Running a civilized society and creating a climate in which private enterprise can thrive takes money. Sewage treatment plants, roads, power grids, water projects, firefighters, police, courts, prisons, control of infectious disease, schools, universities, job training programs, services for the destitute and the mentally ill, urban planning, control of air and water pollution, food and product safety inspections, and on and on and on, all take money. Money that very few people indeed would genuinely like to see California stop spending.
While it’s easy to find examples of improper political influence or simple incompetence resulting in wasteful spending, and no one disagrees with cutting ineffective or wasteful programs, no one has ever seriously disputed the importance of the state providing the essential services that keep California livable and the California economy viable. To do otherwise would clearly mean social and economic disaster. The real argument has always been, and remains today, over where, and from whom, the state is going to collect that money.
The History
In the old days, back before the Great Depression, the state raised the money it needed from property taxes. Then the Depression hit. Property values fell, and property tax revenues fell with them. Yet, the need for government spending was greater than ever. An Initiative was put on the ballot in 1932 to fill the gap by instituting an income tax and sales tax (which would have been used exclusively for education). Wealthy individuals and business interests campaigned furiously against it and it was easily defeated. But the problem remained and, just like today, it could not be ignored.
The next year, after an enormous struggle, the Legislature put a constitutional amendment on the ballot to allow for new taxes, but keep spending under control by only allowing the state budget to grow by 5% per year without a two-thirds “supermajority” vote. As the critical importance of education was not under attack then in the way it is today, education spending was not included in the cap and did not require a two-thirds majority vote. The measure passed and became law.
In the years that followed, California’s exploding population and infrastructure demands required an expansion of budgets greater than 5% per year, and it became the norm that budgets were passed with a two-thirds majority vote. If anything, the two-thirds requirement probably increased wasteful spending, as it allowed whichever party was in the minority (which frequently changed) to demand special favors and “pork” for their districts as the price of allowing the budget to pass.
Then, in 1962, in the name of “cleaning up the constitution,” and eliminating “obsolete” language, the 5% increase in spending limit was removed, leaving the two-thirds requirement to apply to passing any budget. As growth slowed in California in the mid ‘60’s, most of the budgets in the ensuing years did not grow by more than 5% and would not have required a two-thirds majority vote if this change had not taken place. California became one of only three states with a two-thirds majority requirement for passing any and all budgets.
But the real problems began in 1978 with the passage of Prop. 13. This Initiative was sold to the public as a way of being fair to old people on fixed incomes. Rising property values were forcing elderly people out of the homes they had lived in for decades when they could no longer pay their rising property taxes. If it had only applied to individual homeowners it might have been fine, but the main effect of Prop. 13 was to permanently lock in property tax assessments at 1978 levels for corporate property owners.
Prop. 13 not only resulted in owners of similarly valued property paying vastly different amounts in property tax and gave long-established corporations an unfair competitive advantage over new startups, it also guaranteed that, over time, more and more of the tax burden would be shifted onto individual taxpayers through the income and sales taxes – and that is precisely what has happened.
But Prop. 13 did even more. It also expanded the two-thirds vote requirement to cover raising any tax. This is why local communities have to turn themselves inside out to get two-thirds majorities to pass school bonds (and why Monterey County has been unable to raise the revenue it needs to fix the roads). When it comes to passing a budget or raising taxes, the majority does not rule in California.
Profiles in Cowardice
Since the ‘80’s Republicans have been promising, swearing and taking pledges never, ever, under any circumstances, to raise taxes. This has been reliably popular with voters, since no one likes paying taxes, but foolish as public policy. Even conservative icon, Ronald Reagan, understood that the government has to keep functioning and if that means raising taxes, then taxes must be raised. As Governor, Reagan ended up presiding over the biggest tax increase in California history. Not because he wanted to raise taxes, but because he understood that it was necessary.
And today it is necessary again. The Republicans understand this. They know there isn’t enough “fat” or “waste” in the budget to make even a dent in the current deficit. They know that significant budget cuts can only come from essential government functions and that, even then, they cannot close the budget gap with cuts alone. Not even if they fired every last state employee.
The Republicans know that California faces a choice between raising taxes and economic disaster. But they cannot bring themselves to vote for a tax increase. They can’t because they’re afraid their party’s anti-tax base will vote them out of office. To put it plainly, their love of their miserable political careers is more powerful than their sense of responsibility to the people they’ve been elected to represent. It’s ugly. It’s cowardly. But that’s the way it is.
In the California Senate, just three Republican votes are needed to reach the two-thirds majority. To get those votes, the Democrats have agreed to Republican demands that the new taxes fall disproportionately on the poor and middle class. They have agreed to foolishly deep cuts in programs essential to our quality of life, safety and to the rebuilding of our economy. They have agreed, in short, to a terrible budget that bends so far over backwards to avoid increasing taxes on California’s wealthiest individuals and companies that it will damage lives and seriously deepen our financial difficulties.
That was enough to get two Republican votes.
Some of the remaining Republican Senators are clinging to what’s left of their dignity by pretending to be acting on principle. Others, like our own Senator, Abel Maldonado, have been seeking to sell their vote, but at a price so high the Democrats have, so far anyway, been unable to find a way to pay it.
So if our own State Senator, you may be asking, is in a position to demand and receive just about anything he wants in the new state budget, what wonderful largesse is he demanding for our district? Is he going to get our roads fixed? Is he going to get our water projects funded? Will he bring new research centers to our universities or rebuild our blighted neighborhoods?
Apparently not. Abel’s demands, we understand, have more to do with brightening his own future. Rumor has it that his latest request was merely that election procedures be changed in order to make it more difficult for his Republican constituents to vote him out of office. Good luck with that, Abel.
Meanwhile, $270 million owed to the counties for welfare programs is being withheld, $3.5 billion worth of public works projects are being stopped, and pink slips have been sent to 20,000 state employees. And this is just the beginning.
So how are the Republicans responding? Well, this morning they replaced their leader, Dave Cogdill, who had negotiated the current “compromise” budget, with the harder line Dennis Hollingsworth.
As we’ve mentioned before, this theater of the absurd is almost certain to end with a third Republican agreeing to take the pay off and vote for the budget. You just have to wonder how that person will sleep at night knowing that by holding out for just that little bit more, they disrupted thousands of lives, forced families to miss mortgage and credit card payments, and sank the whole state deeper into economic crisis. Do you get what we’re saying here, Abel?
Let Abel know what you think. Call his office at: (916) 651-4015
Wednesday Night Update: Read the latest on Maldonado’s tireless crusade to keep his political career alive in this article from the LA Times. Could they really be on the verge of giving him what he wants?
Thursday Morning Update: It’s a deal! At 1:00AM this morning, the Democrats agreed to terms with Maldonado. The constitutional amendment designed to make a continued career in state politics possible for him will be going on the ballot. He says the open primaries he’s fighting for will help “moderate” candidates from both parties. Right.
Memo to Abel: When you ask what’s in the best interest of your political career rather than what’s in the best interest of the state when deciding how to vote on a piece of critically important legislation, you’re not being a moderate – you’re being a sleazeball.
So we’re glad California has a budget, awful though it is. But we kind of feel like taking a shower after watching the process through which it was hammered out and ultimately passed.
Xasáuan Today 
Why not lease out California’s vast state water oil and fields? Skip the tax increases, put people to work, reduce the cost of energy for California and contribute to American energy independence and make money for the state. Convergence of common sense anyone?
Lease out water oil and fields? Not sure we follow you on that one … XT
You should write us your thoughts at caforward.org — we need to hear from more people like you.
XT – the three concession Abel wants are constitutional amendment to provide for:
1. Open primaries
2. No salary increases for legislators when California is in deficit
3. No payment to legislators as long as a budget is not passed.
How are any of those things a “bad” thing. I am certainly in favor of the last two. If he’d thrown in doing away with the 2/3rd majority, I’d be on his band wagon. Open primaries could be problematic, but the scare tactics employed to nix that seems just that – scare tactics.
We like numbers 2 and 3 too! And we’d certainly take number 1 if we could get a budget in exchange. But both the Democrats and the Republicans are overwhelmingly opposed to open primaries, so the chances of that being accepted are pretty slim. In any case, demanding a constitutional amendment for the purpose of protecting yourself against the voters in your own party is pretty lame and not exactly an example of legislating with the good of the state and your constituents in mind. Abel’s made a valiant effort to look less self-serving by including numbers 2 and 3, but it’s pretty obvious that public relations is their only function. – XT
XT: my lousy typing. California has vast oil and gas reserves in state controlled coastal waters, billions of gallons of oil and trillions of cubic feet of gas. Rather than chance damaging their environment, the good folks in California import their gas and oil from other places where someone else risks damaging their environment. Go figure, pay more for resources exploited in a less environmentally responsible manner than would be the case in California, ship all those jobs overseas to countries that do not have high wages and benefits for oil workers. Give up the revenue that could balance the California budget so that countries like Indonesia and Saudi Arabia can continue to suck the wealth out of this country. Makes sense to the fine folks running California so I guess they have the moral and economic high ground. Wanna buy a bridge to Manhattan?
Considering that there are oil and gas leases issued years ago that have still not been developed, we’re not convinced that issuing more would create new jobs, move us toward energy independence, or raise significant new revenue – and that’s without even getting into the wisdom of endangering coastal resources on which thousands of jobs and dozens of local economies already depend; or the wisdom of perpetuating our obviously unsustainable reliance on fossil fuels. – XT
I submit that responsible exploitation of known resources is a better bet than reliance upon weather (wind and sun) to supply reliable electrical power. Inactive leases are likely non productive, many lease area not economically viable, yet they remain on the books for a minimum ten years. The oil industry has significantly improved their safety record since the environmental safety issue was first raised thirty years ago. This is really a good deal for any coastal state, a self financed economic stimulus that creates a long term cash injection to the local economy, the national economy and state treasuries
Passed the senate this morning. Now back to the Assembly, where I’ve heard they are 9 votes short on the open primary issue. Today should tell the story. I sure would like to get paid the money the state owes me!
Correction. Both houses passed the budget and it is off to the governor. Now, if the pieces requiring ballot approval hold up … sigh …
Gee XT, aren’t you being just a wee bit hard on the Maldo? After all, he’s single-handedly caused every hard-line republican in the state to gnash their teeth and froth at the mouth in anger and frustration, which is worth *something* if only for the humor value.