As anyone who hasn’t been living under a rock in this state probably knows by now, California politics are at an unsustainable impasse.  Californians support extending taxes to balance the budget, and in particular support making the ultra-wealthy pay their fair share.  On the other hand, when phrased generally, Californians prefer budget cuts to tax increases, but oppose any specific cuts to the budget that would make the slightest impact on the state’s fiscal health.  Additionally and more importantly, Californians don’t support a repeal of Proposition 13, which creates the need for a 2/3 supermajority in both chambers of the Legislature to actually raise taxes.

The California Republican Party, meanwhile, has just over the 1/3 in the Legislature to not only prevent revenue increases, but also to stop commonsense efforts by the Governor to place commonsense budgeting that include a mix of cuts and tax extensions on the ballot. Nor does the CRP have any incentive, electoral or otherwise, to compromise even an inch on the issue without a offering ridiculous and ever-growing list of demands in exchange for the hostage. Democrats in both the Executive and Legislative branches, whom Californians voted into office overwhelmingly against the national 2010 tide, have little power but to attempt to minimize the damage caused by unnecessary and devastating cuts.  And even if a combination of redistricting and GOP unpopularity were enough to deliver 2/3 of the Legislature to Democrats in both chambers, it is probable that just enough conservative Democrats afraid of Chamber of Commerce money could be found, to vote against their Party and continue the gridlocked status quo.

The only potential way out of this complicated mess is through an already over-powerful and deeply flawed initiative process.  But with voters unwilling to eliminate supermajority rules on revenue increases, real solutions seem to be few and far between. One potential solution offered by the folks at Calbuzz would be to offer a conditional all-cuts budget, forcing a “yes” vote for awful cuts and a “no” vote to deny them.  This is an interesting idea, but fraught with great risks and potential hurdles.

But another path of lesser resistance may lie open: one that takes the confirmed desires of Californians into account while providing a permanent and sustainable solution to the budget crisis.

The solution would involve keeping the 2/3 requirement for revenue increases on all households falling below a certain prescribed income level, while moving to a simple majority vote on revenues for corporate entities (with possible small business exemptions), and all households with incomes above that level.  The level itself could be open to debate but due to high cost of living in California, should probably fall on the higher end (say, around $250,000 to $300,000 per annum.)  Such an initiative should be free of significant legal challenge, as the California Court of Appeals already ruled the “Millionaire Tax” Proposition 63 to be constitutional, and not a violation of the equal protection rights of the ultra-wealthy.

Californians like the idea of raising taxes on the rich and on corporations, as a way not only to balance the budget but also mitigate the growing income inequality so damaging to the fabric of society.  But they don’t want to see taxes raised on themselves, as they already feel nickel-and-dimed in most aspects of their lives, even as basic cost of living continues to rise.  Further, any politician seeking to implement regressive taxation in a state where the bottom quintiles already pay a greater share of their incomes than the top 1% as is should probably have their head (or heart) examined.  The answer to both California’s budget crisis and to feckless Democrats’ political woes lies neither in regressive taxation nor in continual “compromise” with those who value the well-being of John Galt over those of the sick, the elderly, the destitute and the middle class, but rather in a sustainable economic system in which investments are made in the future with equitable contributions from all levels of society, particularly those who have been most fortunate and demand the most in externalized costs from society to support their lifestyles.

A ballot initiative specifically designed to leverage Californian’s basic economic populist sentiments should have the power not only to be successful at the ballot box, but also to permanently end the legislative gridlock in Sacramento in a way that reflects the actual values of the people of California.

Political analysts in California have watched the fractious internal debate at the CA GOP Convention this weekend with no small doses of trepidation and amusement. According to conventional wisdom, the CA GOP is on its last legs. “Headed off a cliff”, says Calbuzz in a post dripping with the satisfaction only schadenfreude can provide:

Like a herd of wooly mammoths at the end of the Pleistocene epoch, the California Republican Party is on the verge of extinction.

It may still recover. The CRP has come back from near death before. And redistricting, alongside the top-two primary system may yet revive it. But judging from the infighting, narrow thinking and rigid ideological positioning on display at the party’s organizing convention last weekend in Sacramento, the signs are not good.

As former GOP Assembly leader Bob Naylor put it succinctly Sunday morning, “It’s on life support.”

Perhaps. Or perhaps analysts are looking at things from the wrong perspective: one that assumes that the purpose of the GOP, at least in California, is actually to win elections. That may be a mistake.

In reality, the GOP at a national and state level exists to 1) deliver money from the poor and middle class to the rich; and 2) feed enough red meat to their prejudiced and unthinking base to garner just enough votes to continue achieving objective #1. That’s pretty much it.

Right now, the GOP doesn’t actually need to win any of the statewide elections in order to accomplish those goals. Winning them would be helpful, but is ultimately unnecessary. Knowing that the chances of anyone overturning Prop 13 and the 2/3 requirement on revenues are slim to none, all they need is at least 1/3 of the members of just one of the statehouse chambers. To ram through all cuts budgets and destroy faith in government, they need do nothing more.

With that in mind, it doesn’t matter if the GOP wins more elections. All that matters is that they get to that magic 1/3 number in either the Senate or the Assembly, and then that all of those 1/3 + members hold the line.  If they do, they ensure an all cuts budget; they ensure that Democrats take the blame; and most importantly, that California gets held up to the world as a mockery and failure of supposedly “liberal” government. There’s nothing that serves Republican interests at a state and national level more than to see California fiscally collapse. That means shock doctrine, a transfer of wealth from the middle class to the rich, an ability to end all state labor contracts in a way Governor Walker would only dream of, and ultimately the ability to crush the belief of the People in the power of their government to do good on their behalf.

More depressingly, they don’t even need 1/3 of the legislators in either chamber, as long as there are enough squishy “moderate” Democrats afraid to vote for tax increases even if the Dems do technically gain control of 2/3 in both chambers–already an unlikely event, particularly after redistricting and the change to a top-two primary.  There will be likely be at least one or two Democrats eager to play the Joe Lieberman in order to shore up their “independent” or “moderate” credentials to voters.

From this perspective, the CA GOP is crazy, all right. Crazy like a fox. They don’t really need more elected officials. They just need to keep the ones they have in line, and they’re in good shape. The worst thing that could happen to them is that enough of their members go off the GOP reservation that a responsible budget with a balance of cuts and appropriate revenue enhancements makes it before the voters–and it passes with a majority. That would actually do far more damage to the GOP than would losing several more elections.

So count on the California Republicans to demand more purity from their members, at the expense of winning elections. It is, after all, the savvy thing for them to do.

We’ve all heard the classic stories about the one-light towns out there that keep the books balanced by keeping the police busy writing tickets.

We don’t usually think of these rural towns as models of a transparent and progressive administration. That’s why we shouldn’t adopt these kinds of “gotcha” revenue-generating tactics here in San Francisco by turning our entire city into a parking trap.

Unfortunately, just this past week the San Francisco’s Municipal Transit Authority announced its plans to instruct our already hard-working traffic officers to increase the number of parking tickets they issue. The revenue from parking tickets – which MTA had projected to be right around $99 million – has fallen short. So now they are setting higher quotas to raise additional revenue.

We certainly do need more revenue in San Francisco. And one of the city agencies that needs additional funding the most is the Municipal Railway. But we need to make sure this new revenue is generated in a way that is fair to all and in a fashion that takes into account a person’s ability to pay.

What’s wrong with the new MTA parking ticket quotas is that they are the exact opposite – they are essentially a tax lottery, with the unlucky paying more than the lucky. They are unfair, with taxpayers fortunate enough to own garages (usually the wealthier homeowners) less affected than those who do not (usually the less-wealthy renters). And at their core, they are regressive, with the very poor paying just as much as the very rich.

As Assessor-Recorder in San Francisco, my job is to make sure we have a fair property tax system. And I have not been shy about taking on some powerful players – like big banks and other politically connected institutions when I thought they were not paying what they owed. Along with a number of others I have also helped form Close the Loophole – a statewide organization dedicated to reforming Proposition 13 so that commercial property owners start to pay their fair share.

These new revenue sources have several important things in common – they take into account the ability to pay and they are assessed in a predictable fashion. Property taxes, assessed fairly, are progressive in the truest sense because the more expensive the property the higher the revenue generated. And when a person buys or transfers property, they can predict what taxes they owe.

San Francisco has been seeing a healthy debate recently about progressive values. Let’s extend this debate to discussing the many problems with regressive and random revenue generation.

We already have some of the nation’s most expensive tickets. And pity to the person who has his or her car towed – the fees can quickly soar to $500 and above. I have been deeply involved in the movement to fight unfair foreclosures, and I know that $500 for many families is the difference between staying in their homes and eviction.

What has crept into this debate is some sense that people are to “blame” for driving and if they get tickets, then they simply should give up their cars or be more careful.

Certainly, we do not want to tolerate violations of our parking laws. And we do want to continue to pursue a city policy that draws people out of their cars with better public transit, smarter planning and walkable and bikeable streets. But enforcement should be based on safety – not new revenue. And, we need to understand that given the state of our Municipal Railway right now, some people simply must drive.

The parent with two kids at two different schools is going to have trouble on a bicycle. People with mobility issues sometimes need to drive. And most of us know others who have no other real choice – like the janitor who reports to work at 7:00PM. These San Franciscans deserve a tax system that is fair and progressive – not a random lottery that targets them to raise revenue.

Let’s certainly raise more revenue. But let’s do it in a way that reflects our progressive values – with a progressive tax system.

You can make the difference in two clicks. First, sign my petition to tell City Hall to tear up the unfair ticket plan. And second, join the movement I have been leading for nearly two years called Close the Loophole and let’s fix what’s broken in Proposition 13 and bring real solutions to San Francisco.

Phil Ting

San Francisco Assessor-Recorder

(I want to welcome SF Assessor-Recorder Phil Ting. In addition to being pretty good at his job, he’s also an all-around good guy. Welcome to Calitics! – promoted by Brian Leubitz)

It’s time to acknowledge that the “Third Rail” culture in Sacramento has sent California seriously off track.

Most of us know that Proposition 13 – specifically the vast corporate tax loopholes it contains – is the cause for much of California’s fiscal mess. As the elected Assessor-Recorder in San Francisco, I have a vantage point that allows me to see the tremendous inequity in a law that makes many struggling homeowners pay disproportionately more in property taxes than corporations with downtown office buildings.

Many of our leaders in Sacramento privately acknowledge the flaws in Proposition 13. A small few are brave enough to step forward and call for reform.

But too many others say that this “Third Rail” of politics needs to remain untouched, so instead they offer half solutions and political smokescreen as a substitute for real reforms. Edit by Brian for space, see the flip…

But now is the perfect time to demand our leaders stop ducking problems like Proposition 13 and start solving them. I’m currently working on a proposal to reform Prop. 13, the 1978 ballot initiative that capped the state's property tax rate and created vast loopholes and tax shelters for commercial property owners. You can read more about my proposal and about the crisis California faces in an op-ed piece I wrote in the San Francisco Chronicle last week.

While proponents of Prop. 13 initially touted the protections it offered California homeowners, today, the biggest beneficiaries of Prop. 13 are large companies and corporate landowners who use tax loopholes and shelters to avoid paying their fair share of property taxes.

Prop. 13 opened up loopholes for corporate landowners so their properties are often never reassessed and their property taxes remain at artificially low levels forever. This has shifted the tax burden to the backs of individuals and first-time homeowners and has dramatically reduced California's overall tax base, forcing the draconian cuts to vital services that we see today.

Here’s a staggering example: 30 years ago in San Francisco, commercial property owners contributed 59 percent of property tax revenues while residential property owners contributed 41 percent. Today, we see a virtual flip: commercial property owners contributed just 43 percent of property taxes in 2008 while residential property owners contributed 57 percent.

The more our property tax roll is limited by Prop. 13, the more we rely on regressive taxes and fees, like sales taxes, and we find our state in a perpetual budget crisis. California is losing billions of dollars on corporate property tax loopholes.

My proposal for a split roll system would eliminate corporate tax loopholes. It would rework Prop. 13 to literally split the property tax rolls – assigning appropriate tax levels to corporations while continuing to protect homeowners.

I am organizing a grassroots, netroots community around closing the corporate property tax loopholes in Prop. 13 and creating a split roll system. You can learn more about our campaign and join our cause on our Facebook page or by signing the petition on our website at www.CloseTheLoophole.com.

Most politicians in Sacramento still won’t touch Prop. 13. That’s why we need to take on this issue from the grassroots and build the support necessary to require reform. I hope you will join me on Facebook and at www.CloseTheLoophole.com.

Phil Ting is the Assessor-Recorder of San Francisco.

The 30th anniversary of Prop 13 has brought out a raft of commentary in the state media. This commentary tends to split on whether Prop 13 benefited or hurt the state – as if there is still any doubt that it was a disaster – but it rarely examines some of the underlying assumptions of Prop 13, and even more rarely does it explore the deep inequality it has enshrined into our state.

Much of this stems from a fundamental misunderstanding about what Prop 13 was and what it did. Voters convinced themselves it was a populist revolt against rising property taxes. They believe this so fervently that they act as if they willed it into existence.

In fact Prop 13 was an extremist attack on the very practice of state government by a group of far-right activists, with property taxes used as a convenient cover. Those who voted for – and who say they would vote for it again – still seem to believe its primary purpose was to protect homeowners, when its true goal was to destroy public services by starving government of revenue – otherwise why include the 2/3 rule? Why give commercial property the same protection as homeowners?

Further, there seems to be widespread misunderstanding about the level of taxation – especially property taxation – in California. California ranks 38th in property taxes. Somehow homeowners in the 37 states ahead of us haven’t been losing their homes to taxes. One consequence of Prop 13 was a shifting of taxation to sales and income taxes – sales taxes are regressive and income taxes can be volatile. Prop 13 is therefore directly responsible for California’s regressive and unstable budgeting. No Prop 13, no structural revenue shortfall.

Dan Weintraub argued that Prop 13 didn’t devastate government finances. But does he even read his own paper? Peter Schrag pointed out in the SacBee last week that Prop 13 did have that devastating impact:

California’s per pupil school spending, which was among the top 10 states in the 1960s, is now among the bottom 10. Proposition 13 alone is not responsible, but along with two major court decisions that preceded it, it helped decouple school funding from the local tax base and thus undercut voter incentives to fund education generously, as it had been in the generation after World War II. Our roads, once a national model, are an embarrassment. …

California once had a communitarian ethic. That’s been turned into a market ethic. It once did serious planning for the future. For now, that’s a nearly forgotten hope.

Prop 13 helped create a “homeowner aristocracy” – where those who bought their homes before 1976 are given preferential treatment and tax shelters while everyone else has to pay market rates. Some argue that those on fixed incomes deserve protection from rising tax bills, but it is difficult to have sympathy for this when the method of protecting them – Prop 13 – has produced a generation of inequality that leaves most folks under 35 unable to ever own a home in California.

Why should some homeowners get government subsidies and others do not? Why is it that under Prop 13 we protect some homeowners at the expense of future generations? If we are to right the state’s finances, provide economic security for all Californians, deal with the energy price and global warming crisis, and have a competitive 21st century economy, we need to reexamine our priorities, and be willing to move past obsolete 1970s faux populism.

By Dave Johnson, Speak Out California

It is a popular misconception that taxes add to the squeeze on the middle class.  But it isn’t tax increases that have squeezed the middle class, it’s tax cuts.  It may be hard to believe (after so many years of constant anti-tax rhetoric) but here is why.

The middle class IS squeezed these days.  There are pressures and long hours at work, long commutes, health insurance costs, housing costs, food and gas prices rising, and wages are not keeping up — they haven’t been for a long time.  But it is not a coincidence that the middle-class squeeze began at the same time as the corporate-funded anti-government, tax-cutting fervor.  In fact a good case can be made that many of the reasons the middle class feels squeezed are the result of pressures brought about almost entirely FROM the effects of tax CUTS and cutbacks in government services, regulations and enforcement that went along with the tax cuts.

There are direct and indirect relationships.  One example of a direct relationship is the dramatic rise in the cost of a college education.  Sending kids to college has become extremely expensive.  And this places a very hard squeeze on parents who want their children to get a degree.  But here in California tuition was very, very low before Proposition 13.  Tax cuts directly led to this squeeze on the middle class.  (And remember, most of the property taxes that were cut were on business property.)

Indirect results include rising energy prices from cutbacks in government R&D and subsidies for oil alternatives as well as longer commutes as the government cuts back on transit solutions like buses, trains and roadbuilding or improvements.  Health care costs continue to rise because of government inaction and deregulation — the result of the anti-government sentiment encouraged as part of the the anti-tax campaign.  And insurance costs rise while coverage is reduced or even denied as the government cuts back on regulation and enforcement. (My wife is the one who brings in the health insurance for our family.  Every year she gets a raise, but every year the amount taken out of her check to cover her portion of the health insurance payment goes up by more than her raise, and her take-home pay is lower.  So more squeeze.)

Other areas where the anti-government, anti-tax campaign has increased pressure on the average person is at work.  Anyone that works for a corporation is feeling the extra pressures there.  As government of, by and for the people declines corporate power fills the vacuum.  

And there are so many more areas where we are squeezed by this increasing dominance of corporations in our lives.  As government — the power of We, the People — diminishes, the corporations swoop in to pick us clean.  How many examples of corporate power coming to dominate over people power can you think of?

Click through to Speak Out California

Conventional wisdom considers it political suicide for a candidate to talk about the need to raise taxes so the state can pay its bills — especially if it involves reforming Proposition 13.  

Much of the public thinks that government “spends too much” and that much of the state’s budget goes to “waste, fraud and abuse.”  

Much of the pubic also thinks that the primary beneficiaries of Prop. 13 were little old ladies who otherwise would lose their homes to increasing property taxes.

Reality, rarely consulted, understands things very differently.  

California faces another budget crisis.  The Governor proposes solving the problem with budget cuts.

California’s budget pays teachers, fights crime, maintains roads and bridges and other necessary activities.  There simply is no room for cuts to balance the budget. In fact, budget cuts just make following year shortfalls worse.  If you lay off teachers they aren’t paying taxes.  If you don’t fix roads the economy gets worse.  In the long term, if you don’t educate kids employers move jobs to states and countries that do.  And, of course, it is always a really bad idea to cut back on police and courts — especially after years and years of cuts in education.

Budget cuts don’t work, so how about the modern solution to budget problems?  I mean, of course, just borrowing the needed money.  But Governor Schwarzenegger proved that the state can’t borrow its way out of budget crunches: A major reason for this year’s budget problems is the interest owed on Schwarzenegger’s past easy fixes of issuing bonds.

The reality is that the budget cannot be fixed with budget cuts or more borrowing.  We need to increase taxes.  We need to start by reforming Proposition 13, raising corporate taxes, closing tax loopholes and taxing oil that is pumped from the ground.  If we decide to do these things we might find that we not only fix California’s budget problems for good, we might even be able to lower income taxes.

Reality also shows that the major beneficiaries of Proposition 13 were not little old ladies but large commercial real estate holders.  It would be so easy to put a “little old lady” exception into property tax rules so they are not forced from their homes.  But it would be political suicide to even discuss reforming Proposition 13 because of the power of the large commercial real estate owners.  They want their tax break and don’t care if the whole state goes broke and everyone else suffers.  They are able to put a lot more money into the election process than regular people.  That is why it is political suicide to talk about raising property taxes.

Why is it political suicide for a candidate to propose ways to fix problems, but not political suicide to cause them or make them worse?  

Click to continue.