California is the most awesome state in the world. That’s not what we’re debating today. The problem is that California’s awesomeness is currently in a slow and painful decline and we only have ourselves to blame. We’re also the only ones who can fix this – will we?
On Thursday, I spent three hours with a bunch of smart, passionate Californians talking it out at the “Reviving California Community Summit,” which brought together a panel to take on how to fix our budget process (definitely step one for this turnaround).
I know I just lost a bunch of you when I said “budget process.” Please hang in there with me. Think of it this way, you love and care about your family, right? So that means you absolutely have to care about your family’s finances. Ditto with our great state. Yes, politics is messy and often unsavory, but the worst thing decent, caring Californians could do is wash their hands of the whole matter and leave the politics completely to the politicians. They clearly aren’t responsible enough to handle their allowance.
***If you’re still on the fence, click here to listen to the OC theme song, “California,” while you read this. Maybe I’ll start scoring all my blog posts. If you read fast, you can accompany the deep politics stuff with 2Pac’s “California Love.”
Maybe you’ve been checked out for the past decade, but if you stick with me for the rest of this blog post, I’ll get you up to speed and tell you everything that people much smarter than me said in the course of the three hours.
First a couple of quotes from Bob Foster, Mayor of Long Beach, who was on the panel. He did a good job of summarizing.
“We think in terms of a year to 18 months instead of 20-30 years. We don’t have a future orientation and this will turn us into a third-world country if we don’t reform that.”
“Me, you, labor, business – put aside a little of your self-interest and think about your real self-interest – living in a society that cares about its children, educates its workforce and builds an infrastructure for the future.”
What made California awesome in the first place
California is naturally awesome – literally. We have really great land and weather, the biggest port in north America, a ton of coastline…definitely a good starting point. We used to a have a pretty amazing infrastructure – ever spotted the State Water Project running along I-5? WOW! We also have a lot of smart, innovative people here. Both infrastructure and smart people did not happen on their own. The California state government invested in these resources – building roads and bridges and dams and building the incredible California state university system. Silicon Valley is full of self-made entrepreneurs – however, there would be no Silicon Valley without all the bright people educated by our state universities, created by government and paid for with tax-payer dollars. You get what you pay for – however, many Californians are now demanding more and more but don’t want to pay for it.
What the hell happened?!?!
Stuff is wearing out. It happens. And it sucks, because as we all know, that means you have to replace it. It’s one thing to replace a tire, but our entire highway system?! Furthermore, we’ve had some money issues. We have some problems with the way we allocated our money (no rainy day fund, lots of restrictions…), and with the revenue side (too dependent on a booming economy).
You can see the painful effect of this at our state universities. When the Master Plan for Higher Education was passed in 1960, the goal was to guarantee smart Californians a FREE university education. In fact, if you were in the top 12 percent of your class, you were guaranteed a spot at a University of California campus and it barely cost you anything. Last year, 38,000 students who met this criteria were turned away due to budget pressures. Those who made it in are looking at $13,200 in tuition alone.
This is not only a burden for these students and their families – it will cost the state of California way down the line.
There were multiple factors that contributed to this, but I absolutely have to single out a really big one – Prop 13, passed in 1978. It decreased property taxes, and also put in place the two-thirds majority requirement to raise any taxes through the legislature. Wikipedia summarizes: “A large contributor to Proposition 13 was the sentiment that older Californians should not be priced out of their homes through high taxes. The proposition has been called the “third rail” (meaning “untouchable subject”) of California politics, and it is not popular politically for lawmakers to attempt to change it.” A couple of recent extraordinary things related to this:
- California voters passed Prop. 25, removing the two-thirds requirement and the budget passed on time for just the sixth time in 20 years. – TIME: California Miracle- On-time Budget!
- In August, LA Mayor Antonio Villaraigosa called on the legislature to REFORM Prop. 13, calling it a “corporate tax giveaway.”
As Antonia Hernandez, head of the California Community Foundation, pointed out, a lot of the problems we have were good ideas at the time – we just live in a radically changed state now and need to update our laws and policies to reflect that, like, for instance, updating our tax code. Sexy stuff. Bill Lockyer, the state treasurer, raised a lot of the points below – and he should know, right?! I wouldn’t characterize the man as a fringe activist. Between all the panelists, there was actually quite a bit of agreement on what the problems are – not that they’ll be easy to fix.
I’ll provide a laundry list of issues, in no particular order:
As Fred Keeley, County of Santa Cruz Treasurer, pointed out, government has four types of taxes: property, bank and corporation, personal income and sales. Property taxes tend to be the most stable source of revenue, but not for California, because of Prop. 13. Right now, California relies heavily on capitol gains taxes and taxes on goods. That made sense when we use to make stuff, but we now have a service economy and there is no tax on service. It also means that when we had the Dot Com Boom, we were swimming in money (none of which we set aside for a rainy day), and now we’re doing terribly.
Another one of those “seemed like a good idea at the time.” We thought we’d get some fresh faces in the legislature. Instead, term limits have made our state run even more by special interests and unelected staff because the legislators are mainly newbies who have no idea what they’re doing. Furthermore, since they always have to worry about their next election, they can’t focus on the job at hand.
Interesting historical note: California’s unusual initiative process, which allows any Californian to put an initiative on the ballot, was passed in 1911 to balance the power of the railroad men who were totally running the state. Yay, direct democracy! Downside, it turns out the ballot box is not the best way to make laws. The initiative process is now completely used by special interests. Basically, for two million dollars, you can hire those guys in the Safeway parking lot to hustle enough signatures to get anything on the ballot. A few more millions and you can get it passed. I wish the voters were smart enough to see through that, but, unfortunately, they have not been. Representative democracy wins.
Getting rid of the two-thirds vote is a big deal and should help quite a bit. Other suggestions:
- Go to a two-year budget cycle for better planning
- Get rid of some of the past initiatives. Voter initiatives have so ham-strung the budget that the legislature only has discretion over 17% of the general fund. That’s so little flexibility that they couldn’t do anything even if they wanted to.
From the CA Forward People
If you’re really into this stuff, I’d suggest you look at more from California Forward .
Bring the government closer to the people
Another major effect of Prop. 13 that Fred Keeley, who is on the CAFWD board, highlighted was that it effectively demolished 60 percent of local government revenues overnight moving a lot of power to the state government. He argues that we should move more things back to the local government level because local governments are closer to the people on the ground and more responsive.
Fred Keeley was also really into the idea of outcome-based budgeting. Rather than measuring “miles of road paved,” we should measure what we want to accomplish: Is our transportation system efficient? He also argued that government should be held accountable to those goals – if we gave you money in the last budget cycle, we review your results on your outcomes before automatically giving you more. This would be a pretty huge shift in the way government handles its funds.
Let’s pat ourselves on the back – we’ve already done something to improve these problems:
Back in the olden days (a few years ago), a bunch of Democratic and Republican legislators would get in a room and basically split up the state into solidly Dem and Rep districts where basically the party was guaranteed a win. I don’t know who thought letting legislators draw their own district lines was a good idea in the first place, but, fortunately, voters decided to put an end to this. We are now in wait and see mode to see whether the new districts drawn by a citizens redistricting panel will be any better and achieve our long-term goal of having a less partisan legislature – more moderate districts -> more moderate representatives. Cross your fingers.
Last budget cycle (back when we had that two-thirds vote thing, so retro…), Abel Maldonado, a Republican legislator from Santa Barbara, basically held the entire legislature hostage and forced them to pass a process where, rather than the top Democrat and Republican going to the ballot, it would simply be the top two voter-getters in the primary – period. In theory, in areas that are heavily Republican, you would end up with two highly-competitive Republican candidates, maybe more moderate ones, rather than having a Democrat basically get a free spot. Or vice versa. Could have a big impact – we’ll see!
So there you have it, California-lovers. The way forward is clear! Well, not entirely, but it should be clear that inaction is not an option if you want California to be an awesome place for our kids and our kids’ kids. I’ll close with one last thing, if you’re wondering what you personally should actually do about all this (besides vote):
According to the 2010 CA Civic Health Index, Californians ranked 46th out of the 50 states on the question: “Do you discuss politics with family and friends?”
That seems like as good a place to start as any. So start talking!