California's Perpetually Late Budget

Want to know why California will never pass a budget on time, ever? We have to go back to 1978.

Real estate boomed in the late 1970s with property becoming more expensive due to the higher demand in the market. This in turn raised property taxes which are based on a percentage of property value. People began to get scared, some justifiably and most just stupidly, that their property taxes were going to start soaring and they would lose their homes.

Governor Jerry Brown at this time had amassed a huge surplus thanks to fucking over state workers. He did nothing to address people's fears over property taxes, even though many people told him to use the surplus to subsidize and/or lower property taxes.

Come the 1978 election cycle voters approved Proposition 13, and California has been fucked ever since.

Proposition 13 did two main things:
- Cut all property taxes to 1%.
- Require a 2/3rds majority in the legislature to raise taxes.

The first thing, cut property taxes to 1%. This completely gutted local governments who relied heavily on property taxes to raise funds. They were now bankrupt. Jerry Brown then used the surplus to bail out local governments, but only if they would agree to certain things. This essentially took power away from local governments and put it in the hands of state government.

Furthermore, by cutting property taxes, local governments had to find new ways of generating revenue. They looked to sales tax, which is a regressive tax that severely punishes poorer people. By relying more on sales tax, it influenced the jobs available in the community. Local governments wanting more sales tax would revenue often choose a retail outlet to build rather than a high-end tech job. Essentially, communities were given jobs at Wal-Mart rather than a Silicon Valley replica.

The second thing Prop 13 did, requiring a 2/3rd majority in the legislature to raise taxes. This on its own might not be a big deal, but couple it with California not being able to run a budget deficit and the budget requiring a 2/3rds majority vote to pass a budget and you have big problems. (Just to note: Only six other states in the country have a 2/3rds requirement in the Legislature for either raising taxes or passing a budget. Other than California, no state has 2/3rds for both.)

What this means is that 14 Senators can completely shut down State government - which they often do. Since California cannot run a deficit, to balance a budget you either have to raise taxes or cut spending. The 14 Senators have all the power in the world, as do the remaining 26 Senators. Both have a no compromise attitude. The 26 Senators do not want to compromise with a minority, and the 14 Senators know they have all the power and so do not feel the need to compromise. Each group are represented by different constituencies with different interests, therefore you will almost never be able to raise taxes. Choosing where to cut spending is also a challenge.

It is essentially a deadlock with nothing getting done.

The only reason the budget passed in 2009 is because the two leading Republicans of the House and Senate decided to sign the budget realizing the State was crumbling beneath them. The Republicans in the State Legislature were pissed and replaced them immediately followed by death threats from the constituency. I expect the gridlock for the 2010 budget to be just as bad (worse?) as in 2009, especially being a gubernatorial election year.

Solution to all this? Simple: get rid of Prop 13.

Start this process by approving Prop 25 in November which would require a simple majority vote to pass a budget rather than the super majority of 2/3rds.

After that, a movement for a referendum needs to start to put a Proposition on the 2011 ballot. The proposition needs to completely negate Proposition 13 and rewrite property tax laws, sales tax laws, and local government revenue streams.

Fears of property taxes would need to be alleviated somehow. I am for putting property completely under control of local governments. Most people will not be. Instead, perhaps property taxes could be dealt with as follows: if you are over the age of XX and you own/live a home less than XXX,XXX, you would only pay 1% property tax.

Some sort of addition to the Proposition would have to be made about making sales tax illegal and to include some other progressive revenue stream (income tax or car registration fees for example) for local governments.

-e.