California Fiscal Woes

In a post at Salon.com, Andrew Leonard bemoans the closing of some of California’s most beautiful bicycle paths, among the many casualties of our state’s fiscal crisis. At the end of it he blames the usual, and wrong, culprit,

As always, I blame Proposition 13. Curse you, Howard Jarvis!

The infamous Prop 13 contains two major parts; the freezing of (actually restrictions on raising of) real property taxes, and the requirement of a two-thirds vote to pass a budget and raise taxes. This proposition is being blamed for all of our fiscal problems, and it actually plays a far smaller role than some other structural problems in our government.

The property tax restriction was in response to irresponsible increases that were, in fact, causing people who owned their homes free of debt to lose those homes due to property tax burdens that exceeded reason. The restriction does not apply when a property is sold, and property tax revenue has increased dramatically since that proposition passed.

It is true that the act has shifted revenue to income tax, and a serious problem arises in that the legislature spends like drunken sailors in boom times and instigates programs that mandate spending even when the boom times pass and income tax revenue drops. That is a major cause of our current crisis, but it is caused by legislative recklessness, and not by Proposition 13.

I would suggest that a tax based more on income than on property values is more fair in any case. The major asset that any person owns is usually their home, and the value of that home after its purchase is influenced by forces beyond the control of the owner. To have the cost of owning that home vary to major degrees at times and in a manner unrelated to the owner’s income is potentially disastrous.

We probably could live with the two-thirds majority vote requirement if it were not for our gerrymandered districting, with its preponderance of “safe” districts, and the closed primary election system. These districts, each carefully drawn to contain a preponderance of one party or the other, and the primary elections in them, are tightly controlled by party bosses who insist on absolute “purity” in voting on the floor of the legislature. The legislators then have to run in primary elections in which a very small number of voters participate, all of whom are not only members of their party but are energetic and polarized members of their party.

Last year the legislature had a tentative deal on a budget that involved modest tax increases; had the necessary two-thirds majority vote aligned. At the last minute one Republican switched his vote to “no” because the party leaders had threatened him with a primary challenge in his district, saying that they would support another candidate and would campaign against him based on his “vote for higher taxes.” He knew he would lose in that primary based on that single vote, regardless of what his record might otherwise be.

Californians, like Americans in general, do have a strong inclination to want the government to provide services that they do not want to be taxed for. Proposition 13 does, to some degree, reflect that shortcoming but was passed in no small part to impose responsibility on our legislature. In that respect it failed.

The fiscal problems that California face are severe and have many causes, and it may be true that solving them will require an almost total rewrite of our constitution. Simply pointing a finger at Proposition 13 is no solution.