Sin and California’s Future

We had an election in my community this past week, a mail-in school parcel tax question asking voters to approve an additional $150 per property in tax to support the local schools.  In California, tax matters require a 2/3 vote to pass.  This measure got 73%.

So what, you ask?

Well, there is the small matter of the recession driving California’s unemployment rate north of 10%.  Home values have fallen by as much as 40% in some places in California, the undisputed ground zero for subprime lending and home to Countrywide Finance. The State is so far in the red it will take another gold rush to dig out from overspending.

While the nation seems willing to give President Obama a fair chance to try things his way, there is a great “funk” brewing across California that threatens to explode like a firestorm.  It will flare up next on May 19th in a state-wide election on five propositions to help stabilize state finances that the California Field Poll says the voters are expected to reject resoundingly except for Prop 1F which freezes salaries for state officials and the legislature when the state budget is in deficit.  If the measures pass, things won’t get better, but they probably won’t get much worse.  If the measures fail, they shut off access to additional sales tax, borrowing between funds, and other measures that probably dig California $10 billion further in the red short-term.

So what’s the difference between passage of my local parcel tax question and the likely failure at the May 19th statewide election?

There is a holy war in California over taxes, spending and the irresponsibility of government.  The voters are mad as hell at Sacramento, and lack confidence that our state officials can solve the problem.  This is a big problem for Arnold who became The Govenator after the recall of Gray Davis in the last voter supplied IED at the polls, but he is termed out and can not run again in2010.  The defeat of the ballot measures on May 19th, if the Field poll is accurate, will be a pretty clear signal that voters want change they can believe in.

The problem is what do the voters believe in? The California Field Poll says:

  • 67% prefer spending cuts to tax increases to balance the state budget.
  • 70% favor retaining the requirement of a 2/3 legislative majority to raise taxes.

When asked where they would make spending cuts, voters polled said:

  • 59% say we spend too much of state prisons and don’t have much to show for it.
  • 51% say they would make cuts in state parks and recreation.

But voters oppose cuts in many programs, some by wide margins, including:

  • 74% for local law enforcement or police;
  • 73% for school funding (same margin approving my parcel tax increase);
  • 72% for health care for low income and disabled;
  • 67% for child care programs;
  • 66% for mental health programs;
  • 63% for water storage and water supply;
  • 56% for environmental regulation;
  • 55% for public transportation;
  • 54% for highway repair and road construction.

So how would Californians solve the state budget gap if the people had their way?  The answers may surprise you—or not, it is California after all:

  • 80% favor a state tax on pornography;
  • 75% favor higher cigarette sales taxes;
  • 74% favor high alcohol taxes
  • 56% would legalize and tax marijuana for recreational use;
  • 54% favor an oil severance tax;
  • 51% favor collecting sales tax on internet purchases;
  • 54% favor carbon taxes on gasoline and diesel fuel sales;
  • 37% favor increasing taxes on business property;
  • 37% favor borrowing more through state bonds;
  • 27% favor increasing state gasoline taxes;
  • 25% favor expanding state sales taxes to cover all services.

Since tax increases require a 2/3 vote, sin is in big trouble in California, but balancing the state budget is going to require a whole lot of sinning—so let the party begin!

California’s problem certainly include spending too much in the good years.  The biggest problem is that our tax structure depends upon revenues from sources that are highly volatile.  So when things are good money pours in, but then the economy is bad the well runs dry fast.  Clearly, California needs to overhaul its tax structure to diversify revenue and broaden the base.

Does California spend too much?  The Field poll suggests that Californians are willing to spend money on things they believe are important to maintaining a vibrant economy and high quality of life.  That probably is the good news in these polls.  But the voters mistrust their state leaders and lack confidence that the Governor and Legislature can solve these problems. That’s the bad news.