Yesterday’s Constitutional Convention Summit was actually an autopsy. For five hours both panelists and the audience dissected the reasons for the death of the California Dream and all agreed, even if they did not explicitly say this (though many more did than I ever expected), that California’s government was murdered by Prop 13 and its accomplices. A Legislature that in the late 1960s was rated as the nation’s best has now become one of the most unpopular and ineffective institutions in American politics.

What the Summit revealed is that at the core of California’s political crisis is that the people of this state have no way to hold anyone accountable for a system that has totally and deliberately failed. By completely eviscerating the method by which public services are financed, and by locking into place a conservative veto over state government, Prop 13 and the 2/3 rule in particular ensured that the Legislature would never be able to enact effective policy again. And that to produce solutions, voters would have to fill the Legislature with Democrats, something that isn’t possible given our self-segregating electorate.

The Chronicle’s John Wildermuth also noticed the centrality of the 2/3 rule to the discussions, and several folks, including Mark Paul of the New America Foundation emphasized how pathologically dysfunctional it has made our government.

It would be very wrong to say that the supporters of a convention in that room were solely motivated by the wreckage of 1978. Many attendees wanted to focus on the need to increase popular engagement with government. Proportional representation and smaller legislative districts (i.e. more legislators) were common proposals. Steven Hill of New America Foundation in particular has had some good ideas on reforming our democracy – you can find some of them on their Political Reform Blog.

But more important was the spirit of popular engagement that suffused almost every panelist’s comments. There was a recognition that if our state is to be fixed, and if a convention is the way it’s going to be done, the people themselves really do have to be empowered. A convention, and their government, have to be made relevant to the lived experience of Californians. They have to trust that they can control a convention, and that its outcomes will make their lives better.

Much more over the flip.

The lone conservative Republican who agreed to attend as a panelist, Michael Capaldi of the Orange County Lincoln Club, spent his time proving that the Zombie Death Cult literally has nothing to offer California other than the status quo. He kept talking about what “fiscal conservatives” want, as if anyone is still fooled by them. They had the run of the state for the last 30 years. Until last week the last time the Legislature agreed to a tax increase was 1992. They’ve had the governor’s office 22 out of the last 30 years.

The Zombie Death Cult, as witnessed by Bobby Jindal’s ridiculous joke of a speech, is particularly unaccountable. They use the 2/3 rule to shape policy, and then blame the result on the majority party, while they become more and more doctrinaire and cult-like. Hence their name – they’re a cult (deviance from the truth is not tolerated), they are producing death (that of the state and its residents) and they’re zombies (a political party that hasn’t had a hope of winning elections in this state since the mid-1990s, but somehow walks among the living).

Capaldi did, however, understand what was up. He said “fiscal conservatives have the most to lose from a convention” and this is of course true. The entire reason people are speaking of calling a convention is to fix what he and his ideological allies broke. The reason we need to make a convention and government relevant again to the people and their lives is because he helped make government irrelevant and in fact unable to help improve their lives.

Capaldi also made some revealing comments about public service – namely, he thinks it’s for saps. His attacks on elected officials motivated one woman, a former mayor of Morgan Hill, to rise in defense of local electeds. She pointed out that she had been one of the few women elected to local government, was there to speak for working mothers, and that she took it seriously and as a point of pride when constituents would talk to her about issues in the supermarket, or on the soccer field, or wherever else. Capaldi’s attitude is one of a man who has tried to destroy the ability of a community to improve itself, and to denigrate those who try to make things better through government.

I spend time on him to illustrate what is the second key outcome of the Summit – a de facto recognition that the right-wing no longer has a place in California politics. I may be quicker to see this than others in the room, but it’s true. The convention, and state politics in general, are becoming the domain of the center and the left.

The same thing is revealing itself in Washington DC. In federal and state politics the only thing keeping the right-wing relevant are supermajority procedural rules – the Senate filibuster and the 2/3 rule (although a media that has been trained to parrot whatever a Republican says has a role too, but the media is either dying or about to be rudely awakened by massive public support for Obama and his agenda).

For the last 30 years the center has seen the left as their primary threat, and seen the right as either useful idiots or desirable allies. I believe this is starting to change, as some in the center are starting to see the right as their primary threat and the left as either useful idiots or desirable allies. (As someone firmly on the left, I don’t take offense, since I’m not all that worried about the center dominating things anyway. They’re going to struggle to remain relevant too.)

Interestingly, the center and the left can work together because they both agree on something fundamental: good government is essential to social happiness and prosperity. The right-wing rejects all of that. But because Californians now demand good government to help solve this dire economic crisis, the right-wing is effectively cutting itself out of the conversation. Whether it’s Jindal attacking the notion of unemployment insurance or Zed Hollingsworth attacking the notion of funding public schools, the result is the same: marginalization and irrelevance.

Whether in a constitutional convention or state politics as a whole, debates between center and left are going to become of prime importance. On a convention, for example, a question is whether the convention should be limited or broad in scope. Most progressives don’t want the convention to address social issues. But many of us would like to use it as an opportunity to dramatically reshape the relationship of government and the people – and ideally to tear down those divides. Perhaps a unicameral legislature with 300 representatives, some picked by proportional representation. The center would want a more narrowly focused convention whose brief is confined to some structural fixes but that don’t really reshape how California’s democracy works.

Another potential divide is delegate selection. Most progressive organizations want to throw the doors open to the people, to allow them to elect their representatives – as many as 15-20 per district. Some centrist groups, like the League of Women Voters, seem to prefer an indirect method, where a Prop 11-style commission would pick through some arcane formula designed to produce a more neutral (but perhaps less accountable) set of delegates.

There will be other debates, and I know I’ve only scratched the surface of the specific proposals. And that’s partly deliberate. As several folks who spoke yesterday recognized, if this is to work it really must provide the people with meaningful and genuine empowerment. It has to be their convention. The people are, after all, sovereign. We can and should offer suggestions and ideas, but this can’t be a top-down affair. Of course, I’m happy to discuss specific ideas in the comments.

If you’ll forgive me, I want to close with a very good quote on this from my boss at the Courage Campaign, Rick Jacobs, who told the crowd:

What we have is so broken that I can’t even imagine that we get something worse…If we ever get to the point where there is a constitutional convention, I think it ought to be big, it ought to be broad, and we ought to trust the people.

Not surprisingly I agree, and I hope you all do as well. The next moves on this have to be a big and broad public conversation where we go directly to the people and say “we trust you to fix this state. what do you want to do, and how would you do it?”

From today’s Beyond Chron.

Because Governor Schwarzenegger is impotent at brokering a budget, the state will be out of money on February 1st – and will start issuing I.O.U.’s.  That means no tax rebates, no financial aid and no other means of assistance.  Now we are looking at a statewide special election to get out of this mess.  If all we get is more Arnold gimmicks to delay the problem another year, it will be a tragically wasted opportunity.  Because now, more than ever, the public is willing to consider tax reform to get us out of the right wing fiscal straitjacket.  Beyond the Democrats’ effort to scrap the archaic two-thirds budget rule, legislators must consider placing ballot measures to amend Prop 13 (by exempting commercial property) – and eliminate Prop 218’s onerous requirement that local revenue measures get a two-thirds vote by the electorate.  With the recession wreaking havoc on our fiscal health, the public has finally woken up to the horror of right-wing tax policy.  For the first – and possibly only – time, voters might approve progressive ways to raise revenue.

Scrapping the Two-Thirds Budget Rule

Liberal bloggers were ecstatic yesterday to report that a new PPIC poll shows a majority of Californians would abolish the two-thirds requirement to pass a state budget.  And they should be.  Despite California being a solid blue state, Republicans in the state legislature from the Central Valley and Orange County have blocked our budget each and every year – because they adamantly refuse to vote for a single tax increase whatsoever in any way, shape or form.  This “tyranny of the minority” has blocked any effort to raise revenue during hard times – forcing the state to make painful cuts and borrow more money.

Specifically, the poll in question showed that a 53-41 majority of likely voters would support lowering the budget vote requirement down to 55%.  The Public Policy Institute of California (PPIC) has been asking this question every year since 2005, and it’s the first time that a majority of voters approved this idea.  As recently as May 2008, the question failed 39-53, with similar poll results in earlier years. Clearly, a seismic shift in public opinion has occurred.

Getting rid of the “two-thirds” rule is a priority for Democrats in the state legislature, who have tried in vain to forestall this crisis.  In a bout of desperation, they finally crafted a manipulation of the tax rules to get around the two-thirds requirement – only to have Schwarzenegger veto it right before Christmas.  If the Governor calls a special election, Democrats have said they will place a Proposition on the ballot to abolish the two-thirds requirement.

But it would be a lost opportunity to stop there …

Local Revenue Raising Reform:

Scrapping the “two-thirds rule” would make it easier to pass a state budget, but it would do nothing to solve the perennial revenue crisis that local governments face – a crisis that comes from state law.  Prop 218, which passed in 1996, requires all special taxes at the local level to get a two-thirds vote of the electorate.  Prop 13 also requires most local tax increases to be on the ballot.  So when San Francisco faces a $576 million deficit, these fiscal straitjackets mean requires us to have an election to raise taxes – which is never an attractive prospect.  

How in the world would Californians give up their power to raise taxes at the local level?  The same PPIC poll asked about lowering the requirement to raise special taxes at the local level from two-thirds to 55% (i.e., amend Prop 218 to make it less draconian.)  A majority (50-44) said it was a “good idea,” but the margin was closer among “likely voters.”  Prop 218 passed thirteen years ago with little fanfare – because progressives were too distracted by trying to save affirmative action (No on 209), raising the minimum wage (Yes on 210) and supporting medical marijuana (Yes on 215.)  Its damage has been catastrophic, but now we have a chance – possibly the only chance ever – to undo it.

Reforming Property Tax Revenue

Would voters also repeal Prop 13?  Don’t be silly.  The 1978 tax measure that castrated property tax revenue – and spawned the Reagan Revolution across the country – is still popular with Californians, especially long-term homeowners who enjoy the stability of capped increases.  But a Field Poll from June 2008 showed they’re open to amending it, and I couldn’t imagine a better time – when public opinion is willing to entertain such measures – to put it on the ballot in the name of rescuing the state.

Prop 13 was billed as saving residential homeowners, but by far its biggest beneficiaries have been corporations who own commercial property.  Because commercial property has much lower turnover, they pay much lower property taxes.  Imagine, for example, how much more revenue the San Francisco public schools would get if just one building – the Transamerica Pyramid – were exempt from Prop 13.  In the same June 2008 poll that showed voters strongly support Prop 13, the idea of “split roll” taxation either got 46-43 support or a whopping 61-27 approval (depending on how the question was asked.)

Progressives like Rob Reiner have been talking about a “split roll” amendment to Prop 13 for years.  Now is the moment to finally pass what folks have been saying for years.

For the June special election, San Francisco may put another parcel tax on the ballot – like they did in June 2008 to raise public school teachers’ salaries.  I voted for Prop A, but was not thrilled that every homeowner got levied $198-per-year, regardless of the size or value of their property.  Which means I will now pay the same amount for my 400 square-foot Tenderloin studio that Dede Wilsey pays for her mansion in Pacific Heights – which is unfair.  I’m not against taxing property owners, but let’s have some equity here.

Guess what?  San Francisco isn’t allowed to pass a “progressive” parcel tax, because Prop 13 requires them to be “flat.”  Rather than repeal Prop 13 entirely, allowing cities to pass parcel taxes that are not regressive sounds like a politically possible solution.

Other Budget Solutions for the Special Election

While structural solutions must be the priority, expect the statewide special election to have a lot of specific revenue measures on the ballot.  Schwarzenegger’s fiscally reckless idea to borrow against future lottery revenues is not popular and would fail, but the PPIC poll showed that his alcohol tax proposal would easily pass – and his regressive temporary sales tax is mildly popular.  What’s most interesting, however, is that raising the vehicle license fee by $12 would pass 61-37 – and even Republican voters support it by a 7-point margin.

If the Governor wants the special election to be about tax measures (most of which are just quick fixes), Democrats must demand a Proposition to raise income taxes for the wealthy.  The PPIC poll showed that idea passing by a 40-point landslide, one of the most popular revenue proposals.  Democrats in the legislature tried restoring the upper-income tax bracket to Reagan-Wilson levels last summer, but with the “two-thirds rule” could not muster its passage.  And the Governor never supported it – although he gladly repealed a $347/year tax credit for low-income seniors with the stroke of a pen.

If we’re going to raise taxes, let’s do it right.  Put a tax measure on the special election ballot to restore the upper-income tax bracket, and see if the voters like that better than Schwarzenegger’s ideas.  With the fiscal crisis devastating our state coffers, it’s time for everyone to sacrifice – but let’s demand that those who can afford to pay give their share.

Yesterday I wrote a post about a SacBee editorial entitled “Shared Sacrifice”. Looking back, I think I probably focused a bit too much on the teacher pay, which was really a relatively minor side issue, and not enough on the question of Prop 98. Nonetheless, the name of the editorial certainly goes a fair bit towards inflaming itself.

But, the question of Prop 98 is a good one.  Certainly the SacBee got it right when they called it the CA Teacher’s Association’s sacred cow. And given that CTA is one of the most powerful interest groups in Sacramento, that’s not nothing.  However, is it a good thing?  I think that’s a fair question.

Let’s talk Prop 98 over the flip.

Looking at education funding, where we currently reside around 46th in the nation in per pupil spending, it is clear that Prop 98 alone is not the answer to all of our problems.  Prop 98 leaves our K-12 (and community colleges) insulated only when times are good.  When we hit a rough patch, they are vulnerable as well.  After all, it’s based on the total size of the budget, and with the pie shrinking, so does education funding.

Of course there were other options at the time of Prop 98, and there are other options now.  CTA has filed an initiative with the state that would increase the sales tax by 1% and give that money to schools. Any method is bound to have drawbacks, because at some point we must put some faith in our legislators to fairly and fully fund education, at all levels.

I’ve never been a huge fan of ballot box budgeting.  It converts a perfectly good representative democracy into a mess of direct democracy.  It requires citizens to fully understand issues in a few hours that the legislature argues over for months.  And ballot box budgeting doesn’t give us the flexibility to adjust in times of crisis. Like, say, now.

All that being said, Prop 98 shouldn’t be an amount to peg education spending. Prop 98 should be a floor. In a perfect world we wouldn’t need that.  We wouldn’t need to force our legislators to fully fund education, because they would just do it because that was the right thing to do.

Yet we have the Legislative Republicans, carrying their Grover tatoos right over their heart. Vowing to never increase revenue, above all else and all sound policy.  California grossly underfunds education, even when we meet Prop 98 spending levels.  Yet Prop 98 is the problem?

In 2005, California spent $8,067 per pupil, according to a 2007 Census Bureau study.  In the same year, West Virginia spent $9,005 per pupil. Wyoming spent $10,255/pupil, Alaska spent $10,830, and New York spent $14,119.  And yes, our cost of living is substantially higher than any of those states save New York. So teachers must be compensated at higher levels, and everything else is squeezed.  

And that’s the floor that Prop 98 has brought us, and that’s from 2005, a relatively stable budget year. Can’t we do better than lagging $1,000 behind West Virginia? Where do we go once we have produced a generation of under educated Californians? How do we continue to be the hub of innovation that we have been for so long?

No, Prop 98’s problem isn’t that it’s too high or too inflexible, it’s that it is irrelevant.  Or that it should be, but that it’s not.  There is no reason for a state like California to be constantly flirting with minimum spending levels like this.  There is no reason why we spend so little on what must be our greatest natural resource for the new economy.

So, forget Prop 98, that’s a red herring.  If you want to write an editorial entitled “Shared Sacrifice”, there is only one logical target: Prop 13. It has decimated our revenue base and threatened the “California dream.” We once knew that we could count on our state to provide all of us with a solid education that would place the state in good stead for the long haul.  And we didn’t have to worry about things like Prop 98, because we knew our legislators would fund education.

But no longer.  If we want to talk shared sacrifice, let’s look at the right place.

The Field Poll has been surveying Californians’ attitudes on Prop 13, and the broader issues of taxes and spending. What they’ve found is that Californians don’t want spending cuts, prefer spending cuts to new taxes – but also are willing to support new taxes if they’re the only way to prevent health care cuts.

Frank Russo offers an excellent in-depth look at the poll, which suggests that the public is willing to cut prisons (even though we have to INCREASE spending by at least $7 billion), and supports higher alcohol, cigarette, income, and sales taxes top protect health care.

Reading these poll numbers against the Field Poll’s Prop 13 numbers, which indicated ongoing support for Prop 13 and a belief that the state’s problems stem from spending and not tax problems it seems clear that there is a massive disconnect among California voters. They cling desperately to the belief that government waste and overspending is the problem of deficits, otherwise they might have to honestly and openly explain that their support for tax cuts is a desire to get government-sponsored tax shelters at the expense of everyone else in society and our state’s economic competitiveness.

Frank Russo argued the Field Poll numbers might provide a “road map” forward for the legislature. I agree, although that map suggests confrontation will be the first stop on the trip. Something has to give – Californians cannot maintain their low-tax environment without crippling spending cuts they say they don’t want. Republicans will take that to mean a stubborn refusal to increase taxes is popular with voters; they’ll not be inclined at all to seek new revenues.

What is really needed is a strong and persistent argument from Democrats – in Sacramento and in the grassroots – that our state has a structural revenue shortfall – that our problems really do stem from a lack of revenue, that a state ranking 46th in per pupil school spending doesn’t have any revenue to cut. We need to not shrink away when Californians insist that our problems are on the spending side – those Californians are wrong.

It’s especially important to begin with fellow Democrats. The Field numbers suggest that many Democrats are ardent defenders of Prop 13 and believe spending cuts are preferable to tax increases. These Democrats should be the target of a broad-based and long-term campaign to show them the error of this thinking – that their Democratic values are not compatible with these thoughts on budgeting.

It won’t be easy, but it is necessary if we are to fix this state.

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.