As a student who is currently enrolled in a California State University, I have witnessed the devastating effects that the higher education crisis is having on this state. My student fees have increased with the coming of each new semester. My professors have had to completely redesign their courses so that they can teach as many students as the fire code will allow in a classroom at a time. My fellow students and I are “crashing” any open classes left and right, trying to get enough units to reach full-time status so that we can qualify for financial aid and health insurance.  

My fellow students and I are idealistic and optimistic. We believe in hope and change. And we want a candidate for governor who will make higher education reform the top priority in their campaign. As the situation stands Meg Whitman has not made higher education a priority in her plan to govern California and it is doubtful that she will ever see the direct correlation between the health of the state’s higher educational system and the condition of our state’s economy.

Jerry Brown, however, still has the time to make higher education reform the pinnacle of his gubernatorial platform. Brown should learn from San Francisco Mayor and Democratic candidate for Lieutenant Governor Gavin Newsom’s campaigns for Governor and Lieutenant Governor. As a candidate for both offices, Mayor Newsom made higher education reform one of his top concerns. And as a result, Students for Gavin Newsom established chapters at 36 colleges and 35 high schools up and down the state, making it the arguably the largest grassroots student movement ever organized in the state of California.

While it is true that the majority of people who are most likely to vote in the upcoming gubernatorial election are senior citizens, it is far more beneficial for Brown to court the youth vote by running on higher education reform. We are living in an era where a bachelor’s degree is no longer preferred-but required-in order to land most jobs. So not only is this higher education crisis threatening the economic well being of California’s students now but it will threaten the economy of this entire state and this whole country in the future, if something is not done to solve it.

There are several solutions to help combat the state’s higher education crisis. One of the most obvious is adopting an oil severance tax-which would tax the oil as it is pumped from the ground. California is the only state in the country that does not have this tax and it is costing us dearly. Another solution is to repeal the requirement that the state legislature must have a two-thirds majority in order to raise taxes or pass a budget. We are all familiar with the culture of partisanship and greed that plagues the politicians in Sacramento. It is high time that we make these politicians work for us, their constituents, rather than working against their colleagues in the halls of the State Capitol Building.

There are no small or easy ways to solve California’s higher education problems. The time has come for audacious, sweeping higher education reform. The time has come for candidates who embrace the big and the bold and are unafraid of taking risks.

Students are too often accused of being politically apathetic and blissfully ignorant of what is going on in the world around us. But as anyone who has recently stepped foot on a college campus knows, times have changed. We want a candidate for governor who recognizes that higher education reform is the answer to the problems that California has been dealing with for far too long.

California’s young voters, myself included, need to know that Jerry Brown has a plan to truly reform higher education in California. Jerry Brown needs to know that if he wants young people to turn out and vote for him in November, higher education reform is the way to get us into the voting booth.

     

   On November 19th, 52 UC Davis students were arrested after peacefully protesting the new 32% fee increases established by the UC Regents. As a second year undergraduate, I was hopeful that students were beginning to see the bigger picture: California is broken.

   Students, so far, have been forcing most of the blame on the UC Regents. While it is true that the 20 Regents who voted for the increase certainly deserve a heaving portion of the blame for borrowing tens of millions (from a non-CA bank, NY Merrill Trust) while forcing students into a cycle of debt in order to protect UC’s eerily superb bond rating, the only way for students to move towards enacting change is to recognize that UC’s woes are symptomatic of the larger disease that has infected the entire state.

   The UC student, to widen the umbrella for a movement that might have the capability of rallying support for reform, should understand that he or she risks turning people off by angling attacks towards the Regents and the Regents only. It is important to recognize that while it is a travesty that UC is becoming an unaffordable option for many California families, it is nearsighted to think that UC fees are anything more than a slice of the pie that is California’s broken political system. The state workers that have been furloughed, the elderly Californians that are losing their access to Medicare, the thousands of previously middle-class Californians that have had their homes foreclosed, and the over 12% of California that is unemployed might tell students that UC is not the only government program that is underfunded, mismanaged, and increasingly unavailable to the people who need it.

 To the single mother making $30,000 a year or the undocumented immigrant working in poor labor conditions for a less-than-legal salary, the plight of the students might seem distant and unimportant. The reality of the situation is that students are making valid points, but they are doing so in a way that turns off the millions of Californians that should be turned on by the students’ overarching message of reforming California.

   When the student recognizes that the immediate and long term problems caused by UC’s fee increases are tied together with the struggles of working families, immigrants, the elderly, homeowners, borrowers, the unemployed, water drinkers, and dozens of other California communities and interest groups, then, perhaps, we will see forward progress.

   The first point that needs to be made by students (that might catch on) is that the programs that made our state great in the 50s and 60s cannot continue to exist without proper funding.

   The message should be loud and clear: raising revenue does not mean higher taxes for everybody, it means looking at who and what gets taxed in this state, and what kind of people are hurt when programs lose funding. Here are three problems that have been generally accepted among the progressive community to be at the heart of the problem:

   Lack of an oil-severance tax in California. Who wins? Big Oil. Who loses? The People. AB 656 (Torrico) would use a 9.9% tax on Gross Product to generate up to $1 billion annually for programs like UC, CSU and CCC.

   2/3rds majority required to pass anything that raises revenue. Who wins? The CaGOP and Big Business. Who loses? Again, The People. Republicans who are indebted to special interest groups that represent Big Business are able to crush the programs that help make the California Dream a reality for many working Californians. AB 656 is expected to be an easy kill for the Republican minority, even though California is the only state in the union that does not have an oil severance tax (including Sarah’s AK and GWB’s TX).

   Proposition 13. Who wins? Big Business. Who Loses? The People. The remains of the Jarvis Taxpayer Revolution act as the most regressive and harmful tax policy in the state. With the veil of providing economic safety for elderly residents without a fixed income, the anti-tax era cursed California’s future with budget shortfalls and program cuts. It is apparent, now, that Californians can’t have our cake and eat it, too.

   So, students should be asking the question: Why is it that Chevron, Monsanto, and Walmart are allowed to raise revenue while the State of California isn’t? Why is it that CEOs are getting pay raises while the People are getting both pay cuts and program cuts?

   The students are right: the State of California has left them for dead, but they are not alone. Almost every Californian uses some sort of state-sponsored program, whether that be a UC, a public elementary school, a library, or the DMV. If you’re one of those people, and if you haven’t gotten a pay raise, then you should be ticked off, too.

Note: this is a cross-post from my group blog, The Realignment Project. As California grapples with the Herculean task of trying to solve its budget crisis, there’s a sense of complete impasse on what to do – Republicans won’t vote for tax increases, there isn’t enough space in the budget to cut without eliminating some fo the basic functions of government, the governor won’t sign off on a majority budget. There’s been suggestions that the state could get some sort of financial backing from the Federal government, either in the form of a stimulative infusion to fill up the $24 billion gap, or in some form of a guarantee of California’s bonds so that the state can borrow money for routine cash needs without having to pay exorbitant interest rates, and hopefully so that the state can re-start its stalled public works projects (including the High Speed Rail line that was voted in back in 2008). Politicians, pundits, and the public from other states have reacted negatively to this trial balloon, arguing that California is responsible for its own fiscal crisis and that it would be wrong to help one state and not the other. In essence, the reaction is “this isn’t our problem, we shouldn’t have to pay to fix it.”

However, I’m going to argue that it actually is all of our problems, that we are all in the same boat, and that there’s a way to fix it.

To begin with, it’s important to recognize that California isn’t alone; other states are in a similar predicament. As Robert Cruickshank over at Calitics notes, most other states have experienced the same fiscal shock we’ve encountered. Personal income tax revenues are down in 37 states, corporate income tax revenues are also down in 37 states (although it’s not always the same 37 states), sales taxes are down in 29 states. This doesn’t even include property tax revenues, which have been badly battered by the collapse in housing prices. 29 states saw declines in all three areas. While California, by virtue of its size, is in the deepest hole in dollar terms – many other states are in similar trouble. New York’s income tax revenues have fallen by virtually 50% and has been dealing with a $17.7 billion deficit, and Alaska and Nevada are facing a 30% budget gap between revenues and budgetary requirements. This is not a state-level phenomena, it’s national – and if you look at it all together, it’s a $120 billion dollar deficit that we have to fill.

The larger problem is that we’re in a recession and state governments can’t print money to pay their bills, can’t deficit spend due to state laws (usually constitutions), and the bond markets aren’t really snapping up state debt and are charging an arm and a leg to do so. This means that while the Federal government is trying to push a stimulative policy and get the money pumping, the state governments are going to undercut recovery efforts – the Federal stimulus package is about $350 billion/year, and that $150 deficit will cut the effect nearly in half. This policy problem is being compounded by a political problem – bond rating agencies and the bonds markets are ideologically going after public credit ratings. As John Quiggan notes, agencies like Moody’s, Standard & Poor’s, and Fitch which were up to their necks in the current financial crisis, who looked the other way and stamped AAA ratings on garbage CDOs and asset-backed-securities and credit swaps and other financial snake-oils are now aggressively targeting the bond ratings of government entities. While Quiggan’s examples are mostly Australian, you can see the same thing happening in the U.S as states and even the Federal government (all of whom maintain the power of taxation as a guard against permanent insolvency) are being warned or downgraded for actions that are vitally necessary to save our economy. By itself, by shifting state spending away from stimulative spending towards financing higher interest rates and by forestalling the potential for Keynesian borrow-and-spend policies, these agencies are making the crisis worse. Moreover, by pushing the ideological line that balanced budgets are better than increasing spending, they are complicit in the shock doctrine proselytizing going on in state governments (such as in California, where Swartzenegger used the budget crisis to push for the elimination of the state’s SCHIP program, the Calgrants college aid program, and the Calworks welfare program).

So how do we, and by we I am referring to the national progressive movement and our political allies in government, prevent this crisis being used to gut government and exacerbate the recession? I think the solution is that the Federal government needs to either buy or guarantee economic recovery bonds, which would be specifically targeted at rehiring fired public workers and paying existing salaries, for maintaining/expanding funding levels for social services, and for public works. In a sense, this would be Stimulus 2.0, allowing President Obama and his team to accelerate recovery by turning the states from a pro- to counter-cyclical force. More importantly, by creating a new policy mechanism for preventing pro-cyclical spending cuts and tax increases, this would provide a policy tool for future generations, turning the states from a lead weight on the economy in recessions into local engines for Keynesian recovery.

David mentioned this below, but it deserves deeper elaboration. Don Perata’s agreement on a spending cap is one of the worst possible outcomes of the budget crisis. A spending cap has been a core demand of the Grover Norquist far right.  In Colorado, where a spending cap had been in place for several years, it nearly destroyed state government and had to be suspended.

If Democrats agree to this, they will be agreeing to the destruction of the state of California, finishing the job Prop 13 started 30 years ago. I cannot stress strongly enough how bad an idea this is.

It’s also unpopular with voters. Arnold’s spending cap, Prop 76, went down in flames in 2005 with 62% of voters rejecting it.

But what is the spending cap about? And why is is such a horrible idea? An excellent LA Times article from 2005 explains how spending caps are at the core of the right-wing plan to drown government in a bathtub:

Hard-line fiscal conservatives say they hope to reinvigorate the types of populist uprising that led to the approval by California voters of landmark protections against property tax increases through Proposition 13 in 1978 and the passage of term limits on politicians here and in several other states….

The proposals put strict limits on how much state budgets can increase each year. Anti-tax activists see such controls as a means to scale back spending on education, healthcare and social-service programs that even the staunchest free-market Republicans have been reluctant to cut.

Schwarzenegger and his advisors, already battling charges that their spending cap is part of a conservative agenda the governor is trying to force on Californians, have resisted forming alliances with the national groups. But the groups have eagerly embraced the governor’s crusade.

“We think California is very important,” Armey said. “It is a trend-setting state. Getting it done in California will set a very good example for all these other states.”

The article also mentioned the impact on Colorado, which enacted a spending cap in 1990. By the 2000s the cap was gutting government, as intended. The problem is that the spending cap readjusts to a lower level during a recession – but cannot be easily increased once the recession ends, meaning the spending that was cut during the lean times can’t be restored.

It is Grover Norquist’s way of drowning government in a bathtub. Even though Prop 13 has had a destructive impact here in California, leading to a structural revenue shortfall, we have been able to muddle through and protect education, transit, and health care from total collapse. Norquist’s spending cap would deal the final blow to those services.

It would not solve our budget problems – as Colorado found it would make them much worse. In November 2005 Colorado approved a 5-year suspension of the cap, as even Republican governor Bill Owens realized the state couldn’t survive with the spending cap in place.

For Democrats to consider accepting a spending cap is unconscionable. If Democratic leaders agree to a cap as part of a budget deal they deserve to be recalled from office. The current budget crisis is severe, yes. And we need a solution. But a spending cap will produce worse budget crises in future years while leaving California public services in ruins.

Dems should take comfort from the 2005 special election results. Californians do not want a spending cap. Don Perata is totally and completely wrong to agree to one. Let’s hope other Democratic leaders, especially those in the Assembly, refuse to give away the state to the Norquist crowd.

Last month I took the LA Times to task for framing the current budget deficit as a spending problem, and wondered why nobody at the paper seemed interested in focusing on the fact that what California has had for decades is a structural, deliberate revenue shortage.

David Lazarus has taken up the challenge. In today’s column he says what many of us have been arguing for many, many years: Prop 13 must go.

It’s pretty simple, though. Either we spend less money or we raise revenue, or both.

All things considered, our friends in Sacramento aren’t going to suddenly discover the value of frugality — unless packed schoolrooms, broken bridges and crumbling levees are your idea of satisfactory quality of life.

So that means we need to get our hands on some extra cash. And like it or not, that means taxes. That’s a bad word, I know. But it’s how things work in the real world.

Proposition 13 is as good a place as any to start if we want to raise some serious coin and we want to do it soon.

“It’s terrible economics,” said Lenny Goldberg, executive director of the California Tax Reform Assn. “We have the heaviest tax on new investment and no tax on windfall.”

What he means is that Proposition 13 allows the state to reach deep into the pockets of people and businesses that buy property at market value. But it does precious little to get a piece of the action from those with long-held properties that have soared in value over the years.

Amen.

Lazarus does a good job of explaining some of Prop 13’s basic unfairness while also proposing some fixes that avoid hitting elderly and working-class Californians with unaffordable tax bills.

One proposal, which the California Tax Reform Association has already discussed, is to again assess ALL commercial property at market values, instead of giving them the same protections Prop 13 gives to residential property:

Assessing all commercial property at market values could add $5 billion more to state coffers, Goldberg estimated.

“The assessment of commercial property is the biggest hole in the state’s tax system,” he said. “It’s completely indefensible.”…

If the older portions of the Disneyland resort were assessed at the same level as newer ones, he observed, Orange County would be raking in millions of dollars more each year in revenue. This, in turn, would make the county less reliant on assistance from the state.

“It’s only fair,” Goldberg said.

Not only is it fair, but it’s fitting. This WHOLE tax and budget mess got its start not with Prop 13, but with the little-known AB 80, enacted way back in 1967. AB 80 was the Prop 13 of the commercial real estate market, limiting dramatically the ability of local government to use commercial property to pay for its services.

This began the cascading effect that brought us to Prop 13 and, ultimately, to the present crisis. Many California cities had artificially low residential property taxes in the ’50s and ’60s, using higher assessments on commercial property to fund services. When AB 80 disallowed that, the residential rates had to rise. The inflation of the 1970s saw the cost of providing services soar, and that had to come from higher residential property taxes. However, many homeowners had come to see the low taxes of the ’50s and ’60s as a kind of birthright. And so California in the 1970s was consumed by a series of property tax battles, especially at the local level. Prop 13 was the right-wing’s endgame, designed to radically settle the issue in favor of a small group of homeowners at the expense of state government and future buyers.

Even though commercial property values have already begun and will continue to fall along with the collapse of residential values, there is hardly any viable scenario that sees commercial property returning 1980 levels. In fact, at the moment, even the pessimists see real estate returning to 1998-2000 levels, maybe 1994 (the previous bottom) at worst. Assessing commercial properties at fair market value would still capture billions in new revenue even in a recession.

The Cal Tax Reform Association has a number of similar proposals that they claim can raise $17 billion, even without a direct frontal assault on Prop 13. I’ve mentioned their proposals before and will do so again later this week – it’s time we put them at the center of the conversation in California.

But on a deeper level, David Lazarus has begun a discussion that is 30 years overdue. Even if the discussion isn’t easy. Whenever anyone even mentions tweaking Prop 13, people tend to freak out – even at Daily Kos, so-called liberal Democrats in California attacked yours truly for daring mention Prop 13 reform.

The problem is that not enough Californians yet see how Prop 13 works against their interest. The savings on the property tax bill isn’t worth the lack of health care, the inaccessibility of education, and the decaying infrastructure that is starting to cripple our economy. Prop 13’s effect was to create a homeowner aristocracy in this state, where a lucky few who bought homes before, say, 1985 are able to withstand better the economic storms lashing the state, while the rest of us suffer to maintain their privilege.

Lazarus’ column was sparked by an LA Times report that Arnold planned to assess a “fee” on homeowner insurance policies to pay for fire protection. As Lazarus so aptly puts it:

A surcharge on insurance that’s based on a property’s replacement cost, and hence much of its market value. That may not be an honest-to-goodness property tax increase, but it’s about as close as you can come without getting your hair mussed.

It’s too much to hope that Arnold instinctively understands the problem of Prop 13, and in fact he has positioned himself as one of the staunchest defenders of it and its legacy. But as I explained back in October, much to the OC Register’s chagrin, the lack of fire protection is a direct consequence of anti-tax activism. If Arnold is willing to raise revenues for firefighting, he is implicitly opening a door that the rest of us should run through.

Right on, David Lazarus, for reminding us that we’re never going to get out of this budget crisis until we revisit Prop 13. At least someone at the Times gets it!