I guess a better title would be “California’s Woes and Prop 13, Not.” Also, never let it be said that Our Volokh Conspiracy – and its commenters – do not drive the intellectual agenda.
William Voegeli, a couple of whose articles on California’s finances have been linked here (see California tag), and who also provided a nice short commentary for VC on the topic, has a new piece in CityJournal on the legacy of Prop 13. He told me in an email that it got started on account of being struck by how many VC commenters on his earlier post attributed California’s parlous fiscal state to Prop 13. Hence the new article, “Don’t Blame Proposition 13.” Likewise I’m pleased to announce the publication of his new book, Never Enough: America’s Limitless Welfare State. Here is a bit from the California Prop 13 article :
According to liberals in politics, journalism, and academia, Proposition 13 is the reason for California’s worsening fiscal nightmare and the declining quality of the state’s public services, and the motives behind it were deplorable. And because Prop. 13 ignited a national tax revolt that remains potent, the Left also blames the measure for much of what it thinks has gone wrong in American political life generally over the past three decades.
Yet no matter how often their moral and intellectual “superiors” denounce them, California taxpayers continue to insist that the problem isn’t their purported stinginess but their government, which makes lousy use of the considerable funds that it continues to receive. On this point, the voters aren’t being stubborn, greedy, or stupid. The voters are right.
The first thing to recognize is that Proposition 13 did not destroy the tax base of California’s local governments. True, the average property-tax rate has fallen from 2.67 percent in 1977 to 1.1 percent today, observes David Doerr of the California Taxpayers’ Association. But the state still brings in a lot in property taxes. By 2007, the year of the most recent Census Bureau data comparing state finances, California’s state and local governments levied $1,141 in property taxes per capita, less—but only 11 percent less—than the corresponding average, $1,288, for the other 49 states and the District of Columbia. Property-tax revenues in the state have increased from $4.9 billion to $47 billion in the 30 years since Proposition 13. Adjust those figures for inflation and population growth, and property-tax revenues in California were 87 percent higher in 2009 than they were in 1979, chiefly because of rising property values.
And even if one tax is limited, others can rise. A recent article in the California Journal of Politics and Policy by Colin McCubbins and Mathew McCubbins shows that, adjusted again for population growth and inflation, total state and local tax revenues in California were higher ten years after Proposition 13’s enactment than they were just before—and that they were half again as high in 2000 as in 1978. Census Bureau data show that California ranked tenth in the nation in 2007 in terms of per-capita receipts from all state and local taxes (property, income, sales, and excise taxes) paid by individuals and corporations. Per-capita receipts from individual and corporate income taxes were 64 percent higher in California than they were in the rest of the country: $1,764 in California, $1,077 elsewhere. All told, California’s governments received $4,731 per resident from all taxes, 14 percent more than the $4,160 average outside California.
Ah, comes the objection: these numbers unfairly compare California with an aggregate that includes many rural states with low taxes and limited public services. But even if we confine our discussion to the ten most populous states in the nation, home to 54 percent of all Americans in 2009, California remains a high-tax jurisdiction. Its per-capita taxes exceed not only the national average but those of every other high-population state except New York ….
The Californians who refuse to jettison Proposition 13 have a well-founded suspicion: that the state’s public sector is starving on its high-calorie diet because of mismanagement and capitulations to public-employee unions ….
KenB says:
Tax cuts alone are never an adequate explanation for deficits. Deficits are a function of two variables: tax revenues and spending. The left wants everyone to thing spending is irreducible.
May 4, 2010, 7:40 pmMark N. says:
The biggest argument on Prop 13, I thought, wasn’t a generic revenue one, but the one Justice Stevens gave in his dissent as to its constitutionality: that it requires some taxpayers with identical houses to pay more money than others, based on a seniority system. And the seniority system is heritable too, creating a sort of landed aristocratic class, not to mention introducing all sorts of distortions into the rent/buy ratios by adding huge transaction costs into property sales (since a sale triggers a revaluation).
May 4, 2010, 7:47 pmOpenVolokh says:
A few points. I don’t have time to read the whole article, so maybe these points are addressed elsewhere within it. But, based on the excerpt provided the article is way off.
(1) The primary problem with Proposition 13 is not limits on property taxes, although those can be extremely ridiculous. Too often, the beneficiaries of Proposition 13 are huge corporations, not the elderly people on fixed incomes who were priced out of their homes that were originally imagined by voters. The problem is the two-thirds supermajority requirement to raise any taxes whatsoever.
(2) It is ridiculous to mention the voters desire for low taxes (who doesn’t want low taxes!) without mentioning their desire for a high level of services. When you say the voters are right, the question arises. Right about what? Right about their desire to have the best public university system in the world, or right in their desire to have the lowest tax rate in the world? Right in their desire to provide the highest quality K-12 education possible, or right in their desire to not have to pay for it? Saying the voters are “right” when the voters preferences are incoherent doesn’t give on much confidence that the author is coherent. After all, if you think incoherence is “right” I think that must mean that you too are incoherent. California voters are constantly voting to issue bonds for various public investments. Well, guess what voters. Bonds have to be paid back!
(3) Comparing spending on government to other states is completely ridiculous. A salary that would provide an very nice standard of living in Boise, Idaho would provide a horrendous standard of living in San Francisco. You have to pay government employees more to account for the cost of living. You have to also pay contractors who have local employees more for the same reason. Also, California is more liberal than other states. Therefore, it SHOULD be spending more on public services than other states, given the preferences of voters. Comparing spending in California to spending in Louisiana is just plain stupid. California voters value and desire to invest more in public services like education than Louisiana. There are areas where California should cut back in spending. For example, probably on prisons and salaries for prison staff. It is ridiculous that California now spends more on prisons than higher education, but that shows how when the voters who are “right” vote for things like mandatory minimums for victimless crimes, they fail to consider the cost but just vote yes if it sounds good.
There is an increasing consensus that the current situation is untenable. California needs a new Constitutional Convention and the support for one has increased.
A final point. I hate to say it. But academic articles like this hardly matter. What matters is whether or not voters vote yes or not to a new Constitutional Convention. I don’t think articles like this are going to influence very many voters, who already have too much reading on their hands just trying to figure out the complicated ballot measures they are called on to evaluate.
May 4, 2010, 7:48 pmdw says:
Proposition 13 required a vote of two-thirds in both houses of the legislature for any state tax increase. This meant that, with large Democratic majorities in both houses, it was necessary to bribe one Republican state senator in order to pass the budget that would save the state from bankruptcy. See link here
Do you think it would be a good idea to make Congress have a two-thirds majority in both houses before federal taxes can increase? Would that help the USA’s budget situation?
May 4, 2010, 7:52 pmOpenVolokh says:
Given that California is a liberal state, it SHOULD be considering tax increases in addition to spending cuts to balance the budget. I don’t blame the extremist Republican minority for their total disregard of the will of the majority and making taxes not merely a matter of policy, but instead a matter of religion, as much of the stupidity of the majority in empowering the Republican minority.
But watch. What the majority has given the minority Republicans will be taken away. And minority Republicans will only have themselves to blame, because they chose to follow an extremist path rather than make reasonable compromises with the majority.
May 4, 2010, 7:52 pmEH says:
“According to liberals…”
Where’s the part where the guy attempts to be taken seriously, is it after this?
May 4, 2010, 7:54 pmOpenVolokh says:
It OBVIOUSLY is not wise to require a two-thirds majority. That is the same majority that is required for Congress to propose a constitutional amendment.
Acting like adjusting tax rates is a decision of constitutional dimensions is ridiculous. Ironically, in California, it is easier to amend the state constitution than it is to raise taxes. That is ass-backwards.
May 4, 2010, 7:55 pmAnthony says:
The problem with Prop 13, other than being grotesquely unfair (as in, given two people with identical homes, one might pay ten times the property tax of the other), is that it’s one of a number of propositions that makes it essentially impossible to actually pass a state budget. Also, as tax methods go, property taxes are preferable to, say, business taxes, as they actually tax people who live in the state for services provided by the state.
May 4, 2010, 7:56 pmDuracomm says:
A long time california resident comments.
If Only California Could Just Raise Taxes
May 4, 2010, 8:14 pmdw says:
a California political and fiscal landscape that has been utterly dominated the past decade by the Democratic Party
“Dominated” enough to increase spending, but not enough to increase taxes to pay for the spending.
If there is a two-thirds majority required to raise taxes, then there must also be a two-thirds majority required to increase spending. Otherwise bankruptcy is the almost-inevitable consequence. That is the real problem with Proposition 13.
May 4, 2010, 8:26 pmFranklin says:
In addition to spending, another problem is incentives. The state has no incentive to increase jobs or entrepreneurship because the state benefits little from sales taxes. Well california has a jobs problem. Make the state dependent on sales taxes and they will grow jobs. Give the cities the property taxes and the incentives are distributed in a much fairer way. The state is so beholden to property taxes it could care less about jobs growth. A bit simple, but I think a step in the right direction.
May 4, 2010, 8:28 pmDougInSanDiego says:
Sacramento: “If only we had more money to spend, why, everything would be fine!”
May 4, 2010, 8:29 pmricky richardson says:
Prop 13 is another sweet idea so that old people who already have money can keep it. It should be opposed by libertarians and liberals alike.
May 4, 2010, 8:30 pmo says:
That does not follow. The problem is with a state legislator that KNOWS the limits of their budget but ignore such limits. It is not Prop 13′s fault that the legislator cannot control its spending. Prop 13 does not force spending.
May 4, 2010, 8:35 pmCDR D says:
Old people get to keep their money? OMG!!
What a silly idea!
May 4, 2010, 8:36 pmkeypusher64 says:
They are addressed in the article.
Here’s a suggestion: if you don’t have time to read something, you don’t have time to comment on it either.
May 4, 2010, 8:42 pmBob from Ohio says:
Its the spending, stupid.
Roll back spending to 2007 levels, most of the problem disappears. I know, it will be a Dickensian horror at those spending levels.
May 4, 2010, 8:45 pmMark N. says:
It doesn’t follow as an axiom, sure, but it’s nonetheless not hard to predict that if it’s easier to raise spending than to raise taxes, spending will go up more than taxes. As Zywicki discussed yesterday, “starve the beast” does not work.
May 4, 2010, 8:58 pmfirst history says:
It is ridiculous to mention the voters desire for low taxes (who doesn’t want low taxes!) without mentioning their desire for a high level of services. When you say the voters are right, the question arises. Right about what? Right about their desire to have the best public university system in the world, or right in their desire to have the lowest tax rate in the world? Right in their desire to provide the highest quality K-12 education possible, or right in their desire to not have to pay for it? Saying the voters are “right” when the voters preferences are incoherent doesn’t give on much confidence that the author is coherent. After all, if you think incoherence is “right” I think that must mean that you too are incoherent. California voters are constantly voting to issue bonds for various public investments. Well, guess what voters. Bonds have to be paid back!
How true. As a Californian, it never ceases to amaze how the state’s voters can continually vote for more and more spending without thinking of the consequences. Budgeting by ballot absolves the Legislature of its responsibility to make decisions. Voters who don’t like legislative decisions can vote out their representatives, but when the voters establish spending, what the point of representative democracy? At the very least new bond spending should have the same voter threshold (2/3) as it takes for Legislature to pass a budget.
According to a March 24th Field Poll:
The deadlock in Sacramento is merely a ref
May 4, 2010, 9:08 pmOpenVolokh says:
Bob. Are you from Ohio? Well, guess what. California is more liberal than Ohio. Why don’t you mind your own business. If a majority of Californians want to pay higher taxes for more services than Ohioans, that is their right.
I don’t go tell people in Mississippi that they should establish a public university system that is as good as in California. And guess what. They don’t.
Imagine that. The level of taxes and services reflecting the preferences of the people who actually live in the state…
May 4, 2010, 9:10 pmDenver says:
If government California is so profligate why is it among the lowest five states in state government employees per 10,000 population?
May 4, 2010, 9:17 pmOpenVolokh says:
Or here is another idea. If you don’t want to read my comment where the first sentence notes I did not read the whole article, then don’t! Thanks.
May 4, 2010, 9:25 pmKR says:
The whole point is that Californians don’t actually want to pay more taxes, yes?
Also, your schools aren’t that great; don’t confuse your West Coast arrogance with facts.
May 4, 2010, 9:26 pmSteve Sailer says:
California’s fundamental problem is that, on average, its population doesn’t make enough money to afford to live there.
May 4, 2010, 9:42 pmGlen says:
The new California landed gentry is indeed a reality. And, not surprisingly, the vast majority of them live in extremely affluent coastal enclaves of progressivism and vote Democratic (or further left).
Isn’t hypocrisy grand?
May 4, 2010, 9:43 pmElliot says:
I have never lived in California. Can someone give a brief summary of how the lives of the average citizen have been improved by the increased state spending over the past ten years?
Those of us outside the state always read about the increased services the voters demand. What are they?
I asked a similar question during a visit to Illinois last week, and was met with blank stares from a table of very well informed and educated residents.
May 4, 2010, 9:44 pmkeypusher64 says:
But I did want to read your comment. I also wanted to point out how stupid it was.
May 4, 2010, 10:02 pmOpenVolokh says:
So, if it is stupid, why don’t you explain why. Specifically, what do you disagree with?
May 4, 2010, 10:04 pmo says:
That still does not lay the blame on Prop 13, but on the ones raising spending.
May 4, 2010, 10:04 pmOpenVolokh says:
Elliot,
A good place to look at state services that California voters have wanted is to Google to find a history of state ballot measures issuing bonds to spend on public services.
May 4, 2010, 10:06 pmOpenVolokh says:
This is retarded. What is to blame is not raising spending. What is to blame is spending without taxing. If Californian’s want a higher level of spending, that is their prerogative. But it has to be paid for.
May 4, 2010, 10:07 pmOpenVolokh says:
As I explained, the problem is that the voters are not familiar enough with the budget to make coherent decisions. They WANT both the lowest taxes in the world and the best public university system in the world. In fact, I want that. I want to pay zero in taxes and receive world-class services. In fact, not only do I want to pay zero in taxes, I want to have the government give me personally millions of dollars in cash and everyone else millions of dollars in cash and I want unlimited world-class services.
The reality is, you can’t have everything you want.
Voters have repeatedly voted to both lower revenue and authorize large amounts of state spending that are financed by bonds via ballot measures. Voters are not sitting down and thinking how things fit together when they vote for lower taxes on one hand, and increased spending on the other.
May 4, 2010, 10:13 pmkeypusher64 says:
I pointed out the stupidity in my first post. Not going to waste more time on you, in this thread anyway.
May 4, 2010, 10:17 pmA. Zarkov says:
By that reasoning New York City’s rent control law is unconstitutional. Two identical apartments in the same building can pay very different rents because one enjoys “seniority.” Just look up the rents on Stuyvesant Town/Peter Copper Village. As I remember a one-bedroom rent controlled place goes for $1,500 per month while the same apartment goes at about $3,000. The Times had an article on this so you can google it and check me.
Under some versions of New York City’s rental control, one can bequeath the rent controlled apartment.
There was a case where a man had a rent controlled apartment with a lease. Then he got married and divorced. The judge forced a transfer of the lease to wife so she could now enjoy the benefits of rent control.
So if prop 13 bothers you, then NYC and perhaps other rent control ordinances should bother you as well. They are worse because in effect they take property rights from the owner and give it to the tenant.
May 4, 2010, 10:38 pmElliot says:
What percentage of California households pay a positive state income tax?
May 4, 2010, 10:41 pmpireader says:
Actually, the truth is kinda boring … which makes a problem for all the people crying “crisis”.
Before the recession hit, California’s total government spending (state plus local) was running at 21.7% of GDP. That’s higher than the US average of 19.5%, but hardly remarkable (ten states are even higher).
The real problem is that Californis’a total government revenue has consistently run lower than that, because a simple majority of the legislature can spend money but only a 2/3s majority can impose taxes.
The state would be better off if both spending and taxes required the same majority, regardless of which it was.
May 4, 2010, 10:53 pmA. Zarkov says:
The idea that Californians want high spending, therefore the government should be free to raise taxes without limit to satisfy that public want ignores some basic facts. A minority of Californians are forced to pay most of the tax burden, and they don’t get back all the benefits. The legislature is dominated by a set of special interest groups such as the public employee unions. As discussed in the book Plunder, the pension benefits enjoyed by police, fire and other public workers are astronomical and out of control.
As legal and illegal immigrants continue to stream in, mostly from Mexico, the state provides them with expensive services that other people have to pay for. They also have to pay for the extra crime that the children of the immigrants cause. If California could shut off immigration it wouldn’t cure the fiscal crisis, but it would help a lot.
California has become America’s Greece. If anyone thinks that but for prop 13 the state’s fiscal house would be in order should look at New York State and New Jersey. New Jersey is also a high service, high tax, and high property tax state with a high cost of living. Is it flush? No. It’s broke just like California.
May 4, 2010, 10:56 pmA. Zarkov says:
I have been a long-term resident of California, and a transplant from NYC. Over the years I’ve noticed that the more California becomes like NYC the worse off most people are. The spending benefits a minority of civil service workers and a class of chronic and incurable mendicants.
Ultimately the federal government will have to bail out California, and it will. Just like the EU and the IMF (which means all of us) have bailed out Greece. But who will bail out the US? Obviously no one. That means massive inflation.
May 4, 2010, 11:04 pmRKV says:
“The state would be better off if both spending and taxes required the same majority, regardless of which it was.”
Utterly backwards. Completely illogical.
Just cut spending. Given the large fraction of the state budget paid to state employees you must cut wages, cut benefits, and cut retirements. Then cut regulations and cut red tape so we need fewer state employees. Too bad for many Democratic members of the state legislature as these long overdue cuts will reduce their ability to buy unionized state workers votes. Cry me a river.
May 4, 2010, 11:05 pmGlen says:
Because California tops the country in what it pays those employees. California is No. 2 in the nation in pay per state employee (close behind New Jersey). And California ranks No. 5 in pay per state employee as a percentage of state median household income.
May 4, 2010, 11:09 pmAndrew J. Lazarus says:
So on yet another thread I get to post the obvious: the idea that state spending should be a constant after adjusting for population growth and inflation is absurd. (Constant as an argument of GDP is at least more plausible.) If this idea had been dreamed up and implemented in 1910, the cap on the California budget today would be (estimating very generously) $7.5 billion. If someone can come up with a plausible budget for the state on $7.5 billion, please post it below.
So, with one quick calculation, half of the comments plus the original article with its meaningless observation on total tax collections without reference to economic growth are exposed as a travesty of economics.
Just consider highways. Land gets more expensive. Wages rise, even in real terms. And no one is interested in one-lane roads anymore; we need freeways.
May 4, 2010, 11:18 pmSbard says:
Most libertarians (and most economists regardless of political affiliation) are against NYC-style rent control (or rent control in general).
May 4, 2010, 11:19 pmpireader says:
RKV – Utterly backwards. Completely illogical.
You’d add more to the discussion if you’d actually explain why you think so, instead of venting like some guy on a bar stool too deep into his beer glass.
For example:
Do you have any evidence that Califonria governments materially overpay the market for their employees’ skills?
Can can you specify what regulatory “red-tape” to cut that would materially reduce California’s budget?
Do you have a reasoned view about why California’s budget problem is more severe than other high-spend states?
Or are you more comfortable just sitting on your bar-stool parroting whatever you heard last on some high-decibel, low-IQ talk radio show?
May 4, 2010, 11:30 pmPQuincy says:
“State spending in the past two decades, as this Reason Foundation report [PDF] spells out, has increased 5.37 percent a year (and nearly 7 percent for the past decade), compared to a population-plus-inflation growth rate of 4.38 percent.”
The Reason Foundation reports that state spending over the past 20 years has increased at 0.99% p/a more than inflation and population growth in California.
Inflation-adjusted per capita GDP growth — that is, overall economic growth — over the same period has run something like 3.2% (Not being a economic data maven, I’m open to correction on this one…this was the best I could find quickly).
Thus, California state government has been shrinking as a share of the per-capita inflation-corrected economy for 20 years at about 2% a year…or, as my trusty Excel tells me, by about 30% compared to its share of the economy in 1990.
GOSH, how terrible!
It’s striking how proponents of ‘growth-limits’ always talk about inflation and population change, but not economic growth.
May 4, 2010, 11:31 pmPQuincy says:
More generally: like many of the commentors here, I’m a sharp critic of Prop 13, but not primarily for its primary property tax limitations. Limiting property taxes to 1% of value, and even limiting increases by some honest index (say, inflation + 50% of economic growth) may be prudent.
Rather, it is other consequences of Prop 13 that annoy me.
First, the heritable tax preferences that have emerged over a generation are simply unconscionable. I’m lucky enough to have inherited a California house taxed at 1977 levels, and let me tell you, it’s wonderful to be paying a tax rate that reached a nadir of 0.07%! (It’s up now for various reasons). However, it’s hardly fair — especially, as many have noted, since this benefit is enjoyed disproportionately by corporations.
Second, the combination of overall limits (defensible) accelerated by special provisions (mostly for corporations) means that California has switched its state revenue base substantially: in place of property taxes, which are locally bound and relatively slow to change, we rely on a high sales tax (tremendously regressive, especially since items like yachts are tax-exempt) and high capital gains taxes. These are both highly procyclical income sources, and volatile; just when the state really needs steady revenue, they collapse. The result is roller-coaster revenue, which gets spent at the top, then the shortfall is borrowed at the bottom. The result is that in 2009-10, state general fund revenue was nearly 40% (!) less than the previous year. That’s not a spending problem, folks! That’s a volatile revenue problem.
Finally, as most commentors recall, Prop 13 also instituted 2/3 legislative super-majority requirements both for a budget and for any tax increase. As many have noticed, it is legally and constitutionally preposterous for a simple majority (required for Constitutional amendments in California) to be able to mandate a supermajority requirement. It means that small majorities can effectively act like a supermajority in passing such laws, then stand as the subminority when small political shifts take place, and block almost anything.
In short: “According to reactionaries, out-of-control spending is the only cause of California’s fiscal predicament….
May 4, 2010, 11:41 pmAndrew J. Lazarus says:
That’s because (as you doubtless know), their entire argument is somewhere between a scam and a sham.
May 4, 2010, 11:43 pmPQuincy says:
“I have never lived in California. Can someone give a brief summary of how the lives of the average citizen have been improved by the increased state spending over the past ten years?”
A fair — indeed a telling question! The answer, unfortunately, is that the average citizen has not benefited much. California roads are mostly rough, public primary and secondary schools are mostly abysmal, and the state universities receive about half as much funding per student as they did 15 years ago, leading to large tuition increases.
Where, then, has the money gone.
1. To health care. California provides relatively generous Medical (=Medicaid) and childrens’ health care benefits. The cost of these has been exploding.
2. Prisons. Californians love to feel ‘tough’ in the ballot box, and have passed a series of measures by initiative that mandate long sentences (including a draconian ‘three-strikes’ law by which minor crimes can lead to a life sentence). Even though the state has been building prisons rapidly, and hiring very-well-politically-connected prison guards even faster, the corrections system is a desperate, overcrowded mess that sucks in ever more money.
3. Debt service. As noted above, Californians also love to feel ‘generous’ at the ballot box, and have passed bonds to fund projects from open space and libraries to stem cell research and high-speed rail. Good investments? Perhaps, perhaps not, but those bonds have to be services.
To be honest to Anderson and some commentors (if not to Voegeli: that little bird lost his credibility, especially at a serious site like Volokh, the second he reproduced the snark about “moral and intellectual ‘superiors’”), a fourth problem that is already serious but will continue to grow has been pension commitments that are unsustainable. Since California’s localities have been squeezed for revenue since at least 1992, they have substituted unfunded promises for actual raises when negotiating with public service unions. Again, there may be debate about whether public service unions get more than their share (*notice: I’m a CA public employee, but not unionized), but the reality is that vested pension benefits, constitutionally protected, now loom large over many local, regional and the state budget.
May 4, 2010, 11:55 pmAnthony says:
Explain how a 2/3 majority requirement to increase spending isn’t a logical way to cut spending over the long term?
May 4, 2010, 11:56 pmMark Field says:
PQuincy and Andrew Lazarus have nailed it.
May 4, 2010, 11:57 pmPat Cahalan says:
As pireader, dw, and OpenVolokh all pointed out,
> If there is a two-thirds majority required to raise taxes, then there
> must also be a two-thirds majority required to increase spending.
> Otherwise bankruptcy is the almost-inevitable consequence. That is
> the real problem with Proposition 13.
… except for the fact that states can’t declare bankruptcy, it’s essentially correct.
@ A. Zarkov
> The idea that Californians want high spending, therefore the government
> should be free to raise taxes without limit to satisfy that public want
> ignores some basic facts. A minority of Californians are forced to pay
> most of the tax burden, and they don’t get back all the benefits.
Welcome to the guarantee of Article IV. You have no right to get back all the benefits, and never have. Life is hard; I don’t get to decide not to pay some of the taxes to support the grossly distended national defense spending of the U.S., either.
I find it vastly amusing that this post comes mere days after Todd’s “Starve the Beast” post.
If you want a stable state economy, remove the 2/3rd majority. Then the Left in California will gleefully raise taxes in order to pay for the social programs they want. And, if the Right is correct, businesses will leave, investment will dry up, and the state economy will slow down and unemployment will go up. And then the voters will listen to someone who talks about fiscal responsibility, and the Right might actually make some headroads in representation.
As it stands right now, the state budget effectively absolves both political parties of being held truly accountable for their political baloney… the Democrats point at the Republicans and cry that they’re killing the state’s income, and the Republicans point at the Democrats and cry that they’re killing the state by spending. They’re both being ridiculous.
> As legal and illegal immigrants continue to stream in, mostly from
> Mexico, the state provides them with expensive services that other
> people have to pay for.
The 2009-10 budget for the State of California was $87 billion dollars; the projected amount for 2010-11 is $102 billion. I would like a nonpartisan citation in support of your statement, sir. I found a GAO report from 1995 estimating the cost of illegal immigration to the State of California to be $2.35 billion, with additional revenues offsetting between $400 million and $1.4 billion of that figure, for a net negative impact of between $1.85 billion and $950 million. I am unable to find a more recent citation; however, it seems unlikely that illegal immigration has the impact on the state budget that you are implicitly claiming, especially as the number of illegal immigrants in California only grew from 1,476,000 in 1990 to 2,209,000 in 2000 (source: the census).
> They also have to pay for the extra crime that the children of the
> immigrants cause.
Citation, please. The crime rate among illegal immigrants (correcting for the natural increase one would expect given that the target population is by definition more likely to be incarcerated, period) is open to debate, but it is unlikely that the extra crime caused by children of illegal immigrants is statistically very large.
> If California could shut off immigration it wouldn’t
> cure the fiscal crisis, but it would help a lot.
Yes, and if we could cut the education budget by 2/3rds, we’d be flush with cash too. I’m open to suggestions as to how California is supposed to shut off immigration. Please submit only those solutions which will pass legal muster. Also explain where you are going to import the 220,000 farm workers to replace the sudden disappearance of 2/3 of the workforce. Although then the central CA agribusinesses can stop complaining about the smelt cutting off the water supply, since there won’t be anybody to pick the food that they can’t grow anyway.
@ RKV
> Given the large fraction of the state budget paid to state
> employees you must cut wages, cut benefits, and cut
> retirements
According to the California Budget project, California ranks 48th among the 50 states in state employees per 10,000 residents. Reduce pay, you reduce the workforce. Given the rate at which the line moves at the local DMV, I’m not terribly convinced that this is a great idea. Yes, the state pension fund is currently a major problem, but given the fact that those are contractual obligations (and again, states can’t declare bankruptcy), you can’t just cut them.
Nor, in fact, will you ever be able to hold those people who sell political influence to the prison guard’s union or any other union accountable as long as they can keep pointing at conservatives for refusing to raise taxes. You are insulating them from the negative consequence of their actions.
Give them the ability to raise taxes. Taxes will go up, and people will think three times before voting for any spending. Or voting for anyone who signs off on one of these contracts.
May 4, 2010, 11:59 pmA. Zarkov says:
The Census numbers are wrong being severe under estimates of the actual number of illegal aliens. This necessarily follows from the defective sampling methodology they use to form their estimates. Morgan Stanley did a study and estimated the actual numbers are more than double that Census reports.
May 5, 2010, 12:43 amA. Zarkov says:
Look at the National Victimization Surveys here and you will see that Hispanics have 3 times the crime rate of whites. You can find incarceration statistics broken down by age, sex, and race here.
May 5, 2010, 12:54 amA. Zarkov says:
So you propose we ruin the California economy to show the voters that California’s overspending is unwise. Then it will be too late. It might already be too late.
May 5, 2010, 12:59 amA. Zarkov says:
The federal government can shut off immigration. It did so in 1925. California governments can stop promoting illegal immigration by such policies as sanctuary cities. California can force employers to use E-verify and punish them if they don’t. In short California can adopt policies that make life unpleasant for illegal aliens. See Arizona.
As for farming, we can replace immigrant labor with farm machinery. Right now immigrant labor is so cheap there is no incentive to do the R/D. Shut off the flow of cheap labor and farm wages will increase. The companies will offer farmers machinery to reduce their costs. If we can virtually build a car with robots, we can certainly development a machine to pick strawberries.
May 5, 2010, 1:07 amkazinski says:
Yeah, but California voters have made it clear that they do not want higher taxes as a solution to the spending crisis.
As Democrat Kevin Starr the State Librarian put it way back in 2003, and things have gotten worse since then:
May 5, 2010, 1:10 amPat Cahalan says:
> Morgan Stanley did a study and estimated the actual numbers are
> more than double that Census reports.
I didn’t know that Morgan Stanley was regarded as a demographics research expert. Granted, the census results are limited; they were citing in the original post, however, and you took no issue with that. Please to be granting me the full citation, as I requested, so that I can check your references. I do not have the time to fact-check other people’s arguments when they rely on incomplete data.
> Look at the National Victimization Surveys here and you will
> see that Hispanics have 3 times the crime rate of whites.
Without correction for socioeconomic background, legal status, and type of crime, this statistic is close to utterly meaningless. The census numbers have more meaning; they’re a bad measurement, but at least they’re trying to measure the actual targeted behavior.
> So you propose we ruin the California economy to show the
> voters that California’s overspending is unwise.
No, I propose we remove a legal barrier to taxation that exists in a vanishingly small minority of states in the Union, and let the electoral population of California grow up and either pay for what they claim they want, or quit their complaining and lower their expectations. Yes, if this means we tank the economy for 3 years or 5 or even 10, that’s a regrettable side effect of actually fixing the problem. As long as both political parties are knee deep in information asymmetry with the voters, things will not get better. I agree with your comment that it is too late to put this train back on the rails. Stop trying, it’s just making it worse.
> The federal government can shut off immigration.
I thought we were talking about California.
> It did so in 1925.
Oddly enough, the world has changed slightly in the last 85 years. What makes you believe that any methods that worked in 1925 would produce any positive result today? That aside, you know that the Immigration Act of 1924 (to which I presume you’re alluding here) was a major diplomatic blow to U.S. – Japan relations, I’m assuming. Anti-immigration laws are just national protectionism of labor, instead of goods.
> California governments can stop promoting illegal immigration
> by such policies as sanctuary cities.
I highly doubt that any measure in the state of California (or the greater nation, for that matter), will produce an economic incentive that increases significantly the desire for people to come here for work beyond the incentives that already exist. You know what cuts down on illegal immigration? Recessions. Not much else. As long as the standard of living is higher here, people will come here. To fix that, you need to raise the standard of living where they’re coming from, lower the standard of living here, or raise the standard of living somewhere else that they can go. People follow the dollar, the law be damned.
> California can force employers to use E-verify and punish
> them if they don’t.
No, they can’t. It doesn’t work. See the thread on the “secure ID” a few days ago. E-verify is a colossal joke, as an identification and authorization mechanism. Oh, it’s also a government program, how are you planning on funding that, precisely? By taxes, perchance?
> In short California can adopt policies that make life unpleasant
> for illegal aliens. See Arizona.
And yet Arizona, which by any measure has had a recent history of making life much more unpleasant for illegal immigrants than California… still… has… an illegal immigration problem. Which, according to FAIR (certainly a conservative institution as far as immigration goes), is oddly enough *bigger* than California’s as a share of the state’s economy. This is not exactly a ringing endorsement of the empirical validity of the strategy.
> As for farming, we can replace immigrant labor with farm
> machinery.
That’s an interesting hypothesis. You realize, of course, that automated gathering of crops requires an entirely different method of planting, and presuming that your R&D cycle is capable of replacing the workers with machines you have a number of other considerations such as capitalization costs, environmental impact, etc. This is hardly a near term solution. But I digress, this isn’t precisely germane to the rest of the thread.
> Right now immigrant labor is so cheap there is no incentive
> to do the R/D. Shut off the flow of cheap labor and farm
> wages will increase.
Yes, wages will increase. Until your farm machinery solution is in place, and suddenly all of those low-skill jobs that suddenly were capable of putting you over the poverty level will vanish outright. Nothing quite like kicking those undesirables out of the country so that we can give decent farm jobs to Americans… just until we can replace those Americans with a roto-picker. Duplicating the UAW with the UFW, fantastic idea. Let’s make Bakersfield the next Detroit.
You can’t expect free (or fair) markets the world ’round and also expect that the labor force isn’t going to go where the money is. Labor is part of the market, too… lower the barrier to moving goods around and you move the money. Move the money, the people follow.
@ kazinski
> Yeah, but California voters have made it clear that they do not
> want higher taxes as a solution to the spending crisis.
California voters have not made any such thing clear. 1/3rd of Californians have made that clear, that is about all that we can accurately surmise given recent election returns.
May 5, 2010, 2:14 amDavid M. Nieporent says:
Okay, I’m convinced: you’re Welker, aren’t you? Weren’t you banned?
May 5, 2010, 2:34 amPerseus says:
No, the problem is not Prop. 13 or the 2/3rds requirement for raising taxes, but the successive gutting of the Gann spending limits by Prop. 98 (funded by the odious teachers’ unions) and Prop. 111.
May 5, 2010, 3:03 amKanchou says:
I don’t see how that’s some kind of revelation. Things are more expensive in California, things cost more, people earn more, and pay more tax, and it cost government more to fulfill its missions, etc. I am sure the average income for California residents are more than 14% compares to national average. I know for a fact that locality pay for federal government employees in California is usually in 20-30% range, doubles that 14%. Does anybody want to bet that Professor Volokh’s salary at UCLA is over 14% more than national average for law professors?
One thing I really think Prop. 13 should be change is that the asses value should be adjusted when people take out HELOC or cash-out re-finance. I can see the property tax being frozen for people on fixed incomes. But if people use their home for income like ATM machines, I don’t see how it can be justified.
May 5, 2010, 3:09 amThe ATM on Turtle Ridge, Irvine, California
Sebastian H says:
“First, the heritable tax preferences that have emerged over a generation are simply unconscionable. I’m lucky enough to have inherited a California house taxed at 1977 levels, and let me tell you, it’s wonderful to be paying a tax rate that reached a nadir of 0.07%! (It’s up now for various reasons).”
I’m confused. The death of the owner, unless it is then owned by his/her spouse, and then definitely when the spouse dies, allows a revaluation of the house for Prop 13 tax purposes.
Part of the problem is that people lump all of Prop 13 into one idea.
The tax reassessment provision on owner-occupied homes seems fair to me. It seems stupid to tax someone out of their home just because other people in their neighborhood bid up the price. This is especially true as it is re-valuated upon sale or death of the owner (with some provisions made for spouses). Further the tax effects are readily calculable for projections. If the legislators can’t deal with the predictability when planning, they are being idiots.
The inclusion of corporation and corporate ownership in the above doesn’t have the same justice commitments behind it. And they don’t ever die, thus avoiding the revaluation. This is probably less fair.
The 2/3 tax increase requirement is the real Prop 13 culprit. I’m not against it in theory, but the voting requirement for spending increases should be the same (whatever you set it at) as tax increases. Making one a majority and the other 2/3 is just silly.
May 5, 2010, 3:11 amh0mi says:
Other states dont have Prop 13 like provisions on property taxes. How are they faring, in terms of services provided, expense, extent, and whatever deficits (or not) they have?
May 5, 2010, 3:19 amGlen says:
Not always.
Other propositions have been approved by California voters (e.g., 58, 60 and 90) that allow homeowners to preserve their base valuation even upon sale. Owners 55 years or older can usually transfer their base valuation if they buy a replacement home in their current county, or in one of nine other counties that allow these transfers (Alameda, El Dorado, Los Angeles, Orange, San Diego, San Mateo, Santa Clara and Ventura). The replacement home must be of equal or lesser value. The rationale for this provision was to eliminate the burden of higher property taxes that older homeowners might face and encourage them to sell large homes that could be more suitable for younger families.
Base valuations can also be passed onto children by parents, and to grandchildren by grandparents. Here the rationale was to help keep property within families by eliminating any burden that higher property taxes might place upon successors. “Children” are considered to be natural children, stepchildren, sons-in-law and daughters-in-law, and children adopted before the age of 18. Likewise, “grandchildren” includes step-grandchildren and grandchildren-in-law.
So yes, California has created a landed aristocratic class.
May 5, 2010, 4:19 amMr L says:
…which is why we should overturn a wildly popular initiative that passed 2 to 1. Got it.
First off, I don’t see how this helps your argument since it’s already been established that California’s spending is both relatively high and well in excess of combined inflation/population growth. One of the main reasons Prop. 13 passed in the first place was a massive bloat (100% over 2 decades) in the number of government employees; state legislators have since adamantly refused to arrest or reduce compensation, instead choosing a decades-long attrition strategy.
Secondly: if you’d like to claim that reducing pay would reduce the number of state workers, you’re out of your mind. Setting aside the state’s astronomical 12.5% unemployment rate and extremely generous pension plan, California’s state salaries are legendarily high. If you want something more specific, knock yourself out. Start with ‘California Highway Patrol.’
May 5, 2010, 4:25 amDon’t Blame Proposition 13 | Little Miss Attila says:
[...] . . . for the problems here in the Golden State. [...]
May 5, 2010, 5:09 amVisitor Again says:
I’ve lived in California since 1957 except for three years in law school from 1965 to 1968. I have seen governmental services–the schools, the roads and other municipal functions–go from the finest in the nation to among the worst. The decline began when Ronald Reagan became governor and it accelerated on the passage of Proposition 13. A great state that was a magnificent place to live has become a disfunctional state that is a place to move away from. The responsibility lies with the anti-tax movement, funded by the wealthy and the huge corporations, which, not surprisingly, has benefited the wealthy and the huge corporations at the expense of all the people. You get what you pay for.
May 5, 2010, 5:11 amFrank Drackman says:
Went to highschool in California the year before prop 13…
School had Freshman/Sophmore/JV/Varsity Teams in Basketball/Football/Baseball/Track&Field..
also had WaterPolo, Cross Country, Tennis, Golf, and a few more I can’t remember cause it was over 30 years ago…also had like 5 different bands/glee clubs/ for all those f***s who couldn’t make one of the multiple sports teams…
and it was great, cause where else could a 5’7″ 130 lb kid play in Officially sanctioned California Interscholastic Federation Basketball/Baseball/Football games??
Certainly not in Alabama, where we moved before my Junior year, only ONE team in a few sports (No Water Polo in Bama’) and don’t even think about goin out for the O-line if you weren’t 300+ lbs…
frank
May 5, 2010, 8:54 amOpenVolokh says:
Mr L,
Excellent post!
I really like the link to raw data on salaries. And you are absolutely right that salaries for the California Highway Patrol are WAY too high. I appreciate the work done by the CHP officers. But when over 6 figure salaries are the norm for officers, something is out of whack. I would say that the salaries for corrections officers in the Department of Corrections are also too high, though not as out of control as for the California Highway Patrol.
Browsing the pay for other government departments, they do not strike me as out of control. Though with some significant exceptions.
In my view, the State of California should go through and cut some of these salaries that are at the high end down significantly, especially at CHP and the Department of Correction. I would be interested in how much budget savings are possible.
That said, Proposition 13 and the two-thirds rule are still major problems and should be changed.
May 5, 2010, 8:55 amray_g says:
I moved to California the year after Proposition 13 passed (1979), and it has been interesting watching what has happened. Prop. 13′s first effect was to limit the growth of local tax revenues. Rather than adjust to that by either not increasing spending or by raising other local taxes, the local governments made a Faustian bargain with the state government where the state government would take some of the local taxes, and then help pay for things like education out of the state general fund. This worked then, because the economy was doing great and the state had the extra. California even ran some surpluses in the 1980s, I recall getting a refund check one year. So, IMO the problem with Proposition 13 was that the politicians, rather than face up to the reality that the local taxes would not be growing as much as they liked, played games to keep increasing spending.
This had two bad effects: the local governments gave up local control of a significant amount of the local revenues and spending; and it increased the drain on the state general fund. When the economy cooled, the state fund was under more pressure, and the state began to ask for a bigger piece of some of the local revenues.
Now, as far as the initiative bond issues, I agree that situation is stupid. But a couple of months ago I did some research, and the amount of the budget that goes to servicing the debt on those bonds is less than 10% (I forget the exact number). This is a big amount of money, but that still leaves 90% of the state budget that could be adjusted to prevent the deficits.
The media commentators and the politicians keep trying to somehow blame the voters, but the real problem is that the legislature kept increasing spending as if they thought the good times would go on forever.
(As an aside, I find it interesting that what are arguably the two most popular voter initiatives of the last 35 years, Proposition 13 and term limits, are the ones that the media commentators and the politicians spend most of their time complaining about.)
May 5, 2010, 8:56 amdew says:
The 48th out of 50 is of questionable usefulness. There are differences (sometimes quite large) between the states over which services are provided at the state, county, and local levels.
Do you have any evidence for this? Many municipal positions around here (not CA) have zero problems filling most positions. Even a couple years ago when the economy appeared great, many openings I saw had multiple qualified applicants for any open positions (esp. K-6 teachers and firefighters). In the private sector, that is a pretty strong indication that you are overpaying.
May 5, 2010, 9:13 amBlue says:
This is a silly argument–the rate is meaningless…it’s the absolute increase in crimes that occurs as a result of the illegal population that is at issue. In Texas, for example, around 10-12 percent of our inmate population is illegal. If they weren’t in the state that’s a large cost that we’d never have had to bear.
May 5, 2010, 9:39 amKenB says:
Mark N says:
I agree. It’s been tried, and it failed as initially posited. But I am not willing to conclude that we must therefore let the left tax and spend us into oblivion. That they will do so if left unchecked is now being proven at the federal level.
What I do conclude is that focusing on taxes was focusing on the wrong part of the problem. Perhaps it should take a super majority to raise spending above the combined rates of inflation and population growth. If we don’t control the spendthrifts somehow, we will soon be following Greece into widespread poverty.
May 5, 2010, 10:03 amBob from Ohio says:
So sensitive.
May 5, 2010, 10:15 amPhatty says:
What I’ve never understood about progressives is that they have no end game or goal post in sight. The whole point of their existance is to offer voters more services/benefits than what is currently provided. But, no progressive will ever be able to tell you what level of benefits/services is adequate.
Each election cycle, in order to be elected or reelected, the progressives will offer bigger and better easter eggs from the government. It cannot be sustained forever. Eventually something will have to give and there just will not be enough money in the economy to pay for the promised benefits.
That is where Greece currently finds itself. And now the citizens of Greece are rioting because of the looming cuts in state spending, because they have been indoctrinated for generations that their right to state benefits is a birthright, as if money to pay for all those benefits magically falls from the sky.
May 5, 2010, 10:29 amOpenVolokh says:
Phatty,
The reason no one will answer your question about levels is that the question is viewed as incoherent. What do you want, a percentage of GPD? Government spending should be X% of GDP?
That is silly. If the government could perform its missions more efficiently, then maybe that percentage could be lower. If there are things that the government hasn’t done but should do, then maybe the number should go up.
When government wastes money, I want that spending cut. Completely. It doesn’t matter how much spending is relative to GDP. I do not like wasted money.
Likewise, if there is a specific mission that government should do, then the question is what resources are required to do that mission effectively.
The reason you do not get an answer to your question is that isn’t really of interest to progressives. The answer to the question of what percentage of GDP should be spent on government services in the future is: “I don’t know. It depends on what we decide government should or should not do in the future.”
I do know this. Whatever the government does, it should do so efficiently. If you are paying CHP officers six figure salaries, you probably could cut those salaries in half and double the size of CHP without too much problem. Would doubling the size of CHP be a wise use of that money? Probably not. But it would be a better use of the money than overpaying salaries to a lucky few. Probably, you should cut the salaries and shift the money to elsewhere in the budget or to modernizing the CHP’s use of information technology or, in better economic times, to tax cuts.
May 5, 2010, 10:48 amPhatty says:
OpenVolokh,
Let me explain my question/comment a bit further. If any given progressive was the supreme dictator for a day, and had absolute power to implement any and all changes to the government, and those changes magically occurred instantly, what would that progressive do? In other words, what does a progressive’s utopia look like?
Whatever the answer to that question may be, my point is that the next election cycle after the utopia has been completely implemented, the progressive candidate will still be offering to give more benefits to the voters, because that’s the only way the progressive candidate knows how to earn votes.
May 5, 2010, 11:04 amDuracomm says:
California has high taxes. Unfortunately it has an extraordinarily profligate political class.
Despite what the prop 13 haters would like to have you believe California’s problem is overspending not under-taxing.
California’s Spending Addiction
What caused the deficit? State spending has increased 92 percent in 10 years
Has california’s public services provided 92 percent more value to taxpayers?
I doubt it which is probably why the voters rejected the last round of tax increase that was put on the ballot.
May 5, 2010, 11:08 amOpenVolokh says:
Phatty,
Guess what. Different people who go under the progressive label want different things. It is the same with conservatives.
If you ask conservatives, if have a bundle of money of size X. What percentage should be allocated to the border patrol and what percentage should be allocated to the military, you are going to get different answers.
Each thing that the government does should be independently evaluated on its merits.
And yeah, if you made me supreme dictator for the day, I would have a really hard time trying to figure out how much to spend on different items in the budget. I think anyone who took the issue seriously would have a hard time.
If I was made supreme dictator of a large private corporation like Boeing Aircraft, likewise, I would have a hard time figuring out how to allocate funds. Would I be able to do it. Sure. In one day? Definitely not. It would be an ongoing process.
Budgeting is not easy. Conceded. It isn’t easy for conservatives, it isn’t easy for liberals. It isn’t easy for private corporations, it isn’t easy for governments. That progressives wouldn’t be able to immediately spew out an answers concerning complex budgeting problems would be an indication that they are responsible. Anyone who thinks such problems are trivial or easy is not really taking the problem very seriously.
May 5, 2010, 11:16 amOpenVolokh says:
Voters also keep on accepting spending on large projects through the issuance of bonds. Voters do not really have a great grasp of the budget. And who could blame them. To try to understand the California budget or the budget of any state would tend towards being a full time job.
You know. I am not interested in this conclusion. California has definitely been overspending on some things. Just as any entity with a large budget is going to overspend on somethings. California is also underspending on other things. If you think California is overspending, an enumeration over specific items would be useful. Then we could either agree or disagree on those individual items.
I think California is overspending on California Highway Patrol salaries when you see such huge numbers of officers making over $100,000 per year, for example. But, there are other areas where I would like to see the state increase spending.
Proposition 13 needs to be gutted because it just furthers budgetary irrationality. Taxes rates are not decisions of a constitutional dimension. But in California, it is easier to change the state constitution than it is to change tax rates. Also, proposition 13 violates the principle of majority rule.
If and when the Federal Government ever has to bail California out, it should only do so only with loans and only on the condition that California raise taxes sufficiently to finance paying the Federal Government back. This point might be mitigated somewhat by the fact that California pays more in Federal taxes than it receives back in Federal services. But ultimately, there is a real risk that California’s irresponsibility in passing proposition 13 will end up costing everyone else money when California requires a bailout.
Overall, California is a fairly liberal state. Therefore, voters are going to choose to allocate more money to government services like education than other states. There is absolutely nothing wrong with that, though of course any individual voter is entitled to his or her individual opinion.
May 5, 2010, 11:30 amDeanS says:
Here in Florida we have a similar constitutional amendment. An explanation from Wikipedia:
http://en.wikipedia.org/wiki/Homestead_exemption_in_Florida
“…
May 5, 2010, 11:32 amFlorida property tax homestead exemption reduces the value of a home for assessment of property taxes by $50,000, so a home that was actually worth $100,000 would be taxed as though it was worth only $50,000. However, the second $25,000 of homestead coverage does not apply to the school portion of property taxes — and only applies to the third $25,000 of a property’s total just value (i.e., that portion of a property’s value between $50,000-$75,000).
Additionally, the Florida homestead exemption caps the rate at which property assessments may be increased annually. Though millage rates may be changed, the assessed value a house with a homestead exemption can be increased by is fixed. This is the result of the “Save Our Homes” Amendment to the Florida Constitution which was passed by voters in 1992, and went into effect in 1995. The amendment caps the increase of the assessed value of a home with a homestead exemption to the lesser of 3% or the rate of inflation. This means that if an owner had a homestead exemption on a home valued at $100,000 in 1995, and the exemption was still valid in 2005, the most the home could be assessed at is approximately $126,000 [4]. For comparison, records of the Florida Association of Realtors show the median price of a single family home during the same time increasing 138% from $86,000 in 1995, to $205,000 in 2005 [1]
Homestead exemptions are only available on an individual’s primary home. Therefore, this exemption does not apply to businesses, rental property, second homes, homeowner’s claiming permanent residency-based exemptions or tax credits in other states, or homes with owners that do not claim Florida as their primary residence. Because of the “portability” provision of the January 2008 constitutional amendment, a homesteaded owner may now move up to $500,000 of the “Save Our Homes” benefit from one Florida home to the next. [5] However, acquiring a house that had a homestead exemption does not entitle the buyer to retain the low tax rate enjoyed by the previous homesteaded resident, as homestead exemptions cannot be inherited or purchased.
..
“
There was also a change made in 2008 (limiting tax increases on business property to 10% a year) because so many small business were being forced to sell their (many beach front) properties because the property became so high they couldn’t pay them. For example, there were numerous articles about mom and pop restaurants that had served affordable meals for decades that were otherwise profitable that could not pay the property taxes that were increasing at a rate of 30-40% a year.
Dale says:
I’m coming a bit late to the post here, so maybe this is been noted. But, Prop 13 passed over 30 years ago. That’s long enough for most elected officials to figure out it’s on the books. The fact that California’s fiscal is fecal has more to do with the unwillingness of politicians to live within the restraints placed on them than the restraints themselves.
May 5, 2010, 11:32 amAndrew J. Lazarus says:
Duracomm, you keep posting budget numbers that have all the salience of attendance at Dodger games. We expect government spending to go up, not just because of inflation and population growth (which even you didn’t account for in your 92 percent calculation, doubtless to pump up the numbers), but also general economic growth.
The numbers you copy are provided by people with visceral, moral hatred of taxes, who need some retroactive statistical flim-flam to bring people to their argument.
You want to talk about Greece? Greece has an extraordinarily high rate of tax evasion. As far as I can tell, the most likely consequence of the incessant droning that taxes are bad, now that the primary goal of destroying public services while reducing the tax burden on the already prosperous is close to attainment, is that all Americans will adopt the Greek attitude towards taxes.
May 5, 2010, 11:33 amAndrew J. Lazarus says:
You talk about politicians as if we live in a dictatorship, with the exception of Prop 13 passed by the people. It is the people who are unwilling to live within the restraints they voted on themselves. The people, for example, passed Prop 98 to guarantee certain levels of revenue to K-12 education. It’s also the people who demanded, and the politicians who responded, enormous increases in the prison population.
Of course politicians could pass budgets in line with spending limits, but as I pointed out before, had the Gann Limit been passed in 1910, the current limit would be somewhere around $7.5 billion. That is, about five percent of the current budget. I dare you to come up with any sort of reasonable budget (for example, how many teachers, police, etc.) on $7.5 billion.
May 5, 2010, 11:41 amcaliforniamom says:
Living in California I know that if Prop 13 were abolished tomorrow and homes were all reassessed and taxed at market price instead of purchase price, there would be a massive sell-off of residences. People who had budgeted for property taxes at Prop 13 levels and couldn’t afford the higher rates would have to sell and either rent, buy a much cheaper home, or move to a cheaper cost of living state.
The prices of homes would fall under that scenario. Would the state have a net gain?
May 5, 2010, 11:43 amOpenVolokh says:
I would only end Prop 13 for corporations and maybe for homes that worth more than a few million dollars. The more problematic aspect of Prop 13 is the requirement of a two-thirds majority for ANY tax increases of any sort. There is no doubt that an unintended consequence of Prop 13 has been to seriously distort housing markets. However, it would be unfair to disrupt the lives of families that have relied on such distortions. Maybe slow adjustments over time would be reasonable, however.
May 5, 2010, 11:46 amPhatty says:
That presupposes that a state has no other revenue sources other than property taxes. Even if Prop 13 abolished property taxes completely, California could still make do just fine by raising sales taxes, income taxes, estate taxes, etc.
May 5, 2010, 11:57 amAndrew J. Lazarus says:
No, $7.5 billion is taking the state budget of 1902 ($10 million) and compensating for population and CPI increase. It has nothing to do with property taxes in isolation. It is the Gann Limit over the last 108 years.
May 5, 2010, 12:00 pmDuracomm says:
Andrew J. Lazarus said,
Good example of the closing of the liberal mind.
The attitude seems to be don’t bother me with the accurate facts on spending it might disrupt the myth of under-taxation I have carefully created in my head.
Lets call it what it is government policy via fiscal creationism.
You might, but we sure don’t expect spending to increase without justification.
But the big question is how much is enough Andrew?
Did the average citizens budget increase by 92 percent in that interval of time?
The idea that government and their special interests should have a better fiscal situation than the citizens who pay for them represents a disgustingly self centered sense of privilege.
May 5, 2010, 12:07 pmPhatty says:
Yeah, but why are you assuming that just because a certain element of the budget has been limited that all other elements of the budget would stay the same? It seems clear to me that if the Gann Limit had been implemented in 1902, other non-property taxes would have been dramatically increased to balance out the loss of property taxes.
May 5, 2010, 12:09 pmOpenVolokh says:
Phatty:
Prop 13 was a de facto abolishment of other taxes as well. It requires an overwhelming two-thirds majority for tax increases.
May 5, 2010, 12:25 pmOpenVolokh says:
This sort of rhetoric is very unhelpful. If you feel the State of California is overspending in certain areas, why don’t you make the case? I am sure that the case could be made that the state is overspending in some areas and underspending in others.
But, if self-righteous preening is more your style even though it is completely unhelpful, by all means, carry on.
May 5, 2010, 12:29 pmDuracomm says:
OpenVolokh said,
Mister kettle paging mister pot. Mister pot please pick up the paging telephone.
Just kidding…
May 5, 2010, 12:44 pmmischief says:
Except that as they leave, they will take their stupidity with them and go on voting for more spending of non-existent money. Better they be quarantined in California.
May 5, 2010, 1:07 pmAndrew J. Lazarus says:
Phatty, I don’t think you understand the terms in use here. The Gann Limit has nothing to do with property taxes. It is a spending cap on governments, limiting budget growth to increase in population and CPI. It limits the entire budget. If it had been enacted in 1902, the entire state budget would be capped at $7.5 billion today. I am not trying to baffle you by hiding one type of tax and showing you another. I am demonstrating that Duracomm’s Fundamental Axiom that budget growth should be capped by population and CPI increase makes no economic sense whatsoever. Prop 13 is a separate issue.
Probably not, although an entire generation of people’s did as they graudated school and entered the job market. My salary today is in fact more than 92 percent higher than in 1990, even in real dollars. The average citizen has one ovary and one testicle, what do we make of that?
Leaving all that aside, though, your next Fundamental Axiom, that the State Budget should behave just like the citizens’ budgets, is just as historically foolish as the Budget Growth Axiom that, if followed, would have us running the state on $7.5 billion today. The state budget has to accommodate changes that don’t get reflected in the average citizen’s experience: for example, the state spent a great deal of money (for better or worse), much higher increase than CPI, keeping criminals away from the average citizen. All those new prisons aren’t reflected in the average citizen’s kitchen-table bill reconciliation, because they don’t have a line item for “Value of not getting mugged by mugger who got caught with Three Strikes”. To pick the most dramatic example, the Federal budget in 1945 was something like 900% of the Federal budget in 1940. Would you present a complaint that the average citizen budget didn’t increase by 900%, or would you figure out how bogus your general rule is?
May 5, 2010, 1:22 pmBeandip says:
While I agree that California’s fiscal woes are the result of decades of innefficient and wasteful spending, I fundamentally disagree that it is the result of “the government”. California’s fiscal woes are just that-California’s. The problem with California is an extreme example of what state and local governments are facing across the country. Everyone wants services but no one wants to pay for them. The rampant spending is the result of pressure being placed on state and local governments to fund this project or that service-including the same people that vote for things like Prop 13 and against increases in fees or taxes when it involves some service they want or support-regardless of political inclination. There is no evidence to support the claim that conservatives are less “spendthrift” than liberals…they just want to spend on different things. I suspect that the number of republicans who took out home equity loans to finance personal spending is no different than the number of democrats or independents as a function of the overall population (although I am open to contrary evidence if it exists). At some point something has to give.
This is not a liberal or conservative problem…it is a problem of governance. Prop 13 is bad not because it limited the ability of government to generate tax revenue (it in fact didn’t, it just shifted it). Prop 13 was bad because it had the unintended and perverse consequence of reducing the ability of elected officials to say no to wasteful or unfunded spending by unleashing a wave of referendum initiatives that have dwarfed the effect of Prop 13, just as many of which come from the left as the right. We are quick to blame “government”, but we are clearly unwilling/unable to govern ourselves. The idea that if only we listen to voters, rampant spending would be under control is illusory at best. Voters, regardless of political affiliation, vote for spending and against revenue.
Ultimately, Californians have only themselves to blame-liberals, conservatives and independents alike-for their unwillingness to keep themselves in check.
May 5, 2010, 1:41 pmOpenVolokh says:
It established the rule that it takes a two-thirds supermajority to increase taxes. It has thus had a huge impact beyond just property taxes.
Blaming subsequent referendums on Prop 13 is a little off. Prop 13 is not the power that establishes such referendums. On the other hand, since Prop 13 did disempower the legislature to such a large degree, it did result in more spending referendums.
May 5, 2010, 1:53 pmBen says:
Everyone should scroll up and read PQuincy’s excellent analysis of Prop. 13′s flaws. The main problem that Vogeli continues to studiously ignore is the instability in California’s General Fund, because the GF is (post-Prop. 13) completely dependent upon volatile sales and income taxes. Thus, for example, the K-12 education budget has been cut by more than $20 billion in the last two budget cycles.
May 5, 2010, 2:03 pmBeandip says:
“It established the rule that it takes a two-thirds supermajority to increase taxes. It has thus had a huge impact beyond just property taxes.”
Absolutely. But it did not prevent or limit the ability to generate revenue from other sources (call them taxes or fees or debt…) or keep spending in check, which was one of the principle goals/justification for the measure.
“Blaming subsequent referendums on Prop 13 is a little off. Prop 13 is not the power that establishes such referendums.”
Fair enough. Prop 13 is simply representative of a trend and marks a convenient turning point. There are other examples. Arguably, had Californians kept spending in check prior to Prop 13, Prop 13 would not have been necessary. My point is not that Prop 13 is necessarily bad, only that over time, citizens and voters have been increasingly unwilling to pay for services they demand be provided. I do think that Prop 13 had the effect of excelarating the trend, but this belief is anecdotal…perhaps the trend was well under way.
May 5, 2010, 2:05 pmDuracomm says:
Andrew J. Lazurus said,
Population and inflation is a benchmark to show just how bloated government spending has been.
Interesting data point is how many people freak out at the idea of benchmarking government spending and comparing it to private sector growth.
And how much of the growth in the california prison industrial complex is due to prison guard unions lobbying for laws that would balloon the prison population and make money for them?
The Scam of the California Prison Guards Union
Throwing vast amounts of people in prison will reduce the crime rate.
The question is when do you reach the point of diminishing returns and just how much of the growth in prison population returned no real benefit to the citizens of california.
May 5, 2010, 4:04 pmAndrew J. Lazarus says:
Make up your mind. Private sector growth is (roughly) measured by GDP. No way that it is measured by population+CPI. So do you really want to compare state budget to GDP (i.e, some rough measure of private sector growth), or to your special purpose benchmark, the one that would result in a budget of $7.5 billion had it been enforced 100 years ago?
As it happens, I tend to agree with you that we are spending too much on prisons and that the guards’ union is not a beneficent influence. However, we seem to be, at least until recently, a small minority in holding this opinion, so prison expenditures dramatize two separate problems for your economic theory: first, the public as a whole, and not (only) professional politicians demanded an increase in prison spending far above population+CPI without approving any corresponding means to increase revenue (the Three Strikes law passed overwhelmingly by initiative), and, second, there is no reason to believe that amounts needed by government for essential societal needs will mirror the so-called average citizen’s budget. The example of WW2 Federal Funding establishes the second point too clearly to warrant any specific reply from you, it appears.
May 5, 2010, 4:30 pmDuracomm says:
Andrew J. Lazurus said,
What happened after 1945? Government spending on military was cut and spending went back to the previous trendline.
That is illustrated here
Name that Blip
Your example shows that my general rule is generally correct, while your objection to it is mostly wrong.
The 900 percent increase was unsustainable. The 92 percent increase is unsustainable.
What you don’t realize, or refuse to accept, is that spending levels in california are unsustainable.The politicians have promised more of other peoples money that the other people can deliver.
The only question is how much economic destruction is going to be visited upon california citizens before the politicians recognize the cold, hard, truth and do something to fix the problem.
May 5, 2010, 4:30 pmAndrew J. Lazarus says:
Sigh, Duracomm, your link is to a chart as a percentage of GDP not in terms adjusted by population and inflation. Which benchmark do you wish to use?
Of course I picked an example to make your general theory exceptionally absurd. However, it comes out just as wacky when applied to the Federal budget over the long run: if the Federal budget were held constant in real dollars per capita, as you suggest is the correct philosophy, for the past 100 years, the Federal budget right now would be about $70 billion, that is, about one-tenth of the 2010 defense budget alone. Forget Social Security, Medicare, welfare, Foreign Aid, TARP, etc. When I pointed that out on this last thread, Mr Walstad entered the special pleading that the rule didn’t apply to Federal spending, although of course he couldn’t articulate any reason for that, other than needing a quick exit from the reductio ad absurdum of the $70 billion budget.
No one has dared explain how that rule would have worked if California adopted it in 1910, which would give a $7.5 billion state budget today. Instead you suddenly start talking about GDP. Hunh?
May 5, 2010, 5:19 pmDuracomm says:
Andrew J. Lazarus,
I am saying that the current spending levels are unsustainable.
Prop 13 is not the problem, levels of taxation are not the problem, spending is the problem.
Your constant reference to budgets 100 years ago and various forms of nit picking seem mostly to be entertaining attempts to obfuscate the fact that government spending is not sustainable.
Most of the people complaining about prop 13 seem to have no concept of the fact that governments can spend more of other peoples money than the other people can generate.
California shows the way – down
That which can’t be sustained won’t.
No matter how much the politicians and various interest groups wish for unlimited amounts of other peoples money to spend.
May 5, 2010, 6:11 pmapetra says:
I see many writers here consider a two thirds supernumerary requirement to raise any taxes as a ‘problem’. It’s not. The problem is the power to spend with abandon above and beyond taxes, mortgaging the future and the citizenry.
May 5, 2010, 6:30 pmgregorya57 says:
Failure to take into consideration the Leviathan-esque public employee, teachers and prison workers unions influence on the Democratic politicians in Sacramento, is to completely miss what the real problem is. The unions buy pols, who then fed the unions. The unions will have to be broken (there should be no right for public employees to unionize in the first place) in order for California to even think about getting back to fiscal sanity. See Greece, for a glimpse of California’s future. A failed state, for sure.
May 5, 2010, 6:44 pmOpenVolokh says:
This is just wrong. If a majority of voters prefer a higher level of government services and a higher level of taxes to pay for them, that is what they should get. Californian’s take pride in things like having the best public university system in the world. But these things cost money. California cannot simultaneously be the lowest tax state possible and have the best public services.
May 5, 2010, 6:46 pmHugh says:
And what about if the federal government goes in to bailout California? Then residents of Ohio and Michigan and Indiana and all the other states will be paying to save Californians from their own folly. Do we get to be critical then?
May 5, 2010, 6:52 pmAllison says:
–that it requires some taxpayers with identical houses to pay more money than others, based on a seniority system
But the owners of these “identical houses” didn’t pay the same amount for the house in the first place. So they weren’t identical–they were valued differently in the market, and the tax differences follow.
But let’s play your game: many people with “identical jobs” are taxed more than others by the IRS, based on a seniority system, too, since some of those who’ve held the job longer receive more income than others. Is that illegal, too?
May 5, 2010, 6:59 pmPerseus says:
This isn’t 1902, and the Gann limits were designed to reduce the spending beast to more manageable proportions.
May 5, 2010, 6:59 pmOpenVolokh says:
That is right Hugh. Except for every dollar that California pays in Federal taxes, it only gets back 79 cents. So, you have to take that into account. But besides that detail, you are right that taxing and spending becomes everyone else’s business if it requires a Federal bailout. That hasn’t happened yet, and hopefully will not happen.
What California needs to do is get its house in order (probably through a combination of tax increases and spending cuts) so that it doesn’t need a bailout. And it needs to get rid of the two-thirds supermajority requirement necessary to pass a budget that led to this sorry situation in the first place. Unfortunately, direct democracy when it comes to taxing and spending doesn’t really work, since most people really do not have either the time or the inclination to understand the nuances of the State of California’s budget.
May 5, 2010, 7:01 pmOccam's Beard says:
Yup, but it’s also the right of the rest of the country to tell California to pound sand when we (I’m a native of the People’s Republic) come with the begging cup – which we will, soon.
And let’s be precise in our language: A majority of Californians may want higher taxes, but they themselves don’t want to pay higher taxes. The majority of Californians want the minority of Californians who pay taxes to pay more. That’s much closer to the truth than your statement.
Fairness – and avoiding the obvious moral hazard – demands that only those who pay taxes – and thus have skin in the game – should be allowed to vote on whether taxes should be raised.
May 5, 2010, 7:02 pmHugh says:
I recently read an article that explored the challenge faced by states that want to provide high levels of services. It is not just a question of providing services…they need to provide GOOD services. Over time, the quality of services gets worse.
“Whatever theoretical claims are made for imposing high taxes to provide generous government benefits, the practical reality is that these public goods are, increasingly, neither public nor good: their beneficiaries are mostly the service providers themselves, and their quality is poor. For evidence, look to the two largest states in the nation, which are fine representatives of the liberal and conservative alternatives.”
States that provide lower levels of services have an easier time. It is easier to keep the quality of services high when you are providing fewer of them.
Here is a link to that article:
http://www.city-journal.org/2009/19_4_california.html
May 5, 2010, 7:02 pmtsotha says:
California has high taxes. Unfortunately it has an extraordinarily profligate political class.
This, I think, is not an accurate statement of the problem. The political class is no more or less profligate than the voters who put them in office. The real problem in California is people who pay taxes are outnumbered by people who are net beneficiaries of government. The political class, as constituted, is just a reflection of this imbalance.
The 2/3 requirement to raise taxes isn’t a problem. It’s the only thing keeping California from driving out the remaining taxpayers.
May 5, 2010, 7:03 pmAllison says:
–If a majority of voters prefer a higher level of government services and a higher level of taxes to pay for them, that is what they should get.
But that’s not what happens. The majority of voters prefer a higher level of taxes for other people. In fact, for a minority of other people.
And CA hasn’t gotten a high level of service for it at all. The UC system is crumbling. The highways are crumbling. There are brownouts every summer, and no ability to build new power plants. There is no water for farmers to grow food because of the “high level of service” the CA govt provides.
Spend some time at the DMV or any other govt office. Here in MN, it takes less than 4 minutes to get a corporation registered in the state, and you can do that 4:50 PM. See how well that works in CA.
May 5, 2010, 7:04 pmgregorya57 says:
Allison is correct. I just fled Mexifornia (for the second, and last, time). The universities are essentially PC indoctrination camps, with little real education being provided. The roads (which were great 20 years ago) are, at best, Third-world. “Service” is a term public employees appear to be utterly unfamiliar with. I lived most of my life in CA, but having lived in Idaho for ten years, and now Washington, I can see how far the state has fallen. It’s only a matter of time before the place implodes.
May 5, 2010, 7:11 pmAlan says:
OpenVolokh – you keep speaking for Californians claiming they want all these expensive things.
However, Californians have spoken and said they want a 2/3 majority any tax increases. Many of the past ballot initiatives for increased spending and borrowing have failed. Again, Californians have spoken.
Why do you support their wishes in only one direction?
I, too, want lots of things and I want to stay in my budget.
Unfortunately, unlike the state employee unions, I can’t buy politicians elections to make sure I get a raise next year at the taxpayers’ expense. Nor can I rearrange my voting district to make sure only Democrats get elected.
You mistakenly connect a majority in the state government with a majority in the state voting population. The 2/3 voting requirement was brilliant move to deal with the mess of the state government.
I will support a state constitutional convention if you support redistricting and the removal of unions ability to fund election campaigns – deal?
May 5, 2010, 7:16 pmMadHatChemist says:
Cutting the 2/3 requirement for raising taxes would not solve the budget crises. The state would just spend even more, become even more bloated, and still demand to spend more then it has taken in.
Not having a 2/3 requirement didn’t protect Nevada from having an equally bloated budget full of waste, and it wouldn’t help California.
I escaped from California, and even though Nevada is going through a rough time, it has two benefits that California does not: no individual income tax and a part-time legislature.
May 5, 2010, 7:18 pmRKV says:
pireader your comments are barely worth a response.
Do you have any evidence that Califonria governments materially overpay the market for their employees’ skills?
Yes. And their pensions and benefits are way out of line with the private sector. http://agenda.nationalreview.com/post/?q=ZmRkMDQ5OWE3NzViNzRjYjVkZWEzMDFlN2UzNmU3ZWI=
Can can you specify what regulatory “red-tape” to cut that would materially reduce California’s budget?
Our full time legislature passes thousands of bills a year. Independent evidence ranks California as the worst place for business in the US. I believe that is enough evidence. Specifics would take volumes to detail.
Why is California’s budget problem is more severe than other high-spend states?
It’s not. Look at New Jersey.
As to studies that supposedly show CA has fewer government employees than other states, they fail to account for salaries paid by state taxes, paid by entities like school districts, thus grossly underestimating the total payroll. Fraudulently I might add.
I am a life long Californian with an MBA, my own business AND 5 years experience in higher education as managerial employee I know the issues inside and out.
May 5, 2010, 7:20 pmRKV says:
“Everyone wants services but no one wants to pay for them.”
Not true. Everyone wants someone else to pay for them. If they had to pay for what they use, they would demand less.
May 5, 2010, 7:24 pmPerseus says:
I agree, and that’s why liberals complain about regressive taxes like the sales tax as a means of funding the spending beast. It’s also why I like Hayek’s proposal that “the majority which determines what the total amount of taxation should be must also bear it at the maximum rate.”
May 5, 2010, 7:27 pmBryan says:
A majority of Californians voted to keep taxes low by requiring a 2/3 majority to raise them. That is their right.
May 5, 2010, 7:44 pmMike K says:
Just a few answers based on living in California for 54 years.
1. The big corporations whose property taxes are kept low by Prop 13, who would pay the higher taxes if they were excluded from it, as some want to do ? Do you think corporations pay taxes ?
2. The 2/3 majority in the law is all that saves us from rapacious public employee unions.
3. Saying the voters are “right” when the voters preferences are incoherent doesn’t give on much confidence that the author is coherent. After all, if you think incoherence is “right” I think that must mean that you too are incoherent. California voters are constantly voting to issue bonds for various public investments.
They are also voting for Democrats. Any connection ? Maybe a lot of them are stupid but they can learn. Watch November to see if that is possible.
4. A salary that would provide an very nice standard of living in Boise, Idaho would provide a horrendous standard of living in San Francisco.
So wet streets cause rain ? What if the public employee salaries were lower ? What if people couldn’t afford San Francisco prices ? What would happen ? Do you think the city would be abandoned ? Take an economics course, preferably not Marxist.
5. There are areas where California should cut back in spending. For example, probably on prisons and salaries for prison staff. It is ridiculous that California now spends more on prisons than higher education, but that shows how when the voters who are “right” vote for things like mandatory minimums for victimless crimes, they fail to consider the cost but just vote yes if it sounds good.
Why am I not surprised ? How about voters who vote to lock up violent criminals? What is the cost of violent crime when guys like you are in charge ? Ever see the movie “Death Wish”? Do you know that, when it was shown in 1978, audiences applauded at the end ? The old “victimless crime” bloody shirt is dragged out every election season. In fact, I agree with you that prison guards get too many benefits. I wouldn’t want the job.
A lot of knee jerk stuff there, Openvolokh.
May 5, 2010, 7:49 pmApologeticCalifornia says:
California raised taxes last year by $12 billion, obviously passed by 2/3rds majority. Taxes were raised on sales as well as income. It’s A PROGRESSIVE LIE repeated often in my state that 2/3rds is a monumental hurdle to overcome. The reality is that raising taxes and “fees” are passed often by the state, in both good times and bad. The
May 5, 2010, 7:55 pmApologeticCalifornia says:
fta: “Not only is California a high-tax state; it is even more conspicuously a high-revenue state. Property-tax revenues in the state have increased from $4.9 billion to $47 billion in the 30 years since Proposition 13. Adjust those figures for inflation and population growth, and property-tax revenues in California were 87 percent higher in 2009 than they were in 1979, chiefly because of rising property values.” Libtards believe that Prop. 13 somehow starves the state of money. Again, another lie.
May 5, 2010, 8:00 pmAndrew J. Lazarus says:
The data show clearly that between 1902-1980 California government spending outgrew what would have been the Gann Limit amount by about a full order of magnitude. The idea that increased spending is a recent idea is just flat-out wrong. So, at what magic moment did the Gann Limit start to make sense?! Perhaps as soon as you had your own education? Talk about admitting that this is all about pulling up the ladder after climbing it yourself.
But a majority in the state population also voted in the Prop 98 K-12 funding act and the expensive Three Strikes law, and any number of bond measures that were simply to push onto future generations expenses that should have come from current revenues. What exactly is supposed to happen when the majority of the population mandate their government to implement something that is essentially impossible to deliver: huge increases in education and corrections costs with no increase in taxes?
May 5, 2010, 8:03 pmJC says:
Let’s take away Prop 13 and the 2/3′s supermajority tomorrow. What will California’s situation be like next year? Better or worse?
May 5, 2010, 8:06 pmDuracomm says:
Andrew J. Lazarus said,
Your constant need to spin spending levels by pulling the budget back to 1902 is a pathetic attempt to disguise the spending bloat that has occurred in the past 20 years.
1902 did not have widespread use of internal combustion engines, indoor plumbing, electrification, irrigation, or any number of technologies that massively increased productivity and economic output. Draft horses were carrying the bulk of cargo loads in the city during those times.
We have not and are not likely to see a similar development of technologies that will replicate the explosion in economic productivity that occurred when things like replacing draft horses with trucks occurred.
Worse we are in a demographic bind.
The ratio of working population to retiree population is decreasing leaving fewer workers to support more retirees.
When the big wave of baby boomers hit retirement age the unsustainability of current spending will become painfully obvious.
May 5, 2010, 8:30 pmjgreene says:
Government Employees and liberal elitist IDIOTS don’t recognize that government has been increasing spending in good times and bad. It doesn’t matter to these people.
Now there is NO MORE MONEY. They’ll begin to understand this fact when government employees get laid off en masse and agencies are closed PERMANENTLY.
Of course we have to deal with the Socialist Marxists in Washington who will do their best to BAIL OUT California and other profiligate Union Controlled governments. But it is FAST coming to an end.
May 5, 2010, 8:34 pmOpenVolokh says:
This is basically an un-American point of view. The principle is one person one vote. Period.
May 5, 2010, 8:44 pmOpenVolokh says:
State taxes are in fact regressive, not progressive. Who do you think ends up paying property taxes? They may be assessed on property owners, but they are passed on to renters. This assertion is totally disconnected from reality. But even if it wasn’t, so what. The fundamental principle is one person, one vote. Anyone who denies the fundamental political equality of all law-abiding citizens should probably consider moving to another country.
I have dealt with state government on countless occasions, including registering new corporations. While I would not say that customer service is always perfect, it generally isn’t bad. I don’t get perfect customer service from private corporations either. That said, I am all for improving customer service in government.
May 5, 2010, 8:50 pmOpenVolokh says:
More sunshine for me.
May 5, 2010, 8:51 pmRichard Allen says:
In the immediate aftermath of P13, I was sent out to CA by my employer to determine whether there was a research project that could be done as to governmental cuts. After talking to various governmental sources, I concluded that CA was incredibly profligate compared to what I was used to and that there was no useful research to be done. Nothing since then has changed my mind.
May 5, 2010, 8:55 pmOpenVolokh says:
Most ballot measures calling for increasing spending pass. That is a fact.
If Californian’s have spoken, they haven’t said anything that is coherent from a budgetary perspective.
Look, I don’t go around pointing to instances when California has passed spending measure and say “the People have spoken, but when they vote for tax decreases that means nothing!” Your attempts to cherry-pick the votes you agree with is completely transparent and isn’t going to full anyone. Don’t try to be some sort of dishonest spin machine.
I think you haven’t been reading. I have mentioned in countless previous comments that Californians have fairly consistently voted for both lower taxes and higher spending. I am not inclined to deny the lower taxes part.
I do not base my assessment that California would choose a higher level of spending and taxes than other states based on ballot measures. I base that assessment on the fact the California is more politically liberal than most states and state residents place a very high value on state services such as education.
On the first point, deal. I have never liked political processes where the politicians choose their voters rather than the opposite. On the second point, only if corporations are also restricted from funding election campaigns.
Of course, the only problem with such a deal is that it would be unconstitutional under that wonderful example of conservative judicial activism known as Citizen’s United. But in principle, I don’t particularly like huge organizations (or extremely wealthy individuals) distorting our political process with money.
May 5, 2010, 9:03 pmOpenVolokh says:
This is illogical. A budget crisis can be solved in two ways. Higher revenues or lower expenses.
You seem to be mixing your own personal preference for lower expenditures and lower taxes with the definition of a budget crisis. That isn’t intellectually honest if intentional.
May 5, 2010, 9:07 pmEx-Californian says:
My person circumstances improved a great deal. I live in Florida now.
May 5, 2010, 9:08 pmBut seriously I remember when Prop 13 passed. I was living in San Francisco. In a form of protest the teachers locked up all the new text books and issued the oldest ones they could find. It was all theater. I was a helper at A.P. Gianinni Middle School in the Sunset district and I saw the textbooks and asked why we wer given old ones. The Teacher explained that people don’t understand the loss of classes but they understand old textbooks so the school had to show they were hurting by giving out old textbooks. To answer yuor question, the average person’s life has not improved. I would say the average person’s life got worse. This is before the latest recession now life is miserable (My sister still lives in Roseville, I visit occasionally) The business climate has driven many out. San Francisco has been given over to the homeless and their pushy advocates. I used to love that city, now I mourne its lost greatness.
Pat Cahalan says:
@ JC
> Let’s take away Prop 13 and the 2/3’s super-
> majority tomorrow. What will California’s
> situation be like next year? Better or worse?
Worse than it is today. Of course, it will be worse than it is today regardless of what happens today, or tomorrow. The better question is, “What will it be like in 15 years?”
Let’s be honest here. California’s obligations massively outweigh any potential ability to correct the situation in the short term. Like it or not, nearly every outstanding contract is massively underfunded. That’s the practical reality on the ground.
The only way to get back to a sustainable state economy is to force through the debt, clear the contracts, and move to an accountable method of contractual obligations.
@ jgreen
> Government Employees and liberal elitist
> IDIOTS don’t recognize that government has
> been increasing spending in good times and
> bad. It doesn’t matter to these people.
Psst. Let me enlighten you on recent history: government spending is not a function of political party. In fact, there is *no* credible evidence to indicate that Republicans are any better than Democrats at restraining spending. Zero. There is some correlation between party and the tax rate, however.
Also, there are no Socialist Marxists. Marxists are Communists.
@ Duracomm
> 1902 did not have widespread use of internal
> combustion engines, indoor plumbing, electrification,
> irrigation, or any number of technologies that
> massively increased productivity and economic output.
Also massively increased government spending… railroad subsidies, canals, irrigation projects, highways, dams, regulatory oversight of nuclear power plants, water treatment plants…
> We have not and are not likely to see a similar
> development of technologies that will replicate
> the explosion in economic productivity that
> occurred when things like replacing draft horses
> with trucks occurred.
Oh, really? Perhaps you would like to examine the GDP curve since 1792:
http://www.usgovernmentspending.com/federal_debt_chart.html
Tell me, where is this explosion of productivity? Looks to me like the GDP is on a relatively normalized rate of increase for the last 250 years.
@ Mike K.
> The 2/3 majority in the law is all that saves us
> from rapacious public employee unions.
So, if one entered into law a provision that limited the rate at which the state government could contract for labor, say, within some reasonable measurement of private sector employment, would you be willing to get rid of the 2/3rds majority?
I for one would gladly normalize the public sector’s salary rates.
May 5, 2010, 9:14 pmOpenVolokh says:
RKV,
With your MBA, perhaps you understand the basic of accounting. The problem is neither low taxes nor high spending.
High spending is fine as long as you have the revenue.
Low taxes are fine as long as you restrain spending.
Either of these preferences is perfectly fiscally responsible. Okay. Use your MBA and accounting 101 skills.
May 5, 2010, 9:15 pmOpenVolokh says:
No one is going to buy Hayek’s un-American proposal to disenfranchise low-income folk. So just stop trying.
What a waste of time.
May 5, 2010, 9:17 pmOpenVolokh says:
That is there right. But, since a minority of extremist Republicans have decided the tax levels are a matter of life and death religion rather than a matter of rational policy, voters are going to take this power of extremist Republicans to hijack the budget away.
If Republicans wanted to preserve their influence, they should have been more reasonable. There was nothing wrong with using this as leverage to skew things towards spending cuts rather than tax increases a little. To try to take the whole pie like Republicans have instead of compromising is going to lead the voters to take this power away from Republicans.
As is their right.
May 5, 2010, 9:21 pmDuracomm says:
Pat Cahalan said,
Your link went to a chart of federal debt as percentage of GDP.
I’m not seeing how this relates to productivity of the private sector.
May 5, 2010, 9:30 pmLaMonte says:
We have an offer in on a house in California. Because of the reduction in house prices, our tax going forward would be lower, much lower, than the previous owner who bought at peak bubble price.
May 5, 2010, 9:38 pmIt’s not just old folks who benefit from stability in real estate taxes.
We would not even be thinking of buying in California if the spenders of today’s funds and the spenders of tomorrow’s funds could tap into our pockets as they wished.
OpenVolokh says:
Shareholders and consumers share the cost of property taxes. Corporations cannot pass the entire cost onto consumers.
Some of these shareholders and consumers are going to be non-Californians. That is as it should be when it comes to benefiting from the use of property located in California.
Public employee unions are merely one special interest out of many. And I agree that they can sometimes be a problem, just like other special interests. But the fact is, if you look at things like CHP salaries or salaries for the salaries of corrections officers, it is quite evident that the 2/3 majority requirement has not protected our interests.
What the 2/3rds requirement really does is dilute the power and thus the accountability of the legislature. It shifts power over the budget from the legislature to powerful interests and individual voters through referendum process. This wouldn’t be a problem except, (1) the difficulty of getting items on the ballot majorly dilutes the democratic tendencies of the ballot process and (2) individual voters are not really in a position to understand the trade-offs inherent in voting for increased spending or decreased taxes. Basically, direct democracy does not work very well when it comes to budgeting issues, given how complicated the budget is and how much time it would take to process. The average voters, when asked if X amount of money should be spend on Y is in a position of: gee, I guess… Is that a good deal?
Learn what? That the Republicans in the legislature are extremists who have made taxes into a religious issue instead of evaluating them rationally? Republicans will probably do pretty well in November. California will still be a liberal state.
If you don’t want to live in a liberal state and you live in California, you probably should vote with your feet and move to someplace like Idaho.
I would bet a significant sum of money that my knowledge of economics is superior to yours. I have taken more than a few honors-level economics courses and I have set the curve for the entire class at a major university. Oops! And you thought the only reason that Democrats exist is because they haven’t taken Econ 101.
Overall, it would be better if employees of the City of San Francisco can either live in the city or near it. Do you really want employees making decisions that impact the city when they have no personal stake? And, it is not merely the City of San Francisco that has high prices, but the entire bay area.
A couple of points. Don’t try to label me. I support the death penalty, at least in principle. (Though I would not support it unless proof of guilt approached absolute certainty.) I support the police and I support our criminal justice system. I have worked in a prosecutors office in California.
That said, it is very expensive to house people in prison. And those costs need to be taken into account, and they really haven’t. This is another example of direct democracy malfunctioning. People will vote to increase sentences, but they fail to take into consideration the cost.
Do you agree or not? I wouldn’t want the job either. But there are a lot of jobs I wouldn’t want. I wouldn’t want to be a janitor, or a garbage collector, or any other number of jobs. I am grateful and respect the people who do these difficult jobs. However, despite the lack of desirability of these jobs, the pay should be lower. I do not think correctional officers should make over $100,000 a year. They usually don’t, but some of them do. Look at the link to the Sacramento Bee database above.
Why should voters overpay for prison guards? I respect them and the job they do, but I think their salaries need to be brought into line. For example, from the Sacramento Bee database of public employee salaries, we find the following from one of the corrections officers:
CORRECTIONAL OFFICER: 2007 – $132,787; 2008 – $124,870; 2009 – $117,118.
I don’t think it is unreasonable for me to assert that salaries like this for corrections officers are simply way too high. That is not meant to say I do not respect the fact that they have a hard job. I wouldn’t want their job either. But those salaries are just too high in my judgment.
May 5, 2010, 9:54 pmOpenVolokh says:
Better.
May 5, 2010, 9:57 pmPerseus says:
According to the authors of the Gann Limit (one of whom, incidentally, was one of my economics professors), the magical moment came when state government spending as a percentage of income reached 8.5%, and the first attempt at limiting spending, Prop. 1 (which Anthony Kennedy helped draft), was designed to reduce it to 7% over the next 15 years. The idea was that when government takes too big a share of income, it serves as a drag on the rate of economic growth (among other things). After the passage and then the gutting of the Gann Limit, the percentage has increased, not declined.
As for me personally, I did not arrive in California until I was an undergraduate in college, and since I attended private institutions, this has nothing to do with me trying to pull up the ladder. Indeed, my narrow self-interest would be tax and spend, spend, spend on higher education.
May 5, 2010, 9:57 pmOpenVolokh says:
Proposition 13s limits on property taxes are the least objectionable thing that it did. I would be happy to make property taxes zero and then make up the revenue with increases in other taxes.
May 5, 2010, 10:01 pmOpenVolokh says:
I just wanted to repeat this data point in a short comment since some people might skip my longer comment in which this data appears.
Here is an example salary for a corrections officer in California:
CORRECTIONAL OFFICER: 2007 — $132,787; 2008 — $124,870; 2009 — $117,118.
Now, who says the Prison’s Guard Union is not out of control??? We need to do some serious salary cutting.
May 5, 2010, 10:03 pmfrank martin says:
People from out of state who complain about Prop 13 are people who are unaware of the existence of what we who live and own property in the state know as “Mello-Roos”( http://en.wikipedia.org/wiki/Mello-Roos).
May 5, 2010, 10:03 pmEd Snack says:
Presumably Proposition 13 can be overturned quite simply, and by a 50% vote, in the same way it was passed ?
It seems to me that P13 was a (possibly wishful thinking type) attempt to control spending by restricting the ability of administrations to increase taxes, or at least some kinds of taxes. Surely the real problem is that the various administrations since then have refused to adjust their spending. If people really want to increase spending, then they must also increase revenues, or is the Californian resident too foolish or venal to see the connection ?
May 5, 2010, 10:08 pmJerry Carroll says:
I knew both Howard Jarvis and Paul Gann. They were convinced the political class has a lot in common with junkies. One mainlines heroin and the other spends taxpayer money. They just can’t help it. Proposition 13 was an attempt to make them go cold turkey. It worked for a while, but addicts are cunning. The talk about a constitutional convention is just a back door way to gut the most popular voter initiative in history. It is easy to imagine the campaign against such an attempt to take even more money from the homeowner’s pocket to feed a government as bloated as a body in the water for a week. It might even lead to the revival of the Republican Party in California. Alas for the political class, the consent of the governed is still necessary.
May 5, 2010, 10:08 pmbcyoung says:
Having lived in CA all my life I have seen most of the most of what has gone on here. Serveral points.
May 5, 2010, 10:12 pmOne, through out the late 60′s and early 70′s all types Prop 13 measures were proposed, all failed. Back then the property tax was the main source of local school funding and local govt. funding. Things changed in the mid to late 70′s due to a CA Supreme Court decision removing the local funding sources and installing the state as the main funder of education. ( Another prop. later approved by voters in the early 80′s set state education funding to 40% of the state budget. ) This shift along with a state gov’t. not responsive to locals pushed through Prop 13 and the Gann Prop. restricting state spending in the late 1978. Gann has been destroyed by the politicians so it has no effect. Prop 13 has been amended to allow for a 55% voter majority to inact a property tax increase. Plus there are special districts, ( For the last 15 to 20 years.) under Mello-Roos which allows property taxes in new developed areas to be increased from the 1% rate to as much as 2.5%. This is done by the developer who has the only vote.
Second point, residentaial realestate on average in CA turns over about every 5 years. Which means the new value is assesed at the sale. ( Untill lately the value as been higher.)
Third point, under Prop. 13 local gov’t. and the state are allowed, and have never refused a 2% increase in property tax every year. Which means if you hold your home for a 10 year period your property taxes will go up 20%.
Fourth point. All state budgets and new tax increases have to have a 2/3 Assembly and Senate approval. Again this does not apply to the property tax or fees or payroll withholding.
So funding is not the issue. It is the state politicians and the state employee unions that have created this disaster. Every time there has been a boom cycle the politicians and special intrest groups spend like it will never end, ie: overblown budgets, state pensions and programs and commisions to be staffed by them. Ballot inititives sold to the voter for whatever cause de gure. ( Don’t worry we’ll put it on the credit card, someone else will pay later.) When the boom ends and the economy goes south. It is always the greedy taxpayer, darn stupid Republicians or tea party groups being horrific and trying to kick the poor to the curb.
OpenVolokh says:
People who have such derogatory views of those who disagree with them are typically hacks. It sounds like both of these guys were real jerks.
May 5, 2010, 10:17 pmOccam's Beard says:
No, comrade, it is a quintessentially American point of view, one man one vote notwithstanding (btw, does ACORN know about this?), and dates back to colonial times. Giving deadbeats the power to force contributions from productive citizens when deadbeats themselves get a free ride is Marxist. Everyone should pay some taxes. Everyone. And the amount each pays should increase when taxes increase, so everyone has skin in the game. Suppose we all voted to take away every dime you had to contribute to Sarah Palin’s campaign to replace the Messiah? OK by you?
And I don’t care if you’re having your period.
May 5, 2010, 10:17 pmMark Field says:
Hogwash. There’s no such right, it’s an incontestable wrong. It converts a republic into an oligarchy.
Stop and think: suppose the Democrats added a provision to the tax code that taxes could only be lowered by a 2/3 vote. Anybody want to guess how the Republicans would react to that?
May 5, 2010, 10:18 pmOpenVolokh says:
Fees are a lot more difficult to assess than taxes. Also, this has resulted in a lot of unnecessary and inefficient litigation over whether a revenue source is a tax or a fee.
Payroll withholding is for the purposes of paying income tax. Any excess collections have to be refunded to the taxpayer.
To say that Prop 13 is not a major problem is to put your head in the sand.
May 5, 2010, 10:23 pmMark Field says:
Ignorance and arrogance is a bad combination:
“The accumulation … of property … and its security to individuals in every society must be an effect of the protection afforded to it by the joint strength of the society in the execution of its laws. Private property is therefore a creature of society, and is subject to the calls of that society, even to its last farthing; its contributions therefore to the public exigencies are not to be considered as conferring a benefit on the public, entitling the contributors to the distinctions of honor and power, but as the return of an obligation… The important ends of civil society, and the personal securities of life and liberty, these remain the same in every member of the society; and the poorest continues to have an equal claim to them with the most opulent….” Benjamin Franklin, Queries and Remarks Respecting … The Constitution of Pennsylvania
May 5, 2010, 10:23 pmDuracomm says:
OpenVolokh,
Voting is not a magical process, it does not make the impossible possible.
Voters could very well pass a proposition to outlaw entropy. That vote would not end entropy, much as the voters might like the idea.
The same thing applies to fiscal votes.
California voters can and have voted for an unsustainable amount of spending. It is not fiscally possible to raise taxes enough to pay for all of the spending california’s voters and politicians have voted for.
The only question is how much fiscal destruction california will experience before they realize this.
May 5, 2010, 10:25 pmOpenVolokh says:
But the voters DO have a right to be stupid. Direct democracy in California was a failed progressive experiment. It needs to be reined in. But, as long as that is the system we have, voters do have a right to tie the hands of the legislature in this manner. Of course, it only takes a simple majority of voters to repeal Proposition 13.
May 5, 2010, 10:25 pmJerry Carroll says:
You do not dispute their analysis, I gather. Are you on a public payroll, by the way? It would explain your reaction.
May 5, 2010, 10:33 pmOpenVolokh says:
First of all, property requirement for voting were proposed but rejected by the Constitution. That view was rejected and it was left to the states.
But then, we had the Civil War and we adopted the 14 Amendment. To deprive a law-abiding citizen the right to vote would violate that Amendment. Section 2 of which asserts the following:
Any state that abridges the right of a law-abiding citizen to vote is in violation of Section 1. Section 2 is an automatic consequence which flows from such a violation.
The bottom-line is that no one cares what you think. Your proposal to deprive people the vote based on property is unconstitutional and un-American.
If you don’t like it, why don’t you leave?
May 5, 2010, 10:34 pmOpenVolokh says:
Obviously voting doesn’t change the laws of economics. Nor can the State of California print money. The idea that the State of California MUST deeply cut its world class university system or K-12 education in order to balance the budget is false however.
May 5, 2010, 10:37 pmOpenVolokh says:
That would be a sort of silly analysis, based on what I have written thus far, wouldn’t it?
May 5, 2010, 10:38 pmOpenVolokh says:
Great quote Mark Field.
It is amazing how ignorant many conservatives are about the actual views of the founders. Instead of gathering the facts, they just project their own views onto them.
May 5, 2010, 10:41 pmPerseus says:
Poppycock. Besides the fact that the U.S. Constitution itself includes entrenchment provisions, super-majority rules regarding the budget are not uncommon in the U.S. Senate (which also has the filibuster). Now, just as you could argue that those budgetary rules are not binding on future Senates, so it is likewise true that the super-majority requirement of Prop. 13 can also be altered by a simple majority vote of California voters.
May 5, 2010, 10:43 pmOccam's Beard says:
We need a Constitutional amendment, obviously.
May 5, 2010, 10:49 pmOccam's Beard says:
Love it or leave it, comrade?
I’m thinking about leaving…California, before it implodes from the cumulative stupidity of you and your fellow liberals. And taking my income and taxes with me.
May 5, 2010, 10:51 pmOpenVolokh says:
The filibuster is actually unconstitutional. But lets have this argument some other time.
May 5, 2010, 10:52 pmOpenVolokh says:
What am I supposed to say? Besides thank you.
May 5, 2010, 10:53 pmOccam's Beard says:
Now let’s just look at Section 2, shall we, comrade? First, it specifies…uh…male inhabitants. So Constitutional provisions have changed, yes? Second, it explicitly excludes Indians who are not taxed.
Third, it looks to me as though the Founding Fathers connected voting/ representation with paying taxes.
And fourth, it specifies that the abridgement of voting rights shall cause representation to be prorated according to the extent of such abridgement. Frankly, I’d have it no other way.
May 5, 2010, 10:58 pmMichelle Dulak Thomson says:
I have never understood the argument that the property-tax rule in Prop. 13 is “unfair” because people can be living side by side in identical houses and paying very different property taxes. The tax you pay is tied closely to the amount you were able to pay for the house when you bought it. It is unreasonable to expect someone who bought a house in 1970 and has lived quietly in it ever since to find her property taxes increased tenfold because the market in the neighborhood went berserk and someone spent a fortune on the house next to hers.
Needless to say, there’s not much worry about this at the moment. Quite the contrary: People who bought houses in 2005-6 are, as I understand it, trying frantically to have them revalued for property tax purposes, since the purchase prices are now way over current value. ISTR that some jurisdictions are allowing this.
OpenVolokh,
Proposition 13s limits on property taxes are the least objectionable thing that it did. I would be happy to make property taxes zero and then make up the revenue with increases in other taxes.
Would you? The one thing to be said for property taxes is that they’re reasonably reliable. (Especially under something like Prop. 13, where there are revaluations only under transfer of ownership, so as long as property A is in person B’s hands, you can expect a check for such-and-such twice yearly.) Sales and income taxes both fluctuate in concert with the economy, though obviously income much more than sales.
CA’s biggest problem, outside (of course) the massive clusterf*ck that is its constitution, is that whenever the economy is booming, everyone thinks, “Cool! Money!,” forgetting how slender the load-bearing fraction of the taxees is. So you have the dot.com boom, and a bunch of instant million-to-billionaires, and the assumption is that you will have their incomes to tap in perpetuity. When in fact a lot of those incomes drop suddenly into the depressing five digits [yes, I am bearing in mind the national median household income here; I'm talking about where CA gets the money it needs to run it], you discover belatedly that you just can’t run a state by betting on the continued prosperity of a few.
May 5, 2010, 10:59 pmOccam's Beard says:
You obviously haven’t figured out that you’ll be paying my share of taxes. And as more and more productive Americans leave California, that means you liberals will be taxing the bejesus out of each other.
But have the intellectual integrity to tell me you’ll oppose any Federal bailout of the People’s Republic. Your argument is that the liberals infesting California have a right to be stupid and live far beyond the state’s means. OK. But do they have a right to bleed others for their stupidity?
May 5, 2010, 11:02 pmOccam's Beard says:
Just out of curiosity, where are you from? NY? NJ? MA? MI? IL? Maybe Greece?
May 5, 2010, 11:03 pmOccam's Beard says:
Among the things you liberals fail to grasp is that no matter how intrinsically wealthy a polity, it’s perfectly possible to drive it into bankruptcy. Argentina is the poster child for this.
Forty years ago California was an economic powerhouse, vastly wealthy; then the liberal infestation set in, and now we’re looking at defaulting on obligations, and are judged as creditworthy as …Iraq. Thanks, liberals!
May 5, 2010, 11:10 pmPerseus says:
For someone who likes to label people who differ with you “extremist,” you’re in no position to be calling people jerks.
May 5, 2010, 11:12 pmDavid M. Nieporent says:
You are Welker. I knew it.
May 5, 2010, 11:17 pmOpenVolokh says:
Are property taxes reliable? Last time I checked, real estate prices have fallen a lot.
What the state should do is establish a rainy day fund. That is, when the economy is good, it should collect more in taxes than it spends. Then when the economy has troubles, like now, it should use the rainy day fund to smooth out spending.
This sentence is both hilarious and sadly true.
This is absolutely true. This is why we need to establish a rainy day fund with high tax revenues when the economy is good. Democrats in the legislature deserve plenty of blame for not doing this.
Imagine if we had reined in spending a little and saved some of that money when the economy was booming. We would be way better off now.
That said, I hope this crisis does not go to waste. There are some government salaries that really need to be cut. 100k+ for correctional officers is more than a little out of control. I don’t care what the budget picture looks like, I don’t think it is acceptable to waste money.
May 5, 2010, 11:21 pmOpenVolokh says:
Huh? Interesting inference.
The view that the filibuster is unconstitutional is quite common. For example, consider op-eds written by Paul Krugman that I am too lazy to link too.
May 5, 2010, 11:23 pmOpenVolokh says:
That is a very extreme comment. You extremist!
May 5, 2010, 11:26 pmPerseus says:
Because Paul Krugman is renowned as a learned constitutional scholar (and even if he’s citing someone else, direct citation is much better).
May 5, 2010, 11:33 pmM. Simon says:
If a majority of Californians want to pay higher taxes for more services than Ohioans, that is their right.
Absolutely. And if the businesses in California don’t like it they can just leave.
May 5, 2010, 11:33 pmOpenVolokh says:
California has more people in it than I would prefer as it is. I think it is cute that you think of yourself as indispensable. It actually is sort of charming.
First of all, this point has to take into consideration the fact that California only receives 79 cents in benefits for every dollar it pays in taxes. We are already subsidizing a lot of the rest of the country, especially those low-income red states that you love so much.
Second, I would absolutely support a bailout of California if necessary. However, I would attach conditions to it. For example, requiring California to establish a fund to partially pay back any such bailout (that would duly give California credit for its overpayment of Federal taxes compared to the benefits the it gets back) and also requiring it to establish a rainy day fund so that such bailouts would not be necessary in the future.
May 5, 2010, 11:34 pmOpenVolokh says:
Agreed.
May 5, 2010, 11:36 pmOpenVolokh says:
Who said Paul Krugman was a constitutional scholar? No one.
May 5, 2010, 11:36 pmMark Field says:
Of course. But the principle of majority rule means something more than doing whatever the majority of a moment decide. If not, we could vote to become a monarchy tomorrow. That would be stupid, but it wouldn’t be majority rule — it would be an abolition of majority rule.
A system of majority rule must not only operate by that principle today, it must continue to operate that way into the future. Otherwise, any transient majority can freeze its own preferences and eliminate the right of future majorities to decide how to govern themselves. That’s what 2/3 rules do.
And I think those super-majority rules violate the principle of republican government.
Not really. The 2/3 rules apply to local taxes just as much as statewide ones. If the people of, say, Los Angeles County want to increase taxes to fund their schools, they can’t do so unless 2/3 agree. Not because they themselves decided this, but because other people — many of them long dead — decided it for them. And the people of Los Angeles County can’t undo this rule by majority vote, so it’s absurd to claim that there’s any principle of majority rule involved. It’s an oligarchy.
May 5, 2010, 11:38 pmMichelle Dulak Thomson says:
OpenVolokh,
I said property taxes were reasonably reliable. I gather that some people who bought at the height of the boom and found themselves suddenly holding a house worth a lot less than it was two or three years back have tried to get the house revalued for property tax purposes, and sometimes even succeeded. But mostly, anyone still capable of paying his/her mortgage is trying to hold on until prices go back up before trying to sell. Meanwhile, the property tax is still due.
Sales tax revenue is still reasonably reliable too; lots of things aren’t taxed, and online sales look better and better the higher the rates go, but basically everyone does have to buy a lot of stuff locally. And a lot of it is indispensable, and you can count on that money too. The poorer half of any state might not have most of the money, but what it does have, it generally spends. (Or sends to relatives South, but never mind that.)
Income tax is the real problem. It’s wonderful to run your budget on the mere emanations of penumbras of the income of a handful of the citizens. But if their portfolios experience a 40% drop, so does yours. Uh oh.
Re: “rainy day funds”: Great idea; never so far as I know implemented anywhere. You cannot have money sitting around in a State capital (certainly not Sacramento) without someone chafing at the bit to spend it.
Re: not letting crises go to waste: This state needs a new constitution, and anything short of that is just a patch.
May 5, 2010, 11:44 pmMike K says:
Yes, they didn’t agree with you.
May 5, 2010, 11:46 pmOpenVolokh says:
Although the Constitutional clause requiring that all states establish republican form of government has not been enforced to date, it certainly would be if voters were to vote to establish California government as a monarchy.
Does this lesser provision restraining the legislature by not the voters violate that clause?
I would agree with this if Prop 13 had made it so that this provision could not be amended except by a two-thirds supermajority. But, all it takes to end Prop 13 is a simple majority.
Maybe.
But Los Angeles does not have a truly separate sovereign existence except that which the State of California voluntarily delegates to it. If a local small town wanted to decide local affairs by unanimous consent, as long as this could ultimately be overridden by the state if it wanted to, I don’t see the problem.
That is, even accepting your argument that the republican government clause requires that states ultimately be run on the basis of majority vote, it would be fine for local governments to be run on a different basis since the state could always override the ability of local units of government from establishing themselves in this manner.
May 5, 2010, 11:53 pmDavid M. Nieporent says:
I notice that this wasn’t a denial.
In any case, the view that the filibuster is unconstitutional is not common, and in particular is not common here at the VC, and in any case is only one data point, along with your posting style and various biographical tidbits, that gives you away.
As should be clear from the fact that I said it earlier in the thread, I was convinced you were Welker even before you made the filibuster argument; the latter just confirmed my earlier conclusion.
May 5, 2010, 11:58 pmOpenVolokh says:
First, I agree with you regarding a new constitution.
Second, in such a new constitution, you could create a rainy day fund that the legislature cannot touch except during recessions and only to replace revenue that has decreased.
Third, I would be happy to make property tax rates zero and raise the money through a sales tax instead. And you could even shift more to an income tax if you did this simultaneously with the establishment of a rainy day fund.
May 5, 2010, 11:59 pmMichelle Dulak Thomson says:
OpenVolokh,
I would agree with this if Prop 13 had made it so that this provision could not be amended except by a two-thirds supermajority. But, all it takes to end Prop 13 is a simple majority.
Yep. The CA initiative tendency to include supermajority requirements is practically a tic by now (cf. Prop. 16!), but all it takes to undo any of them is another initiative passed by simple majority. Except that a certain fraction of the CA voting public has by now gotten wise to the thing, and there are now a lot of people (me included) who vote “no” on ALL CA initiatives unless provided with a compelling reason to do otherwise.
May 6, 2010, 12:04 amOpenVolokh says:
David M. Nieporent,
Your inference is so retarded that it should be filibustered. If only that were not unconstitutional! =)
May 6, 2010, 12:08 amMichelle Dulak Thomson says:
OpenVolokh,
I think you seriously underestimate the deviousness of CA legislators if you think any constitutional safeguards would keep their hands for long off a large pile of cash.
May 6, 2010, 12:08 amAndrew J. Lazarus says:
My point is that 8.5% is a 100% arbitrary number. No one seems the least bit willing to argue that the Gann limit made sense for the period 1902-1980, not after I bring in the real-life numbers how shrunken the budget would have to be. What a remarkable coincidence that when so-and-so wants to cut his own tax burden, he suddenly discovers that there should be a limit on spending to population and inflation growth, even though it’s obvious that this limit would have been destructive had it been enacted earlier. Why not tie it to LA Dodgers attendance? There are all sorts of reasons to think that population+inflation is much too low with GDP generally rising.
I also wonder how everyone here has decided that there is too much spending. The primary argument seems to be that the increase in spending exceeds population+inflation, but we already know that limit is arbitrary and makes no intrinsic economic sense historically, so the argument is circular. Now, I do see examples of unwise spending, e.g., on prison guards, but even that doesn’t show that the aggregate spending is too high; it might just be that guards should make less money and teachers more.
Perhaps the conservatives have decided there is too much spending because it supports schools that teach evil-ution, and longhairs who didn’t serve in Vietnam, and welfare to the illegal immigrants and the Negroes.
May 6, 2010, 12:12 amPerseus says:
Which is why I said to cite the actual constitutional scholars who hold that view, unless you actually think that Krugman has some sort of insight on the matter.
A very rare agreement with OpenVolokh (I don’t expect it to happen again until Halley’s Comet returns).
May 6, 2010, 12:18 amMichelle Dulak Thomson says:
Andrew J. Lazarus,
Perhaps the conservatives have decided there is too much spending because it supports schools that teach evil-ution, and longhairs who didn’t serve in Vietnam, and welfare to the illegal immigrants and the Negroes.
Are you trying to out-vile hamilton, or what?
May 6, 2010, 12:18 amDavid M. Nieporent says:
1) It’s a deduction, not an inference.
May 6, 2010, 12:20 am2) You still haven’t actually denied it.
Elliot says:
Actually, most folks get what others pay for. They sure don’t want to pay for it themselves. I think the current figure is 47% of households that pay no fed income tax. Anyone know what it is for Califrnia income tax?
May 6, 2010, 12:24 amPerseus says:
Because the drafters of the original spending limitation proposal–Milton Friedman, James Buchanan, William Niskanen, William Craig Stubblebine, Martin Anderson, Anthony Kennedy, et al.–were a bunch of evolution-denying, racist Know Nothings. Right.
May 6, 2010, 12:28 amel polacko says:
it was a fact that, prior to the passage of prop 13, people of my acquaintance were having their property taxes doubled and even tripled annually ! until they were driven from their homes.
May 6, 2010, 12:31 amit’s true that someone who stays put only gets a small increase in their bill each year while a new buyer will have their property value reassessed, but what’s wrong with that ? taxes are based on sale prices and they do fluctuate.
one must also keep in mind that there is much more property turnover in california than there are long-term residents in the same property.
in recent years, local governments have been finding ways to slap additional fees onto property tax bills that circumvent prop 13 regulations, but even so, it’s nothing like the enormous increases faced by homeowners who had no option other than to pay up or get out.
the point of the passage of prop 13, which has since been lost,was
to get the ever-greedy government to adjust to existing revenues rather then counting on limitless tax increases. sure, they moan about not having a bottomless pot of gold from which to spend, spend, spend…but what else is new? they wouldn’t be satisfied if they were able to take every last penny from us. at some point, the people have to say ‘enough’.
Mark Field says:
If the rule could be overturned by a majority of those affected, I might agree; at the least it wouldn’t make much practical difference regardless of political theory.
But that’s not the case. Go back again to school taxes. Those are quintessential local issues. Why should voters in Fresno get to bar voters in Pasadena from increasing their own local taxes in order to fund their own local schools? That’s not a case of majority rule, that’s oligarchy.
This is the reverse of the actual situation, and therefore irrelevant to my point. My point is that voters outside Pasadena (to continue with my example) have prohibited the people of Pasadena from acting according to majority rule even on issues which affect only the people of Pasadena. What right have they to do that?
May 6, 2010, 12:35 amPerseus says:
I must be missing something. Localities are creatures of the state without any independent sovereign status, and as such the voters (and their representatives) of California get to make the rules that govern how localities are run.
May 6, 2010, 12:43 amJohn says:
Mark Field: My point is that voters outside Pasadena (to continue with my example) have prohibited the people of Pasadena from acting according to majority rule even on issues which affect only the people of Pasadena. What right have they to do that?
I like this argument, because the end point of breaking the divisions down smaller and smaller ends with the individual. So what right does any larger voting body have to prohibit me from doing anything? What right does a town have to determine my tax rate? Lets just ignore that whole society thing.
May 6, 2010, 1:08 amAndrew J. Lazarus says:
Yes, and that Proposition required state spending to remain constant as a percentage of state personal income. Historically, that rose much faster than population-inflation. By my calculations, the 7% of state personal income that Proposition One called for would have been $109.5 billion in 2009—which I believe is higher than the actual budget. (I’m a little unsure how to account for fiscal year begin dates here.)
Ronald Reagan campaigned for Governor partly on disgust with the student protesters at UC. You darn well bet that the drop in support for state institutions amongst the electorate (as opposed to a few conservative intellectuals) was related to perception of what those institutions were doing and whom they benefited.
May 6, 2010, 1:17 amOpenVolokh says:
Pasadena does not even exist, except at the sufferance of the State of California. The State of California can therefore dictate Pasadena’s political system. State laws trump local laws.
Now, should voters in areas outside of Pasadena impose such requirements on residents who live in Pasadena? No. Can they? Absolutely.
May 6, 2010, 1:29 amDougInSanDiego says:
Madonna singing, “Don’t cry for me, California ….”
Really – do NOT shed a tear for this damned state. It in no way deserves sympathy.
Here is a current, real world example from San Diego that illustrates just how insane the spending mentality is:
San Diego, of course, is flat out broke. Not only does it share the same financial woes of other cities in the state – it also has the pension fund scandal that led to Moody’s downgrades, lawsuits against the fund managers, etc etc etc. Oh – and a very high unemployment rate. Oh – and a big housing downturn. And – in addition to the Olympic state income tax – an 8.75% sales tax.
So – what does the city do?
Well, of course – “We NEED a new central library!” (“it will help the city skyline”.). Cost – 1/2 billion.
Well, of course – “We NEED a new city hall!” (“the existing one is not big enough with the additional people we want to hire”)
Well, of course – “We NEED to expand the conference center” (so Comicon does not leave for Anaheim).
Now – all of these will be paid for with bonds, so – as with individuals using their credit cards – it’s not real money and actually it’s all free!
As I said – don’t shed a tear for this pitiful, pathetic state dominated by a party that salivates every morning at new ideas for new spending that were thought up in the last nights’ dreams.
May 6, 2010, 1:39 amJerry Carroll says:
You never said whether you are on a public payroll. That would help us to better understand the lyrics to the song in favor of letting her rip in Sacramento and every other taxing agency. Are you one of those “public servants” who will retire with 90 percent of your salary? Strange as it might seem, some find this relevant to the discussion.
May 6, 2010, 8:28 amDuracomm says:
Andrew J Lazurus said,
This is your primary, pathetically weak, strawman argument used to deflect attention away from the cold, hard, undeniable, fact that california spending has exploded and is unsustainable.
California’s problem is overspending not lack of tax revenue.
Even worse, most of that spending bloat you are desperately trying to defend benefits politically connected interest groups (like prison guard unions) not california citizens in general.
California’s $500-billion pension time bomb
May 6, 2010, 9:23 amMark Field says:
As a matter of power, of course they can. I’m hardly disputing that. What I’m saying is that you can’t call it “republican government” when they do.
See above.
That’s overstating it, but there’s no doubt that the folks you list didn’t want the state doing those things.
May 6, 2010, 9:56 amAndrew J. Lazarus says:
California spending has not exploded. When I ran the math, I see it is actually less than the limit that Ronald Reagan, Milton Friedman, et. al. called for. It may be that too much of the money goes to prison guards; indeed it may be that too much goes to public employees as a whole. (However, you seem to confuse unfunded future pension obligations with current spending.) However, the idea that the total amount of spending is too high is based pretty much on your own desire to pay less tax, and nothing else.
California’s current budget system is unsustainable. It isn’t, however, an accident that the State Party of No has yet to present the spending cuts necessary to bring spending into alignment with how much they are willing to raise from taxes; when confronted by the choice, the electorate might prefer taxes to cuts. We certainly see from any number of recent initiatives that the people are as willing as any legislature to create services without providing the means to pay for them.
May 6, 2010, 11:24 amDuracomm says:
Andrew J. Lazarus,
How can you say California spending has not exploded when almost every independent source says that state pensions alone are not sustainable?
This is in spite of the fact that california has probably the highest tax environment of any state in the union.
Your statement is not supported by california’s fiscal facts.
Cost of retired state worker health, dental care puts California at risk
May 6, 2010, 11:48 amrobc says:
Thats a stupid statement. The voters of CA also dont want higher taxes. We know this because they passed Prop 13. Since, I agree with your last sentence, that means they cant increase spending.
May 6, 2010, 12:02 pmMadHatChemist says:
This is not at all illogical. If they raised taxes, you assume that they would then be satisfied. They would just turn around and not only say that what they spent isn’t enough, they’d just complain that not getting even more money is somehow a tax cut.
Give them the ability to tax and spend they will do just that at increasing levels, with the budget always being more then what they took in — it is how they justify raising taxes even more!
May 6, 2010, 12:06 pmPat Cahalan says:
Scroll down and look at the GDP numbers that are in the table below.
May 6, 2010, 12:14 pmAndrew J. Lazarus says:
The current state spending and the future cost of pensions are not really related, except to the extent that the state is contributing to the pension fund today in anticipation of making pension payments later. And, indeed, the state appears to be undercontributing to the pension fund. But this does not show the state is overspending, if anything, it shows the state should be spending more (by increasing contributions to the pension fund).
You do understand the difference between what the state spends today and its promises of what the pension fund will be able to provide 20 years down the road, don’t you? If you want to say the state is overpromising what it can deliver to employees when they retire, why, even I think that you are right. But your problem seems to be with current salaries to prison guards, not to mention teacher pay and, of course, welfare to all those undeserving leeches.
The amount of the state budget today is completely in line with the Reagan/Friedman/etc. idea of 7% of state personal income.
May 6, 2010, 12:57 pmPat Cahalan says:
@ Michelle Dulak Thomson
> It is unreasonable to expect someone who
> bought a house in 1970 and has lived quietly
> in it ever since to find her property taxes
> increased tenfold because the market in
> the neighborhood went berserk and someone
> spent a fortune on the house next to hers.
What makes you assume that this is an expectation? Why should someone’s house be exempt from free market forces?
If the market dictates that someone’s house is worth $1,000,000, it’s worth $1,000,000, even should that person choose not to sell it. It is an asset. They can tap into it in times of need, someone with a house worth $250,000 cannot do this. They have a huge fiscal advantage.
Moreover, it’s probably worth that much because of that old real estate creed, “location, location, location”. Someone who bought a house in 1970 when they were 40 and had three children probably bought that house due local access to schools, their job, etc. Now that it’s 40 years later, she’s 80, her children are gone and don’t go to those local schools, and she’s retired and doesn’t care about her commute any more. Protecting her from the true market value of her home and the consequences thereof means the current generation of workers with children have to live farther from the schools and the businesses. Now we need a suburb. And a highway. And once the suburb gets big enough, we need to build a school out there. And this perfectly acceptable, well-constructed school in Grandma’s neighborhood is now vastly under-enrolled, and needs to be closed.
Nostalgia is great and all, and the last few paragraphs aside, I’m perfectly willing to accommodate a fundamental change in the system by which we assess property values for the purposes of taxes, at least to a degree. Because I don’t worship at the altar of the free market.
Oddly enough, though, most people who harp on Prop 13 as being valuable because it protects Grandma from the true valuation of her home will turn back around and insist that government interference in a market is a de facto bad thing.
Take your pick. If the market can be restrained, it can be restrained. If it can’t, it can’t. Grandma gets to pack up her stuff and move.
@ Elliot
> Actually, most folks get what others pay
> for. They sure don’t want to pay for it
> themselves. I think the current figure is
> 47% of households that pay no fed income
> tax.
They still pay taxes. Also, for reference, the lowest quintile by income (those households you reference here) vote at a staggeringly lower percentage than those from the higher income brackets… 36% compared to 52%/59%/67%/63%.
The top 80% of voters, by income, staggeringly go to the polls more often than their broke brethren, for a large number of reasons.
So your inference (*they* vote themselves cake on *our* dime!) is bunk. Most voters in the upper income brackets have voted them the cake on their own dime. If you want to complain about taxes and spending, you can’t blame the poor for forcing the government to spend tax money on them… the truth is, middle and upper class people vote to spend money on them.
@ Duracomm
> California’s problem is overspending not lack of tax revenue.
You keep saying this. Budgeting is balancing revenue with expenditures. If your budget is out of whack, *by definition* your problem is that you are spending more than you’re bringing in. You can’t *overspend* unless you are also failing to bring in revenue.
Let me ask you a question: if California had a balanced 5 year budget amendment, where any new spending bill or initiative was required to have as part of its passage a linked source of revenue, would you mind getting rid of Prop 13?
May 6, 2010, 12:58 pmBryan says:
An extremist minority of Republicans? You mean the Republican representatives elected by their constituents? Come on. It’s not the Republicans. The Democrats in Sacramento, who were long ago purchased by unions and to whom they are completely beholden, will fight tooth-and-nail against even a modicum of spending restraint.
The facts don’t line up with your “Republicans won’t compromise” meme. Last year, a massive amount of taxes and fees were increased. The state sales tax rate was raised by 1% (to 9%), and the state income tax rate was raised by adding a 5% surcharge. Vehicle registration fees (aka the “car tax”) shot up 76%. Gasoline taxes were increased by 12 cents per gallon. The dependent tax credit was slashed from $309 to $103, effectively a tax hike of $206 for every claimed dependent. But you’re right. No taxes or fees ever get increased in California. Darn Republicans.
Of course, even that wasn’t enough to close a budget deficit that dwarfs the Grand Canyon. To suggest that Republicans are rigid and unwilling to compromise is so at odds with reality that it’s borderline delusional.
Typical backward thinking. “In order to preserve their influence, Republicans should abandon their values.” Try again. California is teetering on the edge of bankruptcy, and the only response from Democrats and their union bosses is to keep spending like drunken sailors. Joining the spending orgy run by Democrats and their union cronies isn’t a political winner for Republicans.
May 6, 2010, 1:25 pmElliot says:
They are gorging themselves with someone else’s cake. Slopping it up, consuming yet not paying for it. It’s sure not their dime buying their Twinkies.
May 6, 2010, 1:32 pmElliot says:
How come Texas is doing so much better than California?
May 6, 2010, 1:36 pmAndrew J. Lazarus says:
That was with three Republican votes, right? So let’s say “Most Republicans won’t compromise.”
By the way, did the recalcitrant Republicans ever outline the cuts they wanted to impose so the voters could judge whether they wanted them, or did they give the usual babble about magically finding some “waste, fraud, and abuse”?
May 6, 2010, 1:45 pmJerry Carroll says:
Ask the Californians who are moving there in great numbers. Many of them are bringing their rich government pensions with them. They got theirs and want to keep it.
May 6, 2010, 1:47 pmBryan says:
I’ll quote William Voegelle of the City Journal:
Virtually all of the spending problems in California stem from two causes: a government firmly in the pocket of unions, and a massive welfare system. From teachers unions to public employee unions, public salaries are sky-high and rapidly increasing. Again, from Voegelle:
That’s the biggest issue — the gluttonous swine that are the unions. Republicans have made countless attempts to constrain union compensation to reasonable, even generous, levels. Every such effort has been blocked by Democrats.
May 6, 2010, 3:22 pmOpenVolokh says:
That was one Republican, namely Abel Maldonado, who demanded and got open primaries in exchange.
If Republicans really had serious values, they would know that adjusting tax rates don’t belong among them. Tax rates should reasonably fluctuate. They shouldn’t be made a matter of religion.
That is a phony value from a party that has apparently lost any sense of what is worthy of being a value or not.
Like I said, Republicans are going to be punished for being so recalcitrant and their insistence on driving the State of California over a cliff.
Here is how grown-ups should make budget decisions: both sides compromise. I am all for spending cuts. In fact, some of these spending cuts should have been made when the economy was better and tax revenues were higher.
May 6, 2010, 3:58 pmOpenVolokh says:
Bryan,
Your comparison between California and Texas are way off. The cost of living in Texas is much lower. Even in the big cities like Houston and Dallas.
Also, I have said it once, I will say it again. California is more liberal than Texas. If California was exactly like Texas, that would be very strange, not normal.
May 6, 2010, 4:03 pmDuracomm says:
Andrew J. Lazarus, showing either his mad troll skills or studied ability to completely ignore the plain facts I keep pointing to, said,
Except for the fact that the state must now account for those pension obligations and that is going to crush california’s bond rating
It appears that in your world not funding pensions the state can’t afford to pay for means they are not spending enough. The idea of trimming the pensions to a sustainable level never enters your consciousness.
No wonder california’s finances are in the ditch.
We agree and I’m sure the bond rating agencies do to. They are going to crush california’s bond ratings to account for it.
I would observe, and my links have mentioned, that funding the extravagant pay and pensions the politicians have given to the politically powerful unions takes money and resources away from california’s deserving poor and middle class. .
Apparently this is not important to you because you want to ignore that point also.
My real problem is with fiscally ignorant folks like yourself who can’t or won’t recognize that california has spent far beyond the taxpayers ability to pay.
May 6, 2010, 5:20 pmPerseus says:
That’s only true if you include general fund spending, which does not include total spending.
I can call it republican government because (as a political theorist) I do not accept your idiosyncratic definition of republican government. As for those folks, I’d like to see some substantiation that they did not want the state to do what you claim.
You certainly have carried on with that style.
May 6, 2010, 6:50 pmMark Field says:
It would be REALLY hard to sustain an argument that majority rule is not an essential component of republican government, but if you’ve got some cites, go for it.
May 6, 2010, 7:11 pmJerry Carroll says:
I don’t mean to be persistent — actually, I do — but you haven’t said yet whether you are on a public payroll, thus accounting for your hostility to Proposition 13.
May 6, 2010, 7:22 pmAndrew J. Lazarus says:
Again, Duracomm, while California may have given excessively generous pensions to state employees, this has little or nothing to do with the budget crises of 2009 and 2010. ‘Has’ and ‘will’ are not the same thing. 200 comments in, you have yet to supply a yardstick for spending too much now other than your own prejudices, parroting people who agree with these prejudices, and a totally bogus computation based on population and inflation.
The total is still about $109 billion including special funds and excluding only spending of bond funds. Definitely in the ballpark. California may be spending unwisely but it really isn’t spending that much.
It would be helpful to know whom you are addressing, but, no, I am not on the public payroll. However, I don’t think people on the public payroll are the ones who should resent Prop 13 the most; it is young families looking to enter the housing market, or entrepreneurs whose established competitors have more favorable property tax rates.
May 6, 2010, 7:54 pmOpenVolokh says:
Actually, I am a public employee. I am the governator! And I will crush you, you little girlie man.
May 6, 2010, 7:54 pmElliot says:
What accounts for the big difference? Isn’t cost of living a result of overall management of a state and economy? Why has Texas done so much better than California?
May 6, 2010, 8:40 pmOpenVolokh says:
No. Actually, success can increase the cost of living. Note the price of renting or buying housing in California’s Silicon Valley. It is precisely because so many are so successful that they have bid up the price of housing. Contrast that with Mississippi where the cost of living is much less.
That is just sort of a silly assumption you are making Elliot.
May 6, 2010, 9:26 pmElliot says:
Success doesn’t increase costs. Do cans of soup cost more in California than Texas? Levis? Skiis? Copies of Audacity of Hope? Running shoes? Mahogany desks? Rolexes? Gulfstream G550s? Framing lumber? Concrete? Roof shingles?
Dallas and Houston are very successful cities with high incomes. How come the housing bidding situation you describe hasn’t happened there to the extent it happened in California?
Does government mandated land use, environmental restriction, building codes, and zoning have anything to do with the price of housing? Does it limit the supply of new housing coming onto the market by taking land off the market?
Is it possible Texas has done a much better job managing its housing than California? (Maybe Texans have higher IQs?)
May 6, 2010, 10:44 pmSteverino says:
You can hardly call what is happening in California a “success.”
Regulation and compliance costs add a great deal to the cost of living in California.
I worked very briefly for a developer. Here in Texas, in 1999 the cost of complying with regulation added $3-$4,000 to the price of a new home. In CA at the same time it was over $50,000.
In addition to being costly, the over-regulation is time consuming. The reason why houses are ridiculously expensive in CA is because there is a government-created artificial shortage.
That is just one industry. Chief Execute Magazine recently had 651 CEOs rank the states in order of business climate. California was rated last. Essentially, people are walking away from business rather than deal with Sacramento.
In 2009 the Milken institute released a report on the state of manufacturing in CA, “Manufacturing 2.0.” Here are 5 key points:
According to the report, CA lost over 634,000 manufacturing jobs and 34% of its industrial base between 2001 and 2007. And I can guarantee that the hemorrhaging will only get worse as CA implements its silly California Global Warming Solutions Act (AB 32). Prices of all goods and services will continue to climb in CA as it drives energy prices up, and businesses and jobs out of the state.
The solution isn’t to keep trying to squeeze blood from a stone. Good luck with that. California’s Franchise Tax Board reports that 85% of all income tax revenue comes from 15% of taxpayers. I’ve seen figures in news reports that say that as few as 150,000 Californians pay over 50% of the taxes.
So Californians most certainly are voting to give themselves and others bennies on someone else’s dime.
And yes, I’ve seen the proposition advanced that Californians are voting to give themselves excellent benefits and infrastructure. That may be what Californians are voting to give themselves, but that isn’t what you’re getting. It’s another fairey tale. Take public education. If anyone else wants to bother doing some internet searches on public schools ranked by state, you’ll find CA public elementary, middle, and high schools consistently near the bottom. Universities? Yeah, you’ll find a campus or two on some top 10 list. And you’ll find other states’ public univesities ranked higher than many other CA schools.
Californians aren’t getting their money’s worth for what they’re voting to have a small minority of tax payers buy for them. Because that asylum is being run for the benefit of the keepers, not the inmates.
May 6, 2010, 10:44 pmOpenVolokh says:
It depends on whether you like the affect of land use and zoning regulations or not. I do not think this is a matter of “success” as much as it is “preference.”
If you wanted to be a professional baseball player and I wanted to be a professional golfer, you might be tempted to judge my “success” based on my baseball skills, but the true measure of success is my performance at golf.
I detect a pattern where you are trying to convert your own preferences into some sort of objective metrics. But that isn’t appropriate.
May 7, 2010, 12:35 amOpenVolokh says:
Another way of putting it is this. You could increase the housing supply in Silicon Valley and lower the costs, but only by decreasing the “quality” as some people perceive it.
Land use and zoning regulations are cheaper to maintain when an area is not very successful, since not many people will want to live in the area.
May 7, 2010, 12:38 amSlugger Steve says:
I live in California — we pay plenty of taxes. The problem is the spending at the state and local level.
Steve
May 7, 2010, 2:21 amSteverino says:
High costs will ensure that an area is unsuccessful. And the costs of doing business are the highest in the nation, according to Forbes magazine’s state-by-state business climate rankings.
The fact that your economic theories just don’t bear up reality ought to be enough for you to drop them. The evidence is against it.
But then, I know you won’t drop them. Which is an appropriate metaphor for whole CA budget crisis. The whole state won’t drop their failed economic theories.
Which is why I left and moved to Texas. Along with millions of other Americans as well as immigrants. In the past two years, the number of Americans moving to Texas from other parts of the country has been more than double the number moving to any other state.
As a matter of fact, Texas is predicted to pick up 4 congressional seats and electoral votes in the reapportionment following the 2010 census. Not bad for one of those places “not many people will want to live in.”
California, by the way, appears to be on the way to picking up no seats or votes. For the first time in history.
You’d be surprised by the number of people who want to live in one of those areas “not many people will want to live in.” I worked for a high tech company in southern California. We could not recruit software engineers from out of state. There was no way we could pay them enough money to duplicate the standard of living they enjoyed elsewhere.
The quality of their homes was just fine, thank you very much. So was the quality of their lives.
It’s not necessary to have a government engineered shortage that makes housing unaffordable to ensure “quality.”
That in itself illustrates a huge part of the problem. Californians imagine they are getting something they are not with their overbearing regulatory schemes and high taxes.
Which is why I mentioned the suicidal CA law regarding reducing global warming gasses to 1990 levels. Even if you accept that man-made activity it is beyond silly for a single state to pass such a law. It will have zero effect on the planet. It simply can not. But it will have a huge and disastrous effect on business in the state. And on jobs.
So which metric do you want to use to judge the success of this law? Any possible effect on global warming, or the feel-good empty symbolism?
Of course it will reduce CA’s carbon footprint, as any company than can relocate to Nevada will do so. Many others will just fold.
I don’t know how you define success, but apparently it includes having the fifth highest unemployment in the country. Will success be declared when CA leads the nation in that metric? Not to worry, CA leads the nation in a number of other important categories. Let’s see. Business Bankruptcies. They were up 81% in the 12 month period ending Sep 30th 2009. Nearly doubling the ational average increase of 44%. Housing market with the highest rate of foreclosures; Stockton. I already mentioned CA is number one in highest cost of business. And with laws like the California Global Warming Solutions Act getting ready to take another big bite, I’d say CA will remain no. one in that category.
Or will success be achieved when, eventually, the only economic activity possible in CA will be the type that wouldn’t be out of place at a Rennaissance Fair? That won’t generate the kind of revenue needed to tax CA out of this mess.
May 7, 2010, 2:53 amPerseus says:
The Framers of the Constitution included all sorts of minority vetoes, including, among other things, amendments, bicameralism, presidential veto, and judicial review. And it is an artificial distinction to say that it’s republican so long as a majority rules within a given body even if that body can block the act of another. And by your logic, for example, the president’s veto (despite the president being a member of a different branch and broadly elected) would be anti-republican because it is not an article II power, but an article I power, which means that the president is exercising a legislative power that allows him–a minority of one–to block legislation.
May 7, 2010, 3:36 amOpenVolokh says:
Steverino,
First of all, I like Texas too.
Second of all, I don’t think I have defended everything that is done in California.
I have simply said this:
It is perfectly reasonable to desire a higher level of government services and be willing to accept higher taxes to finance them. And it is perfectly reasonable to desire a lower level of taxes and be willing to accept a lower level of taxes to finance them.
It is my belief that most Californians cherish certain government services, especially education. And they especially take pride in the University of California system, our California State University system, and our community college system.
It should be pointed out that Texas, like California, has established an above average university system, especially the University of Texas at Austin. Although the University of California system is certainly better than the University of Texas system.
In which state did Google and Apple and HP and countless other technology companies originate? Texas is trying to catch up, but they still cannot match California in technology.
Should we cut spending in certain areas here in California. I think so. I think paying prison guards 100K+ salaries is a little bit overboard. At the same time, spending cuts will not be enough. We are going to have to increase taxes a little too.
You would be better off if you were less extreme.
May 7, 2010, 4:21 amOpenVolokh says:
I am afraid you are wrong about this Perseus. As James Madison wrote in his notes before the Constitutional Convention, the central principle of republican government is that the great questions of society are to be decided according to the will of the majority, subject, perhaps, to some limited rights that are granted to protect minorities. Checks and balances are meant to cool passions, not frustrate the power of the majority to decide the great questions of society.
Mark Field is right that two-thirds voting requirements imposed from outside violate republican principles. But, the issue is, that this does not matter as long since the government that establishes this local rule is itself republican in nature and these local entities only exist at its sufferance.
May 7, 2010, 4:50 amOpenVolokh says:
Another point. The President is not merely “one person.” The President is the only elected official who is selected by and accountable to all of the people.
May 7, 2010, 4:56 amDavid M. Nieporent says:
I never thought I’d hear Mark Field endorsing George Wallace’s argument.
May 7, 2010, 8:40 amDuracomm says:
Andrew J. Lazarus said:
I have posted numerous links that detail california’s fiscal problems.
Other links have been posted detailing the fact that california is a very high tax state.
In spite of very high taxes california continues to have budget problems.
That’s a solid evidence that the problem is overspending not under-taxing. It is also a pretty good clue that the problem is here right now.
May 7, 2010, 11:16 amTime for reform – not for blame
NOW VOTERS HAVE JUDGED LEADERS; HOW WILL LEADERS TAKE THE REBUKE?
Mark Field says:
Yes, but they also made it very clear that in all other cases, majority rule was to operate:
George Washington, Message to the Third Congress, November 19, 1794 (discussing the Whiskey Rebellion): “to yield to the treasonable fury of so small a portion of the United States would be to violate the fundamental principle of our Constitution, which enjoins that the will of the majority shall prevail.”
The House of Representatives, making formal response to President Washington on November 28, 1794, praising his handling of the Whiskey Rebellion: “It has demonstrated to the candid world, as well as to the American People themselves, that the great body of them, everywhere, are equally attached to the luminous and vital principle of our Constitution which enjoins that the will of the majority shall prevail….”
Thomas Jefferson, First Inaugural Address (March 4, 1801): “[I]t is proper you should understand what I deem the essential principles of our Government…. absolute acquiescence in the decisions of the majority, the vital principle of republics….”
In Federalist 58, James Madison responded to an anti-Federalist argument that the quorum in the House of Representatives ought to be more than a majority. In fact, this anti-Federalist argued, the Constitution should have required more than a majority for certain votes.
Madison rejected these arguments as leading to minority rule, a rule inconsistent with fundamental republican principle:
“It has been said that more than a majority ought to have been required for a quorum; and in particular cases, if not in all, more than a majority of a quorum for a decision. That some advantages might have resulted from such a precaution cannot be denied. It might have been an additional shield to some particular interests, and another obstacle generally to hasty and partial measures. But these considerations are outweighed by the inconveniences in the opposite scale.
In all cases where justice or the general good might require new laws to be passed, or active measures to be pursued, the fundamental principle of free government would be reversed. It would be no longer the majority that would rule: the power would be transferred to the minority.”
Similarly, Alexander Hamilton criticized the Articles of Confederation precisely because they required more than a majority vote: “Its operation contradicts the fundamental maxim of republican government, which requires that the sense of the majority should prevail. … To give a minority a negative upon the majority (which is always the case where more than a majority is requisite to a decision) is, in its tendency, to subject the sense of the greater number to that of the lesser. … The public business must, in some way or other, go forward. If a pertinacious minority can control the opinion of a majority respecting the best mode of conducting it, the majority, in order that something may be done, must conform to the views of the minority; and thus the sense of the smaller number will overrule that of the greater….”
And just to complete the point, Lincoln’s First Inaugural: “A majority held in restraint by constitutional checks and limitations, and always changing easily with deliberate changes of popular opinions and sentiments, is the only true sovereign of a free people. Whoever rejects it does of necessity fly to anarchy or to despotism. Unanimity is impossible. The rule of a minority, as a permanent arrangement, is wholly inadmissible….”
May 7, 2010, 11:54 amElliot says:
My preferences have nothing to do with the fact that land prices move up when government removes land from the pool of potential development sites, restricts height of multi-family buildings, and mandates minimum lot size for new houses. That cuts supply. The cost of complying with government building and environmental regulations also has nothing to do with my preferences.
Cost of living is not something that just happens. It is the result of economic and government actions. Government in Texas and California took very different approaches to land use and building regulations. So, cost of living as a function of housing is very much a partial creation of government.
May 7, 2010, 12:06 pmElliot says:
Of course. That’s why cost of living is higher for everyone in California. They chose the higher COL.
The interesting aspect of the land restrictions is they usually advantage the existing owners to the disadvantage of new buyers. If I have a property in Silicon Valley, I can enhance its value by getting all the vacant land zoned off limits.
Then I complain to the government that there is no affordable housing, and minorities can’t buy houses, so the government implements affordable housing programs by pressuring lenders to lower mortgage requirements.
California chose one path. Texas chose another. California is a mess. Texas is thriving.
May 7, 2010, 12:32 pmMark Field says:
David’s snark is usually much better than this. Let’s consider the 2 components of the Civil Rights Movement, voting rights and civil rights:
1. George Wallace wanted to prevent actual majorities from making the laws by preventing blacks from voting. In this context, his position is identical to those who favor a 2/3 rule: they are trying to prevent majority rule.
2. Substantively, Wallace wanted the minority to enact rules which would maintain their privileged status, just as 2/3 supporters want to maintain theirs. Wallace did that by making substantive rules which nobody should be allowed to make. In CA, in stark contrast, everybody agrees that the voters of Pasadena get to decide how much money they want to spend on their schools, but people outside Pasadena have nevertheless established a protected minority within Pasadena with a veto power over a rule which everyone agrees Pasadena voters can make.
So yeah, the Wallace example is there as a cautionary tale, but it’s the Prop. 13 supporters who are its heirs both philosophically and, for that matter, politically.
May 7, 2010, 1:06 pmJerry Carroll says:
You haven’t said whether you have a pecuniary interest in ever-increasing government spending in California even if it drives away prosperity. You complain about six-figure incomes for prison guards, but decline to say whether you are on a public payroll. It would be helpful in analyzing your arguments in favor of the transfer of wealth from the private to the public sector. Please do not consume alcohol or suck on a crack pipe before replying as evidently you did before with your “girly man” comment. Homosexuality has nothing to do with this question, nor am I one.
May 7, 2010, 3:56 pmPat Cahalan says:
@ Eliot
> Government in Texas and California took very different
> approaches to land use and building regulations.
Given that there are certainly examples of people lobbying to restrict land use outside the bounds of what I consider reasonable, there are a few major structural reasons why Texas and California have different building regulations. Hurricanes vs. Wildfires & Earthquakes, just to name a couple. Granted, California has environmentally-based land use restrictions that Texas doesn’t, but the biosphere in California is also a big more diverse than in Texas, simply due to geographical considerations.
> The interesting aspect of the land restrictions is
> they usually advantage the existing owners to the
> disadvantage of new buyers.
Replace “usually” with “almost inevitably”. However, this isn’t necessarily nefarious; if your house was built in 1930 it has nowhere near the structural requirements that a house that was built in 1990 has. That’s “to your advantage” if you bought your house in 1970 compared to someone who built their house in 1993… until a 7.2 hits and your house is now 6 feet away from its former foundation :)
> If I have a property in Silicon Valley, I can enhance
> its value by getting all the vacant land zoned off limits.
You certainly could. I find this exception scenario to be hugely unlikely, unless your “I” is a very large development corporation with significant property assets. And then, of course, you’re playing a lobbying game with another large development corporation with significant property assets.
Admittedly, this isn’t to anyone’s advantage from the perspective of the average Joe Citizen, but this is hardly something that can occur only in California. Florida is ripe with stories of this sort of governmental corruption, and it’s about as “red” as California is “blue”.
@ Steverino
> I worked for a high tech company in southern California.
> We could not recruit software engineers from out of state.
> There was no way we could pay them enough money to
> duplicate the standard of living they enjoyed elsewhere.
Yahoo, Google, Apple, JPL, Boeing, DirecTV, and numerous other hardware and software technology companies don’t have this problem. In fact, among the higher-skilled programmers that I know, money is usually down around 4th or 5th in the deciding factor of what job to take. If you can’t recruit out-of-state talent at a technology company, likely your problem isn’t the salary you can or can’t offer; it’s the fact that you require your workers to relocate to begin with, and what that implies for your working environment.
May 7, 2010, 5:42 pmspike says:
Prop 13 has shifted most of the property tax burden to new residents of CA and so shifted it to the young and away from the affluent old and from businesses. That worked fine until the economy went sour, resulting in massive defaults on mortgages in many areas and loss of much of the property tax base. Prop. 13 is just plain unfair. It gives established businesses a huge advantage over new businesses that must pay higher taxes.
As noted by many, the ease at which the state constitution can be changed (by a mere majority of voters) has lead to many really stupid laws. The three strikes law has lead to the highest incarceration rate in the country, which means very expensive prisons. Such an amazing waste of money. The power of the prison guard union is frightening. Note many of those prisons are in the “conservative” areas of the state. Essentially welfare for the poorer rural counties (NYS has the same problem). The state now spends more on prisons than it does on the Univ. of CA.
I own a house in CA and pay absurdly low property taxes. I find it amazing to see Jerry Brown running for Governor. It was his idiocy as governor in not acting to reduce tax rates in the 1970′s that lead to a huge surplus and then to the passage of prop 13. Prop 13 has been like a ticking time bomb that has finally exploded. I don’t see much hope that the drastic changes needed will ever come about.
Still it will always be much more pleasant to live in CA than in Texas, which is why you can buy a house in Texas for a lot less than you can buy a house in CA.
May 11, 2010, 10:33 pmspike says:
The current tax system also locks the elderly in large houses because they would pay more in taxes if they moved into a smaller house. The one out is they can sell to their children. Or they rent the house out. Still it has a weird effect on economics of home ownership and the real estate market. It has similar effects to rent control in NY. People get locked into real estate for their entire lives.
May 11, 2010, 10:39 pmCaleb says:
Calfornian propporty taxation and revenue is not based on commercial land value as it should be thanks to propostion 13.
May 13, 2010, 4:38 amScewing land development and real estate prices and
instead taxation and revnue colection has been moved to taxes on income profits and on business.
Caleb says:
The only way for California to take it out of the current fiscal mess it is in is through land value based taxation assesment and revenue collection while reducing taxation on income sales and busniess profits propostion 13 does not allow that to happen.
May 13, 2010, 4:53 amNot unsuprisingly Californias busniess enviroment is rated as amongst the worst in the US thanks to the scewed revenue collection base that prop 13 has created.
So Califorinias problem is not over spending it is insuficent and wildly dysfunctional revenue collection base landownership need to be taxed in accordance with market prices.
Joe says:
Incorrect. Many can, and do take out a reverse mortgage that allows them to meet their fiduciary requirements (prop taxes, upkeep, food, medecine, etc.) while staying in their home for life with no payments.
May 20, 2010, 6:53 pmCaleb says:
The only fiscal sensible solution for California current budget mess is to heavily tax land value and reduce taxation on income commerce and industry with same amount. And actuly in doing so raising bilions of revenues for the state while bettering Calfornias worsenining business and investment enviroment. Unfortanly Prop 13 hinders Calfornia from taking such a measure as it functionins as a straigh jacket on Califonias finances and lead to more and more severe budget cuts lesser and lesser aggregate demand and larger larger budget defecits.
May 21, 2010, 2:34 pmCaleb says:
Its time for Califrornia to begin a yearly and heavy taxation on land and land value and reduce taxes on income commerce and industry with the same amount.
May 22, 2010, 1:46 pmAnd in doing so produce bilions in revenues through higher productivity and economic growth.
For this to happend the fiscal straigh jacket that is Propostion 13 has to be geting rid of and Property taxes raised to make upp for a considerbly lower overall taxation and beter investment enviroment.
Caleb says:
As long as it requires a two thirds majority to pass an fiscaly responsible budget in California the state will be an banana republic not just constituionally but sone also economicly.
May 23, 2010, 11:33 amJerry Carroll says:
Caleb: What level of the government trough is your snout stuck in?
Proposition 13 was aimed at quelling the insatiable appetite you people have for the public’s money.
You are part of the problem.
May 23, 2010, 12:28 pmMike K says:
Probably because 5 million illegals aren’t counted.
May 23, 2010, 3:19 pmCaleb says:
The problem is propostion 13 and its insuficent revenue collection base.
May 23, 2010, 4:54 pmWich forces higher taxes on income commerce and industry as an alternative to make upp for prop 13 revenue shortfall for local governments.
Proposition 13 leads only to real state speculation and inflated house prices and.And it centralizes Californias government as local sources of funding are shifted to state level sources instead.
Jerry Carroll says:
Proposition 13 was enacted because of the greed of the political class and government unions that wanted more, more and more. Now that other backdoor ways of achieving that goal have been exhausted, these people are inventing one specious argument after another against the only brake that has worked to slow the state’s insatiable appetite for spending.
What about it, Caleb? Worried about your six-figure government pension?
May 23, 2010, 5:30 pmCaleb says:
The fact that Calfornia has such large degre of public employes and spending are the indirect consequenses of proposition 13 as it incentives public overspending and landowners are the driving force behind it they are the most benefited when this happend becouse the value of their land goes with public money investments.
May 24, 2010, 3:50 amlandowners them self do not have to contribute to the states revenues through commercial activities just sitt back and allow Calfornias public sector to increase the value of their land through investments.
Caleb says:
The number of public employes could be reduced if proposition 13 is repealed and the tax system in Calfornia is reformed so the proporty taxes are raised while taxes on income profits and enterprise lowered that would dramaticly strengthen Californis private sector employment while reducing emplyment in the public secor .
May 24, 2010, 4:22 amJerry Carroll says:
And up is down.
May 24, 2010, 10:07 amCaleb says:
No upp is not down but it it would definatly strenghthen Californias deteriorating business enviroment that requiers adequite public investments. Something that the fiscal straight jacket that is prop 13 hinders that demands tax reform away from income taxes to taxes based on market based land value.
May 25, 2010, 3:38 amCaleb says:
Prop 13 leads only to speculation infltad housing prices rapid boom followed by an housing bust driven by under market based prices for housing and lack husing sales since many house ownners are discuraged from saling their houses thanks to ridiclisy low proporty taxes based on non market and non land value assesed prices its not a coincidence that that the US housing bust had its origien in California.
May 25, 2010, 3:56 amCaleb says:
Today public funding in California has become centralized thanks to prop 13 while while central goverenment funding of commercial private activitys has steeply declinded being pushed out by local funding needs. Now local funding is made up by state government since local proporty tax revenues has declind steeply over the last 30 years leaving local governments without ability to adequitely bieng able to fund them self.
May 25, 2010, 4:54 amThis in turn leads to higher and higher local taxes in an atempt by local goverements to make upp for the shortfall in proporty tax revenues.
And the same patern of increased overall taxation becouse of the lack of proporty tax revenues is seen at state level to with higher and higher income and sales taxes Prop 13 increases taxes it does not reduce them.
Caleb says:
The fact is without propstion 13 Califorinias overall tax base could have been considerbly lower even if the proporty taxes would be higher and the business enviroment would be much better god enough to raise adequate revenues for Califronias now bankrupt government.
May 25, 2010, 6:07 amCaleb says:
So propstion 13 is publicly funded welfare for land lords.
May 25, 2010, 7:44 amaltough a form of welfare that is draining Californias finances from rvenues since the costbenefit from the measure is much lower theen the actual costs.
Caleb says:
Decreased local government proporty tax revenues increased overall taxation
May 26, 2010, 11:06 amalong with centralization with central government growing in size. And
in as ever more important source of funding becouse the local governments are unable to collect adequite local property tax revenues to fund them self this is the result of propostion 13 Calfornia is rooting from deep whith in.
Caleb says:
Another result of propstion 13 is an ever growing federal bureacracy over California since local governments are restricted from being able to collect enough of proporty tax revenues to distrubute to the state government.
May 27, 2010, 6:09 amSo federal government instead takes upp an ever increasing role as the source funding for California instead. Leading to a growing federal bureacracy over California.
So funding for California as a state does to an increasing rate not come from local revenue collection but from federal grants.
California is being more and more centralized not only from state governments over local governments but also by federal goverenment over Californias state government.
Caleb says:
California need to shift its taxes away from taxing income business and enterprise and increse taxation on proporty instead as the main a source of revenue.
May 28, 2010, 5:11 amAnd that taxation need to be collected on market based land value.
California has extremly valuable land with alot of Value that tanks to proposition 13 is wasted when it could more than enough cover Calfiornias needs ass a state.