Tag Archives: Prop. 13

San Francisco shouldn’t become “parking trap”

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

California’s Past, California’s Future

Over at Newstalgia, Gordon Skene posted a fascinating echo of the past, from a Jerry Brown address to the state the day after the passage of Prop. 13 in 1978.

The Jerry Brown you hear is in full backpedal mode, telling voters that the message was received, that government spending is a scourge, that “we must look forward to lean and frugal budgets.”  Voters sent a message that they want their taxes cut, and the state will oblige.  Brown offered a hiring freeze for state workers, proposed a round of budget cuts, and endorsed some kind of automatic limit on spending for the future.  He offered a defense of state workers late in the clip, and he asked corporations to pretty-please take the huge windfall they would get by having their property taxes lowered to “invest in the state,” but otherwise, it’s a full-on co-opting of the Jarvis message.

Now, coming the day after passage of Prop. 13, you can argue that Brown was doing what he had to do.  The people really did speak, although they didn’t quite know the consequences of the words they were using, and Brown would have a re-election battle within 5 months, and he had to project a message that he “felt the pain” of those out there who voted to save their homes.

The problem is that this statement is directly analogous to the statement of Darrell Steinberg on May 20, 2009, the day after the special election went down in flames.  Some would obviously ague that he was in the same position as Brown, and did what he had to do as well.  As I said on May 20:

Where is the argument for DEMOCRACY in these statements?  Since 1978 that democracy has crumbled and needs to be completely rebuilt.  Everyone knows this but refuses to say it out loud.  This is why the legislature and the Governor have historically low approval ratings.  People are starved for actual leadership and see none.  Only democracy will save us.  This failed experiment with conservative Two Santa Claus Theories has now become deeply destructive.  Because the democrats have provided no leadership and ceded the rhetorical ground, California public opinion holds the contradictory beliefs that the state should not raise taxes and also not cut spending.  And if it persists without leadership and advocacy to the contrary, nothing will change.

Not once in those 31 intervening years has an argument been offered that leads proudly instead of placates meekly, that tells people about the future instead of the past, that makes stands on principle instead of trying to do the best with the system we have.  That address in 1978 should have been replayed in a loop at every Democratic committee meeting and club event for 31 years, with the inevitable question asked afterward: “Is this a rallying cry?  Is this the voice of a party that presumes to be on the side of the people?  Is this giving people a vision, a dream, even a goal?”

People understand this in their lizard brains.  They can naturally discern the strong and the weak, and gravitate toward the former even if their strength is repulsive.  Since 1978, we have had exactly one other Democratic Governor in California, the kind of guy who signs on to amicus briefs with the Cal Chamber of Commerce defending illegal gubernatorial actions, and he was run out of Sacramento by a radical right movement that considered him too much of a hippie.  (By the way, the modern version of Jerry Brown similarly loves illegal, anti-democratic executive actions, probably because he can’t wait to use them.)

I have always thought that a strong defense of democracy, of the principles of majority rule, of government as a protector and a defender, would be rewarded in the public square.  Instead we muddle through, and people suffer.  I have not taken too much note of this “failure of the California dream” concept – for my money, as long as there were millions in poverty, gated communities and invisible barriers stratifying society, a separate California for the poor, the sick, the aged, then that dream was a good tool for marketers but a destructive proposition to tout.  And while this has never been more true in our unequal society, it was ever thus.  For the dream to be resurrected, it would have to be something fundamentally different.  Not a “dream” of suburban sprawl and excess, but a dream of a society that takes care of one another, that seeks to maximize potential, that provides opportunity and allows individual dreams to take root.  That can only happen in a flowering democracy reflective of the popular will.

I think leaders are emerging.  While I won’t be a part of day-to-day writing of the back and forth of California politics, as a citizen of the state I intend not to abandon it but to do whatever I can to involve myself in a movement toward fulfilling that new dream.  It’s deeply frustrating to analyze the politics of a state surrounded by brick walls to responsible governance at every turn, but paradoxically I think it remains an exciting time to be a progressive in California.  The long march continues.

Will The Spotlight Ever Fall On Jerry Brown’s Ideas, Not His Image?

(Attorney General Brown formally filed to open an exploratory committee for Governor today.)

With the Rasmussen poll numbers filtering through the traditional media, the idea of Jerry Brown being the favorite at this moment to return to the Governor’s mansion is taking hold outside of California. Talking Points Memo has a piece marveling at how strange it is to see the “colorful” Brown back in this position, recalling the time-worn stories about Linda Ronstadt and “Governor Moonbeam,” although they do acknowledge that “this all contributed to a somewhat inaccurate caricature of him as a left-winger.”  Indeed, the TPM profile notes that Brown was a fiscal conservative in office and ran on the flat tax in 1992.  Clearly, the author was informed by Joe Mathews’ cover story in this month’s American Prospect, which delves further into Brown’s un-campaign for Governor and the puzzling question of what in the heck he’s planning to do once he gets there:

But a little talk about the big picture is in order. Outside Brown’s news conferences, California is coming undone. This summer, unemployment reached 11.9 percent. Tens of billions of dollars have been cut from the budget in the past year. Thousands of teachers have been laid off. State offices are now closed three Fridays a month. University tuition has been hiked. Thousands of elderly and disabled people are losing their state-provided health insurance.

The crisis is so profound that it may present an opportunity for California to fix its badly broken government. Coalitions on the left and in the center (the right is sitting on the sidelines, enjoying the Armageddon) are drafting plans to change the way the state is governed. They hope to get several measures on the 2010 ballot that would reshape the state budget, call a state constitutional convention, and perhaps unwind much of Proposition 13, the 1978 initiative that severely limited the government’s ability to raise taxes — a major contributing factor to the budget hole California finds itself in today.

If any candidate should be talking about this, it’s Jerry Brown. After all, Prop. 13 passed during his governorship. But Brown has yet to engage the would-be reformers. In the rare moments when he’s asked how the state might be fixed, he talks vaguely of the need to forge compromise and invokes older, better times in California, when he and his father, former Gov. Pat Brown, were in power. “We can talk about ‘restoring the dream,'” he told a union conference in Palo Alto during an explicitly political appearance this summer. “Well, I was around when the dream was here.”

This is a dodge — not only of the present questions about what he might do as governor but also of lasting concerns about Brown’s own role in diminishing the California dream. Pat Brown was a great builder of the highways and waterways and schools that made the state prosperous, but his son Jerry announced “an era of limits.” Since that declaration 33 years ago, the state’s population has grown from 22 million to more than 38 million. The state government has not kept up. If Brown has specific ideas on what to do about all of this, he is keeping them to himself.

Brown clearly has a blueprint for winning the election – say as little as humanly possible about the problems that grip the state, and hope that tangerine dreams of the halcyon 70s push him to victory.  You cannot blame him – it’s a winning formula.  With a pathetically thin state political media, it’s fairly difficult to run on any issues to begin with, at least ones beyond the bumper-sticker variety.  Arnold Schwarzenegger got elected by saying pretty much nothing that wouldn’t fit as a movie slogan, and a celebrity-obsessed media let him get away with it.  So I don’t begrudge Brown the lack of specifics.  That’s the way the game has been played in recent years.

Indeed, I don’t worry about what we don’t know about Brown, but what we do know.

Progressives, both then and now, argue that Brown’s brand of anti-government liberalism fueled the Prop. 13 fire. If government isn’t all that important, what does it matter if you cut taxes? Brown had frozen highway construction, criticized funding for adult education and food stamps, and slashed social services. “I am going to starve the schools financially until I get some educational reforms,” he said in one encounter with reporters.

What reforms, governor?

“I don’t know yet.” […]

Brown, in the midst of running for re-election, called himself a “born-again tax cutter” and immediately reinvented himself as Prop. 13’s champion. (He maintains now that he had to support 13 after its victory because of his oath to defend the state constitution.) Brown went so far as to befriend the legislation’s co-sponsor, the anti-tax crusader Howard Jarvis. “It seemed like he went over to Jarvis’ house frequently,” says Joel Fox, who would later serve as an aide to Jarvis. “Mrs. Jarvis would tell stories about serving lunch to the governor with Howard in his pajamas. Howard voted for him for re-election because Jerry convinced him he would implement Prop. 13 in the right spirit.”

As it happens, the only thing worse than Prop. 13 itself was its implementation. Brown and the legislature bailed out cities and counties that lost revenues under the law — and thus established the dysfunctional system of budgeting that plagues California to this day. Tax and spending decisions once made by city councils and school boards were centralized in Sacramento. The state Capitol became a giant piggy bank, with interests on the right and left using lobbying muscle — and the initiative process — to carve out special protections for their funds, leaving less for broad public investments. At the rare moments when Democrats tried to make such investments, Prop. 13’s two-thirds requirement for taxes allowed Republicans, even when they were in the minority, to block them.

Indeed, the Jerry Brown of recent public comments shows no sign of understanding the present state of the state.  He has supported the current Governor in various accounting tricks and tough-on-crime stances that have blown a hole in the deficit.  He has stated an unwillingness to take a leadership position on any even remotely controversial issue.  He hasn’t strayed from that “born-again tax-cutter” mantra.  As our own Robert Cruickshank says in this very good article:

“The problem with Brown is that I’m not convinced he’s moved past 1978,” says Robert Cruickshank, who works for the progressive 700,000-member network Courage Campaign and is a frequent contributor to the blog Calitics. “The lesson he drew from that is that he has to adapt to a more conservative reality. … I’m concerned that it’s not going to be the kind of governorship where you see significant changes in the way California operates.”

If this is the Jerry Brown we can expect to “lead” in 2010, I know that progressives will have far better outlets for their advocacy, be it the Lakoff Initiative or the Constitutional convention.  As I’ve said many times, you could elect Noam Chomsky governor and he would still be constrained by the same structural factors that resist true democracy and responsible governance.  And Jerry Brown is most certainly no Noam Chomsky.

A Lawsuit Challenges The Two-Thirds Rule

It seems thirty years or so too late, but a former UCLA chancellor and director of the MOCA in Los Angeles named Charles Young filed suit against the provision in Proposition 13, passed in 1978, that requires a two-thirds vote in the Legislature to raise taxes.  The legal theory behind the case mirrors the theory behind the attempted repeal of Prop. 8 this year, which was ultimately unsuccessful.

The legal theory of the suit, which names the Legislature’s chief clerks as the technical defendants, is that when voters passed Proposition 13 in 1978, cutting property taxes and requiring a two-thirds vote for tax increases, it was a “revision” of the state constitution rather than an “amendment.”

The constitution allows amendments to be made by initiative petition but allows revisions – generally a more fundamental change – to be made only through a constitutional revision commission or a constitutional convention.

It’s essentially the same argument that opponents of Proposition 8, the 2008 measure that outlawed same-sex marriages, made in attempting to persuade the state Supreme Court to void that measure. But the court, which had earlier sanctioned same-sex marriages, ruled that Proposition 8 was valid.

I’m a bit surprised that Young didn’t include the single-subject rule in his charges, as the property tax rules and the two-thirds requirement for taxes don’t seem to bear much relationship to one another.  Of course, that has already been argued before the state Supreme Court, along with the revision argument, equal protection concerns and about a half-dozen other charges, four months after passage, in Amador Valley, and the Supreme Court upheld the initiative.  Here’s the way the revision argument played out back then.

The California Supreme Court held that although Proposition 13 would result in various substantial changes to the constitution, it was only an amendment because the changes were narrowly tailored to the objective of changing the taxation system. Id. at 228.  According to the Court, a change in the voting requirement did not amount to a revision of the constitution.  The Court further stated it was not uncommon to have similar voting requirements for financial matters, and that the Proposition would not effect home rule.  Id.  The Court cited Article XIII, Section 20 of the State Constitution that authorizes the legislature to set maximum property tax rates. Id. at 228.   The Court concluded this new article, implemented by Proposition 13, would be no more threatening to home rule than Article XIII, § 20. Id.  The Court, while not endorsing the Proposition, did state the initiative process was a direct form of government from the people. Id.  Finally, the court held that it would not limit the ability of people, through the initiative process, to achieve such a limited purpose of a new system of taxation. Id.

The Court upheld every aspect of Prop. 13 at that time, and the law has withstood multiple legal challenges over the years.  Like with Proposition 8, the Court seems loath to overturn a vote of the people, and now we’re 31 years down the road.  Of course, this forms the core of Charles Young’s argument, that the effects of Prop. 13 are powerful evidence that it is not merely an amendment, but a major revision affecting the lives of all California’s citizens.

I’m skeptical that this can get off the ground, but I see little harm in it.  And maybe putting Prop. 13 on trial, and laying out the effects in sharp detail, could lead to closing the loophole and building a sustainable revenue base.

Ah, The Good Old Days

Just a précis on budget negotiations today: the Big Five leadership has met over the last couple days, with more heat than light.  The Governor remains committed to adding unrelated policy changes into any budget deal, items like changing contributions to public employee pensions, and tightening eligibility and rooting out fraud in programs like in-home supportive services for the disabled, Medi-Cal and Cal-Works.  These items will do nothing to affect the current budget numbers, a fact Schwarzenegger has acknowledged, but he continues to leverage the impasse to capture long-sought goals.  The Governor also has taken to lying about how these issues suddenly appeared in the negotiations, claiming that “reform issues were very clear” from the start, which is true if you define “reform” as “whatever Arnold wants it to mean.”  Karen Bass signaled her frustration with the Governor’s clear unwillingness to close a deal by inserting unrelated items, boycotting today’s meeting and questioning the Governor’s figures on what reducing “fraud” would actually reap in savings (and since he’s been consistently wrong on this front in the past, it’s a good bet).  The Governor did concede that suspending the Prop. 98 education funding mechanism would not be viable, but he keeps pushing for the amorphously defined “reform”, no doubt because he thinks it plays well with the public (Matier and Ross transcribe that private polls show a jump in Arnold’s approval ratings).  This speaks more to the Democrats’ inability to clearly explain reality than anything else, though Bass gave it a try today:

But Bass said she believes talks have gotten worse, not better. And she publicly blasted the governor for comments he made in Sunday’s New York Times Magazine, in which he said he explained why he doesn’t go home depressed by budget woes.

“Someone else might walk out of here every day depressed, but I don’t walk out of here depressed,” Schwarzenegger told the Times. Whatever happens, “I will sit down in my Jacuzzi tonight,” he said. “I’m going to lay back with a stogie.”

“He said he’s happy to just go home and sit in his Jacuzzi every night,” Bass said Monday. “I’m very, very concerned about this. He doesn’t seem to be concerned that people are getting IOUs, and all he has to do is go out and blame the Legislature.”

With squabbling and posturing like this, you’d think I’d agree with the Calbuzz take of why this crisis has dragged on for so long.

The constitutional requirement for a two-thirds vote of the Legislature to pass a budget is clearly the single most important reason why the Capitol is in a state of near-permanent political gridlock. But the two-thirds rule has been around since the New Deal and budgets used to get passed. So what’s the hang-up?

Power: Nobody’s got it.

The governor and the Legislature fulminate and flounder simply because no one in the Capitol in 2009 has the stature, clout or influence to cut a deal like Ronnie and Jesse or Pete and Willie once did.

Actually, the budget has ALREADY been passed once this year, closing a $42 billion dollar deficit.  The new $26 billion dollar problem points to the unique nature of the current deep recession.  I’d like to see good ol’ Ronnie and Jesse and Pete and Willie deal with a $68 billion shortfall in the space of six months.

But beyond that, what is also missing from this analysis is the lengths to which the “big bully” theory of how to manage California government, where Democrats and Republicans get together and “cut a deal,” is in a real sense RESPONSIBLE for the problem we now face.  Take the assessment of the 1992 budget in the midst of a recession:

Contrast this year’s with the budget meltdown of 1992, the last time California issued IOUs. Although many of the same conditions applied, the big difference was that both Gov. Pete Wilson and Speaker Willie Brown wielded enough political authority to sit down in a room and cut a deal: Wilson took responsibility for rounding up Republican votes for tax increases and Brown for putting a lid on Democratic caterwauling over program cuts.

Somehow the inability of these major players to avoid a situation where IOUs had to be issued gets put to the side.  But what Willie Brown did not use that clout to do, what no Democrat has done since 1978’s Prop. 13 opened the structural revenue gap enforced by the 2/3 requirement for budgets and taxes, is actually solve the real problem.  Instead he  cut a deal, relying on a future asset bubble to bail him out again and again, and setting the table for today’s crisis.

The 1980s saw the construction of the model. Sprawl was used to provide affordable housing. Special tax systems were set up to pay for suburban schools – the 1982 Mello-Roos Act – which were funded as long as there was enough credit to sustain sprawl. The loss of property tax revenue led cities to shift toward retail, further promoting sprawl (big box stores, malls). The jobs and spending created by sprawl provided enough prosperity to keep voters happy and the politicians in power. For those who were left behind – those living in the city centers, people of color, and the poor – 1978 had been partly about their political and economic marginalization, and the majority of Californians embraced it as part of the deal.

The ideal feature of the centrist system, from the view of its practitioners, is that it apparently neutralized the right-wing revolt of 1978. Low taxes could be paired with preservation of core services, albeit at a slightly reduced level, and thereby avoided another Jarvisite outburst. Well-paid consultants could run statewide TV campaigns to force the public to accept the consensus, without having to do the messy work of engaging a grassroots that would challenge the centrist status quo.

When the system came crashing down in 1991-92, the centrists found it possible to cut a deal to keep things going. Pete Wilson and Willie Brown had much in common, and were able to hammer out a package of tax increases and spending cuts that got a 2/3 majority. I don’t romanticize that deal, but instead use it to show that it confirmed to the centrists that the system they’d built in 1980s could withstand crisis as long as everyone was willing to sit down and make a deal, damn the consequences.

However, the right-wing wasn’t sleeping. In 1990 they managed to convince a bare majority of voters to approve Prop 140, a radical term limits measure that should have fallen afoul of the “revision” rule. But the real moment of change came in 1994, when the far-right in the Republican Party grabbed control of the agenda and launched a massive attack on Latino Californians. Pete Wilson wholeheartedly embraced the attack, and although it brought Republicans gains that year, it was a victory to make Pyrrhus jealous. Latinos registered for citizenship and to vote in massive numbers, and beginning in 1996 what had once been a state whose politics were fairly balanced shifted massively to the Democrats.

As long as Republicans stood a reasonable chance of winning control of California’s legislature or its electoral votes, Democratic deal-cutting with Republicans could be sold to the base as a necessary move to stave off the Jarvisite hordes. But after 1996 this became less and less plausible. The California Republican Party became a captive of the extreme right, even more than usual, and in one of its last acts before leaving power in 1998, pushed through a massive and reckless series of tax cuts.

I don’t disagree at all that we currently face a lack of leadership and clout to get deals done in Sacramento.  Arnold Schwarzenegger has no role inside his own party, and Bass and Steinberg preside over a dysfunctional set of rule requirements and are term-limited out of gathering political capital.  My point is that such leadership has ALWAYS been lacking from the Democratic side of the aisle, at least since 1978.  When prosperity waned, it was clear that California’s political structure would resist responsible governance at every turn.  But instead of preparing for that eventuality by changing the rules, those good old boys of the past cut deals that exacerbated the problem.  They forced the current crop of non-leaders into ringing up the state credit card and enabled the right-wing faction that holds a veto over economic policies.  The center did not hold – but it could never hold.  And the centrists who ruled California in the years after Prop. 13, the timid types who ran away from real solutions and put the state in the position to fail, should not be lauded.  They should be ashamed.

Gary Kamiya On The Crisis

I’m sure many political observers will laud this New York Times magazine article on California’s crisis and the men and women who seek to solve it, but I found it oddly pedestrian.  The profiles of the candidates reveal little of substance, and aside from displaying the salient fact that Arnold has no interest in the well-being of his constituents, I didn’t see the point.

“Someone else might walk out of here every day depressed, but I don’t walk out of here depressed,” Schwarzenegger said. Whatever happens, “I will sit down in my Jacuzzi tonight,” he said. “I’m going to lay back with a stogie.”

Overall, I saw too much focus on personality in dealing with what is essentially a problem of process.

Actually, while I didn’t agree with all of it, I thought Gary Kamiya had a much smarter take, and it didn’t mention Arnold Schwarzenegger or the names of any of his potential replacements more than once.  The headline, “Californians are sinking themselves,” doesn’t seem to match the bulk of the article, which focuses on the dysfunctional governing process.

The immediate source of California’s financial problems is a lethal combination of ideology and rules. It is deeply politically divided, and its governmental mechanisms are completely broken. Bay Area leftists stare at Orange County conservatives across an unbridgeable abyss; a large and potent group of anti-government libertarians faces off against an equally powerful group of pro-tax, proactive government liberals. If California, like most states, required only a simple majority to pass its budget, the disagreements between these camps could be worked out; after all, the Democrats control the Legislature. But California requires a two-thirds majority, which gives the GOP, now dominated by anti-government, anti-tax ideologues, veto power over the process. The result is deadlock.

Compounding this problem is California’s notorious initiative process, which allows voters to bypass the Legislature and place initiatives directly on the ballot simply by gathering enough signatures. The initiative process was originally passed by voters in 1911 to circumvent the power of the oligarchic railroad trusts by restoring direct democracy. And it still offers citizens a chance to take control of important issues. But it has gone out of control, abused by powerful interests who hire people to collect signatures and ram through bills that no ordinary citizen can be expected to comprehend. By sidelining elected officials, it achieves the worst of both worlds: It gives ordinary citizens, who lack requisite expertise, institutional memory and accountability, too much power, and then forces legislators to clean up their mess — except that because of ideological gridlock and the supermajority requirement, they can’t.

Kamiya looks at the three strikes law and in particular Prop. 13, which he views as the ultimate manifestation of the Two Santa Claus theory, that California can have endlessly lower taxes with endlessly more social services.

This was, in effect, a mass outbreak of cognitive dissonance, an up-yours delivered to government with the public’s left hand, while its right hand reached out for Sacramento’s largesse. Now, 31 years later, the bill has finally come due. There is no free lunch. If you want good roads, parks, decent schools (California’s schools, once the best in the nation, are now among the worst) and adequate social services, you have to pay for them.

Out of this, Kamiya points his finger at the people who voted in Prop. 13 and failed to modify it over the ensuing 31 years, who are “self-centered” and have “not decided what it thinks about the New Deal, or government itself.”  They need to “grow up,” Kamiya says.

I think this ignores the fact that Californians have traditionally been offered precious few choices to rectify the broken system.  The Democratic Party essentially has made a pact with themselves to nibble around the edges for three decades instead of confronting the great unmentionable crisis of governance.  People see the dysfunctional politics play out year after year and become rightfully disaffected with the system.  And they are never told anything from anyone in a position of power to counteract the Two Santa Claus theory, and so they necessarily believe it.  I don’t blame citizens for responding to their leaders.  The problem lies with the leadership itself, or more to the point the lack thereof.

I was 5 years old and on the other coast of the country when Prop. 13 was passed, and I’m not about to bear the brunt of the blame for that decision.  I would blame myself if I continued to live with the failure of the political leadership to confront the root causes.  But Californians are starting to use movement politics to go around the leadership and force the necessary solutions.  The sheer enormity of the problem and the size of the state makes this a difficult option.  But the alternative, to acquiesce and wait patiently for the leadership to figure things out, is unthinkable.

Hey Legislature: Listen To Harold Meyerson

Harold Meyerson had a nice piece last week similar in tone and scope to my piece on Jarvisism – arguing that Prop. 13 really was the original sin that sent the state on an almost continuous downward spiral, as much a reflection of the Age of Reagan as the financial deregulation that presaged a crisis at the federal level.

By passing Howard Jarvis’ malign initiative, California voters reduced the Golden State to baser metal. Under Republican Gov. Earl Warren and Democratic Gov. Pat Brown, California epitomized the postwar American dream. Its public schools, from kindergarten through Berkeley and UCLA, were the nation’s finest; its roads and aqueducts the most efficient at moving cars and water – the state’s lifeblood – to their destinations. All this was funded by some of the nation’s highest taxes, which fell in good measure on the state’s flourishing banks and corporations.

Amid the inflation of the late 1970s, however, the California model began to crumple. As incomes and property values rose, Sacramento’s tax revenue soared – but the parsimonious Democratic governor, Jerry Brown, neither spent those funds nor rebated them. With the state sitting on a $5 billion surplus, frustrated Californians grumped to the polls and passed Proposition 13, which rolled back and limited property taxes – effectively destroying the funding base of local governments and school districts, which thereafter depended largely on Sacramento for their revenue. Ranked fifth among the states in per-pupil spending during the 1950s and ’60s, California sank to Mississippi-like levels – the mid-40s in rank – by the 1990s.

Meyerson puts together all the malign elements of Prop. 13 – the defunding of local government, where people gain their impressions of government as a whole (so defunding it serves conservative frames of government as useless); the 2/3 majority requirement for raising a tax, giving over the state to a conservative veto; the regressive nature of the tax structure that became an outgrowth of that super-majority, since the only taxes allowed by the Yacht Party affect the poor disproportionately, leading to the lower class spending a higher percentage of their incomes on taxes than the upper class; the tax-cutting troglodytes emboldened by their ability to hijack.  He closes by explaining how Washington should not ignores the dysfunction of the nation’s largest state.

Because California is so much larger than any other state, and its unemployment rate is among the nation’s highest, the collapse of its capacity to spend will counteract some of the effect of the federal stimulus and retard the nation’s recovery – much as its aerospace slump retarded the recovery of the mid-1990s. The Obama administration ignores California’s plight at its own – and the nation’s – peril.

The nation’s banks are stuck with so much bad paper from California mortgages gone awry that a huge contraction in state spending would make their assets even more toxic. In the short term, the only way to avoid a further downturn may be a federal loan to the state.

A more permanent, homegrown solution to California’s woes (and it may take a state constitutional convention to get it) would require the state to eliminate the two-thirds threshold for enacting taxes, to repeal Proposition 13’s freeze on the value of commercial properties (some of which are still assessed at their 1978 levels) and to end the process of ballot-box budgeting through the initiative process, which is now more dominated by monied interests than the Legislature ever was.

Harold Meyerson showed the way forward, to such a degree that the SacBee editorial board called today for a fresh look at Prop. 13.  The news peg may be San Francisco County Assessor Phillip Ting’s activism in support of a split-roll solution, assessing commercial property taxes at similar levels.  But the intellectual underpinnings are all in Meyerson’s piece, which out to be memorized by progressive activists.  

People generally respond to leadership.  Legislature, take note.

Howard Jarvisism – A Tale Told By An Idiot

George Skelton has a punishingly absurd column today.  He has in the past recognized that Prop. 13, and more importantly the Trojan horse of the 2/3 requirement for revenue hikes embedded inside it, has foisted much of the problems upon the state that it now faces.  He recognizes that again here.  But he then goes on to suggest that Arnold Schwarzenegger should take the attitude of “born-again tax cutter” Jerry Brown and treat our current “tax revolt” (which he takes as gospel from the results of last week’s special election) by slashing services for all manner of struggling Californians.  Skelton hints at a tactic of merciless cuts as a means to show the public the painful reality of Howard Jarvisism, but really he just sort of agrees with the conventional wisdom, which he plays a role in setting, that the voters rejected tax increases of any kind and now the Governor must do the serious thing of cutting all manner of state spending.

Let’s take a look back in time and be clear about who’s driving this conventional wisdom.  California’s political observers have been stuck in a post-June 1978 mindset for the past thirty years, scared to death of the terrifying spectre of Howard Jarvis, himself a bundle of contradictions.  He was a Mormon who drank vodka.  An anti-government crank who nonetheless ran for US Senate and Mayor of Los Angeles.  A supposed defender of homeowners when at the time of Prop. 13 he was employed by the Los Angeles Apartment Owners Association.  Jarvis was a liar and a fool.  In the ballot argument for Prop. 13 in 1978, he claimed that school funding would not be affected by the amendment, and responded to the possibility of library services being cut by saying that “63 percent of the graduates are illiterate, anyway.”  He had a disdain for the average Californian, and probably took up the mantle of property tax revenue caps after seeing his home at 515 North Crescent Heights Boulevard in Los Angeles increase in value from $8,000 to $80,000 in 35 years.

Prop. 13 addressed one specific problem – property tax assessments were growing faster than wages.  But grafted onto the measure designed to slow down that growth were a series of proposals – shifting the balance of power from local to state government, capping commercial property with residential, and establishing the 2/3 requirement for revenue – that have gradually but steadily eroded the quality of life that previously made the state the envy of the nation and the world.  In 1978 the state had enough of a surplus to paper over the immediate effects of Prop. 13.  The measure was practically designed to drain that, and put an end to effective governance in the state.  Today, businesses and homeowners benefit from public investment in infrastructure – sewers, roads, electrical lines, freeways, mass transit – without having to contribute to the improvements.  And to get a true sense of how that attitude of, basically, selfishness, can be traced back to Jarvis himself, read this flashback from the 1979 budget crisis, and the anti-tax champion’s march on Sacramento.

Into the volatile political atmosphere parachuted Howard Jarvis, the irascible co-author of Prop. 13 and the cranky embodiment of the tax cut movement. Jarvis and his posse came to Sacramento on June 7, the one-year anniversary of the measure; 30 years later, the episode offers a look back in time at some hints of what was to follow.

Jarvis, a burly and profane spud of a man, had come to deliver 150,000 computer-generated letters sent by tax-cut supporters to warn the Legislature, “We’re not going to let anybody get away with a new plot to circumvent Proposition 13.”

One target of his ire was Assembly Bill 8, which radically restructured California’s system of public finance and sent $5 billion from Sacramento to local jurisdictions. Still in effect in 2009, it cast the framework for many of today’s structural budget problems, by putting the state in the permanent business of financing schools, cities and counties.

Surrounded on the east steps of the Capitol by dozens of boxes containing the letters, Jarvis accused then-Speaker Leo McCarthy of a “plot” to undercut Prop. 13, and got into a beef with a reporter who asked him to be specific about the alleged conspiracy.

As a daily report of the incident had it: “Jarvis snapped angrily: ‘I’m not going to list all of them. I don’t carry the bill numbers around in my pocket.'” […]

As Jarvis spoke, a group of mothers who’d come to Sacramento to lobby for more spending for pre-schools began shouting at him: “What about the schools? They’re ending programs to help,” a woman from Azusa hollered.

“That would be your problem, not mine,” Jarvis yelled back. “It’s absolutely not so. Prop. 13 didn’t have any effect on the schools at all.”

Jarvis then walked into the Capitol, where he and his backers dropped off boxes of letters in legislative offices. All went well until he called on Assemblyman, later Congressman, Doug Bosco, who was meeting with a county supervisor and three fire chiefs from his district.

“We were discussing why there isn’t enough money to put out the fires,” Bosco said later. “In walked Howard Jarvis and I said, ‘Good, you can explain it to them.'”

“Jarvis insisted that reduced property tax revenues allowed by Proposition 13 were more than sufficient to finance essential services,” a future Calbuzzer reported. “When the chiefs asked Jarvis what specific cuts he proposed, he told them, ‘that’s up to you,” which set off “a heated exchange that lasted 10 or 15 minutes before Jarvis left…in a bit of a huff.”

“A short time later, Jarvis wandered by Governor Brown’s office, where he received a considerably warmer reception.”

Howard Jarvis had no interest in governing and even less interest in people.  He treated budgeting only in the abstract, without detail and certainly without any projection of a human face on the consequences of his actions.  He was a miserable, selfish old coot.

Only in California can this man be transformed from guy-shouting-at-the-end-of-the-bar status into a figure worthy of any respect, both by politicians like Jerry Brown and the political media.  The assumption is that he led this grand movement that persists to this day, but his stature only remains because so few dared to challenge him on the basic facts.  We have a government with the structural architecture of that selfish old man, but a population that simply doesn’t think that way.  Yet nobody has the courage or the leadership to actually point out that architecture, the main stumbling block to returning California to anything approaching fiscal sanity.  Howard Jarvis, like a headless Ozymandias statue surveying a wrecked land, became a king because of the vacuum of leadership into which he stepped.  His reputation is unassailed, and we are all poorer for it.

Get Your Bananas

Paul Krugman actually understands the nature of the crisis here in California, and he writes about it today.

Despite the economic slump, despite irresponsible policies that have doubled the state’s debt burden since Arnold Schwarzenegger became governor, California has immense human and financial resources. It should not be in fiscal crisis; it should not be on the verge of cutting essential public services and denying health coverage to almost a million children. But it is – and you have to wonder if California’s political paralysis foreshadows the future of the nation as a whole.

It’s a key point.  Without the insanity of Prop. 13, making revenue so unstable and volatile from year to year, and completely inequitable, locking in older homeowners while increasing the tax burden on younger ones, the crisis would be as manageable as other states.  Without the Trojan horse of the 2/3 rule for taxation snuck in through Prop. 13, the tax structure would not become the hideous, mangled beast we see today, where the effective tax rate is higher for the lowest-income Californians than for those with the highest income.  And without the growing extremism of the Yacht Party, where anyone who breaks Grover Norquist’s pledge draws an effort to drum them out of the party, perhaps Sacramento would be populated with public servants who want to fix the problem instead of break it.

Krugman’s point is to sound a warning bell for the nation at large, to view the problems of obstruction and dysfunction at the state level with a wider lens.  He explains that Republicans have “been driven mad by lack of power,” with the extremist rump faction predominant.  But even then, he gets that California’s problems are unique.

So will America follow California into ungovernability? Well, California has some special weaknesses that aren’t shared by the federal government. In particular, tax increases at the federal level don’t require a two-thirds majority, and can in some cases bypass the filibuster. So acting responsibly should be easier in Washington than in Sacramento.

But the California precedent still has me rattled. Who would have thought that America’s largest state, a state whose economy is larger than that of all but a few nations, could so easily become a banana republic?

It’s a sad commentary, when the finest liberal columnist in America basically reassures his readers that no government could possibly be as ridiculously constructed as California’s.

Outlook Still Grim Until Structural Reforms Are Made

Greg Lucas took a look at tax receipts for the first week of April, and the news is gloomy.

In 2008, not exactly a boom year either, $703,166 in personal income taxes was paid in the first eight days of the month.

During the first eight days of April 2009, $456,227 came over the transom.

By April 30 2008, nearly $12.9 billion in personal income tax revenue was collected.

This year, Governor’s Schwarzenegger’s Department of Finance predicts a monthly total of only $8.9 billion in personal income tax receipts.

If the first week is any indicator, revenues may not even meet that lowered expectation.

Lucas surmises that the $8 billion revenue gap for 2010 announced by the Legislative Analyst a few weeks back could potentially double, based on these returns and the possibility of losing particular ballot measures in the May 19 special election.  I don’t think there’s any question that the legislature will return in June to something over a $10 billion gap to deal with.  And as we know, Zed Hollingsworth and the even Yachtier Yacht Party will want to fill that with cuts to already emaciated state services.

(as a side note, I love that there are almost 200 entries in a Google search for “Zed Hollingsworth.”  Memewatch!)

But in fact, there are ways to deal with these problems, even in a down economy, that make the most sense for the vast majority of Californians.  The Commission on the 21st Century Economy released their latest set of reports today, and what jumped out at me was their report on the potential of a split roll property tax, which would keep residential rates at current levels while modifying those for commercial and industrial properties, and as a result, California could see a $7.5 billion dollar annual boost to their budget bottom line.  Obviously, the typical doomsayers like the Chamber of Commerce will come out and call this a “job-killer” and cite the negative impacts on the economy, but considering that even in these rough economic times, corporate businesses just got a $1.5 billion dollar tax CUT, I don’t take their concerns seriously.  They have cried poor for decades, and as a result the state has suffered deeply.  While carve-outs for local small businesses may be part of a solution, having commercial property taxes frozen in amber has led to municipalities literally passing the cup to fund services.

The City of Orinda wants your help, and your donation is tax deductible.

There are no bake sales in the works, but Mayor Sue Severson plans to solicit donations for extras the City Council does not want to pay for out of the general fund.

Donations could pay for events such as Orinda in Action Day, or they could pay for public art such as the popular frog sculpture in the downtown fountain without draining the city’s general fund, Severson said.

“Our budget is so minimal and we have very little flexibility in what we’re able to do,” she said.

The city’s roads and drains need more than $100 million in repairs the city can’t afford.

And Orinda’s average income in 2000 was $132,531.  Imagine the needs of the cities at or below the poverty line.

We cannot survive as a state with this kind of inequity.  The state must be freed from these artificial bonds and allowed to address needs properly in the way every other state in the union can.