unlike Texas, we can’t even secede because we’re not stupid.
We are left, for the moment at least, with the sole option of cutting expenditures by $42 billion over two years, which would be irresponsible even if it were possible.
But maybe we are irresponsible. When you add up all the restrictions we have put on state government over the past quarter century — Proposition 13, legislation and taxation by referendum, term limits and recalls — it’s no surprise Sacramento has ceased to function as a government.
Poor Gov. Schwarzenegger. The man who promised to change Sacramento after replacing Gray Davis is left going hat-in-hand to Washington, only to hear from the Treasury that it wouldn’t be right to send taxpayer money to a state that won’t raise its own taxes or to use taxpayer money to guarantee borrowing by a state whose bond rating, according to Standard and Poor, is the lowest in the country.
We are in a pitiful state. Here’s what Schwarzenegger said last week:
“There is, when it comes to revenues, a free fall right now. We don’t know where this is going to stop. Even while we are going to negotiate the budget in June, we don’t know if that doesn’t create during that time another $3 billion deficit. It’s painful to know that the kinds of programs you cut are absolutely essential to people. But when you don’t have the money you can’t promise something to people, something you can’t afford.”
Here’s some of what Schwarzenegger is proposing to do with his latest budget proposals: Close state parks, dismantle CalWorks and Healthy Families programs, which provide direct aid and health care to 1.5 million poor families. Eliminate CalGrants, which gives college aid to low and middle-income families; lay off teachers; cut aid to community colleges and to HIV programs.
The cuts fall mostly on the poor, but the governor has ideas for raising money as well. He wants to borrow $2 billion from cities and counties, which are broke themselves and thanks to that same Proposition 13 cannot raise taxes without a two-thirds vote. “Our revenues are back to the 1999 level,” said Schwarzenegger. “So we have to dial back to what was happening in 1999.”
In other words, the result of the Gray Davis recall is not to take us back to 2003 — when Davis increased the vehicle license fee and was recalled from office so Schwarzenegger could rescind the increase —but to return us to the last century.
One has to wonder why anyone would want to be governor in a state such as this — where Warren Buffet pays $2,500 in property taxes on his $4 million house in Laguna Beach while paying $15,000 on his Omaha house worth $500,000. But despite the absurdity and inequity of California laws, there will be a governor’s election next year and there are already plenty of candidates.
Democrat Jerry Brown, who will be the favorite if Sen. Dianne Feinstein doesn’t run, has had little to say about what he would do to reverse California’s fiscal mess, but San Francisco Mayor Gavin Newsom wants a constitutional convention to eliminate the two-thirds vote requirement on raising taxes. Newsom is right that, 31 years after it passed, Proposition 13 has become enemy No. 1 of good government, and the idea for a convention is supported by a host of good government groups.
Voters might not be ready to eliminate the property tax provisions of Proposition 13, but they may understand the pernicious effects of the two-thirds vote requirement.
On the Republican side, Steve Poizner and Meg Whitman are dancing around the budget problem, but Tom Campbell, the smartest man in politics I know, comes at the problem sensibly. His program lays out some $13 billion in budget cuts, but they do not hit the poor and the sick as severely as Schwarzenegger’s cuts. Campbell would close the remaining gap with a 32 cent per gallon tax on gasoline.
Most economists agree that a gasoline tax would go far toward solving a host of state and national budget, energy, environmental and foreign policy problems.
Tax gasoline and change the constitution: These are two sensible solutions (in addition to making budget cuts) to our fiscal mess. Are we ready to do what it takes?
James O. Goldsborough has written on foreign affairs for four decades, both from the United States and abroad, where he worked as a foreign correspondent for The New York Herald Tribune, International Herald Tribune and Newsweek magazine for 14 years, reporting from more than 40 countries. Visit his website here. Submit a letter to the editor here.