For years upon years, most states had consistent vehicle license fees. They didn’t vary all that much from state to state, averaging around 2% of stated value. You paid your couple hundred bucks per year and for that you got to use a tremendous system of roads, traffic lights, and stop signs.  All very helpful to your average driver.

Then something happened in Virgina in 1997. Jim Gilmore was elected governor.  Yes that crazy guy at the end of the stage in the first few presidential debates.  He focused his campaign almost exclusively on eliminating the “car tax” in Virginia.

And it worked. The vehicle license fee was slashed in the state.  Funding for the roads and transportation suffered, and eventually the government began to feel the effects across the budget. Stop me if you’ve heard this before.

But Virginia was able to bring itself out of the abyss.  How? They went and elected themselves in 2001 a courageous governor who stood up to the “goverment sux” crowd in now Senator elect Mark Warner.  Warner went and did the unthinkable, he raised taxes. He restored some of the license fees and increased other fees to ensure that the state of Virginia didn’t have to slash across the board.

Here in California, we had quite a similar story, didn’t we?  Of course, Schwarzenegger didn’t really need to campaign on the “car tax.” He did it because he could and it calmed the right-wingers that he needed to keep away from Tom McClintock. Let’s be honest, had he not even touched the issue, he probably would have won anyway.

But he did campaign on the issue, and so he went about and made deals with interest groups to get his bills paid.  Higher ed got their compact to increase funding. K-12 got promises to increase their funding later. All this to slash and burn through our revenue stream.  So he paid for the several billion in local government infill with general revenue. In FY 2004-2005, it cost us about $6B, and that number has increased since. Some back of the napkin math gets you to about $25 Billion in the four completed fiscal years since.

Now, what could we have done with $25 Billion? Oh right, we could have avoided a budget crisis.  

But it’s unclear if there is a Mark Warner in our future. Our 2/3 rules gives a minority a veto power they didn’t hold in Virignia. Furthermore, a few republicans were even willing to come along to help Warner clean up the mess there. Arnold is finally looking at raising taxes, but he only gives a quick smirk at the VLF, raising it by a $12 flat fee.  Kevin Drumm has a better idea:

Unlike a sales tax, which needs to be a flat rate for administrative reasons, the VLF could easily vary by assessed value. It could stay at its current rate of 0.65% up to, say, $10,000 in assessed value, increase to 2% for more expensive cars, and increase still further to 4% for top end cars. The average rate would still be about 2%, but the incidence of the tax would be more progressive.(Mother Jones 11/2008)

The main element of Arnold’s tax plan is the inherently regressive sales tax.  Drumm argues for this progressive VLF.  As for me, I’d like to see an element that contributes towards our goals under AB32 as well. A quick idea would be to give discounts for low-polluting vehicles while penalties for high-value cars with poor mileage. Yes, Hummer owners I’m looking at you.

But however you do it, we need to restore balance to our tax system. We can’t keep eliminating without considering that we are just becoming more and more dependent on the cyclical income tax. It’s a recipe for boom and bust that we’ve seen play out too often here.

In accepting the lawsuits challenging Prop 8 for review, the Supreme Court certified two questions related to the constitutionality of Prop 8:

(1) Is Proposition 8 invalid because it constitutes a revision of, rather than an amendment to the California Constitution?

(2) Does Proposition 8 violate the separation of powers doctrine under the California Constitution?

The Court, therefore, wants these two issues discussed separately.

The legal analysis of the first question has been discussed at length (for example: here, here, and here.) In the comments to my post yesterday, MikeD asked about the second argument. He asked if the seperation of powers argument is different from the amendment/revision argument. Here's my take on answering his question:

The root of the separation of powers doctrine is Article III, Sec. 3 of the California Constitution, which states:

The powers of state government are legislative, executive, and judicial. Persons charged with the exercise of one power may not exercise either of the others except as permitted by this Constitution.

While not entirely clear in the Constitution, the Supreme Court has held that the initiative power is part of the legislative branch.  Applying the seperation of powers doctrine, then, the voters exercising their legislative power through an initiative cannot encroach upon the power of the judiciary to excercise its power.

In an speech delivered in 2006, Chief Justice Ronald George described the seperation of powers doctrine:

In the case of the California judiciary, the governor is given the power to appoint judges, and the legislature, of course, has the power to control financial appropriations for new policy initiatives for support of the courts. The judiciary, on the other hand, has the important constitutional responsibility to protect the rights of all of our citizens against any unconstitutional actions by the legislative or executive branches.

If you want to know why Speaker Karen Bass is talking very loudly about a federal bailout for California, you just have to read the local papers.

The Merced Sen-Star:

At Tuesday’s board meeting Superintendent Terry Brace explained the district will lose $3.5 million under Gov. Arnold Schwarzenegger’s proposed budget plan.

If that passes, the district’s three percent reserve will be pushed to the limit to cover expenses. Brace said the aim will be to maintain educational programs first. After that, “we want to cut things and not people,” he said.

The Hanford Sentinel:

Kings County officials implemented a hiring freeze Tuesday as one of several measures to circumvent anticipated funding cuts from the state in the midst of a faltering economy. The county had already been on a limited or “soft” hiring freeze since July 1, the freeze affecting only positions that won’t affect the basic level of service. No reduction in staffing levels were being considered.

County Administrative Officer Larry Spikes says it’s a necessary measure to protect the county’s fiscal health in light of the worsening state budget crisis underscored last week by the governor’s call for a special session to close the deficit. Never before in California history has a governor called an “extraordinary session” so late in the year.

The Modesto Bee:

Efforts to close an $11.2 billion state budget deficit have shaken up the state’s Healthy Families program, which provides health care to about 13,300 children and pregnant women in Stanislaus County.

Next month, the state is preparing to freeze enrollment in the program, which provides medical, dental and vision care to children whose families earn too much to receive Medi-Cal but can’t afford private insurance. If the Managed Risk Medical Insurance Board approves the proposal Dec. 17, families trying to enroll children will be placed on a waiting list at least until June 30.

This is what’s happening in this state, at precisely the wrong time.  During an economic downturn, with the attendant job loss, people need more services, not less.  It’s the perverse cycle of constrained state budgets with their balanced budget amendments that they need to cut back precisely when they should be expanding.  In a downturn, government must be the spender of last resort, yet the state Constitution doesn’t allow it.  And cutting the budget to get it in balance during this greatest fiscal crisis since the Great Depression would be an absolute disaster.  And frankly, the Yacht Party isn’t going to agree to anything sensible.

It would be better for all involved if the entire Democratic caucus decamped from Sacramento to Washington and sat outside Nancy Pelosi’s office until a stimulus package with aid to state and local governments passed.  Otherwise, the local stories are going to get worse and worse.