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February 23, 2004

CALIFORNIA INITIATIVES....I sort of promised last week to try and make some sense out of the initiatives on the California ballot. After all, I am Calpundit, right?

And I tried, I really did. But I failed. At least, I failed on the hard stuff. But before we get to that, let's go through the easy stuff:

  • Proposition 55 is a school bond, just a run-of-the-mill bond for repairing schools, fixing infrastructure, etc. My take: sure, go ahead and vote for it. On the other hand, if you hate bonds, vote against it. In any case, it's pretty straightforward and hardly requires any deep analysis.

  • Proposition 56 lowers the threshold for approving a budget from two-thirds to 55% and does the same for raising taxes. It's also got a few other minor goodies that its supporters are trying to pass off as reasons to vote for it ("legislators don't get to take bathroom breaks until a budget is passed!"), but don't believe it. Lowering the budget/tax threshold from two-thirds to 55% is what Prop 56 is all about.

    Personally, I've always felt that supermajorities were appropriate only for extraordinary actions such as amending the constitution, things that are supposed to be hard to do. But passing a budget and changing tax law is routine stuff, and I just don't see the point of requiring a two-thirds majority.

    Now it's true that there's a huge political subtext to this in California right now: Democrats control about 60% of the legislature, which means they can pass a budget all by themselves if they only need 55% but have to bargain with the Republicans if they need two-thirds. And Republicans haven't been in much of a bargaining mood lately.

    But you know what? That's how it works in nearly every other state already. What's more, the California governor has a line item veto, which means the Dems still need to negotiate with Arnold to get a budget passed.

    Bottom line: I'm going to vote Yes on this one. It makes sense.

  • Proposition 58 allegedly requires the legislature to pass a balanced budget and prevents them from ever again issuing bonds to cover an operating deficit. I have my doubts that it actually has any teeth, but I suppose it's worth a try. I'll vote Yes on this one.

And that brings us to Prop 57, Arnold's $15 billion bond measure. It's primarily meant to cover past debt (although a portion of it would be used for next year's budget), and since that past debt has already been incurred it seems like this bond really needs to be approved, even if you generally dislike the idea of using bonds to cover operating expenses.

But it's not clear to me what happens if this measure fails. (Actually, Prop 57 is just a safety measure, since the legislature already approved bonds last year to cover this debt. However, those bonds are being challenged in court. So what I really mean here is that it's not clear what happens if Prop 57 fails and the court overturns the existing bonds.)

Supposedly, fiscal disaster awaits us if Prop 57 fails, but even after a fair amount of searching I've been unable to verify this. So I don't know what to say about this one.

But I'll keep looking, and if I come up with a suitable answer I'll let everyone know. Deal?

Posted by Kevin Drum at February 23, 2004 09:32 PM | TrackBack


Comments

Proposition 58 can go into effect only if proposition 57 passes (and vice versa). A yes vote on 58 will have no effect unless 57 also passes.

http://www.smartvoter.org/2004/03/02/ca/state/prop/

--Rick Taylor

Posted by: Rick Taylor at February 23, 2004 09:41 PM | PERMALINK

The preferred lie of the anti-56 campaign is that Proposition 56 is a "blank check". Few blanks checks have so many limitations. As Kevin noted, the governor must still sign any budget passed by the legislature. What's more, since California has the line-item veto, the governor can blue-pencil any particular item he doesn't like (which, come to think of it, is why the state agency I used to work for doesn't even exist anymore). On top of all this, there are elections. If the GOP really believe that the Democrats will ride roughshod over them (and the governor) and engage in a mad spree of tax and spend, then they should be delightedly looking forward to majorities after the electorate expresses its will.

The much-advertised "accountability" provisions in Proposition 56 such as docked pay are window dressing. The real accountability is that someone finally gets the credit (or blame) for the state budget. For years now, we have instead seen the Democrats and Republicans point at each other after enactment of grotesque compromises that no one likes. Let's give the majority party actual responsibility for the budget and if they fumble it, well, someone else is likely to become the majority.

Yes on Proposition 56.

Posted by: TonyB at February 23, 2004 09:50 PM | PERMALINK

Well if the courts rule the state had no legal authority to issue the bonds then I would argue it has no legal obligation to pay them off. Tough on the bond holders, but isn't this more or less what happened with WSPSS bonds.

Such a result would also be an effective way (as opposed to proposition 58) of preventing such borrowing in the future.

Posted by: James B. Shearer at February 23, 2004 09:55 PM | PERMALINK

Requiring a 2/3 majority to pass budgets runs afoul of the median voter theorem, which says that the equilibrium issue positioning has each major party attracting half the vote. According to the theorem, no budget in California should ever pass. Therefore, the assumptions of the theorem don't hold exactly. However, they must be a good approximation, since the budget never passes without much pain.

Why didn't California voters consider the game theoretic implications of passing Prop 13?

Posted by: Matt at February 23, 2004 10:06 PM | PERMALINK

I'm just happy I don't live in a direct-democracy state. Although, I suppose, ballot initiatives are probably the most likely way to stop gerrymandering once and for all.

Posted by: John Y. at February 23, 2004 10:32 PM | PERMALINK

It's clear to me what happens if 57 fails - Arnold, guided by Jeb Bush's finance director Donna Arduin, starts making dramatic, major, big cuts to state programs.

What else can he do?! The GOP will not go for a tax increase. Even if 56 passes, Arnold knows he has to get re-elected in 2006 - and survive any recalls that the wingnuts propose if he does raise taxes.

No, if 57 fails, they will argue that they are left no choice and must make catastrophic, destructive cuts to CA government, and we all know that nothing will be spared. Go look at Oregon. And it doesn't actually matter what the real numbers say - there is an ideological agenda here, even with Arnold who is a rather moderate Republican. They will justify cuts if they get the chance.

It seems to me that there's no alternative. 57 is a gun to our heads. Yet this is what the state voted itself back in October when they decided to go through with the recall. 57 will pass, there's not much other choice. Once that is done, though, then the politics should get interesting, particularly if 56 passes.

58 sucks. Just thought I'd say. Fiscal conservatism is not all it's cracked up to be, unless the 1880s was your idea of a good time.

Posted by: eugene at February 23, 2004 10:32 PM | PERMALINK

Regarding Prop 55: Didn't we just pass a huge billion dollar bond for fixing schools just a couple years ago? Why are we financing regular maintenance with long term bonds?

Posted by: nash at February 23, 2004 10:35 PM | PERMALINK

As Prop 13 passed before I moved to Calif., I am not thouroughly versed in all it's causes and effects. But one effect I have heard mentioned many times is that the voters intended to make it difficult to raise taxes, hence the necessity of the 2/3rds majority. While that effect has made it difficult in past years to get a budget passed on time, it didn't deter the dems from getting the one or two members of each house to cross over with some prok barrel incentives. Last year was different in that recent Repub. gains in the Assembly and Senate meant more crossover votes were needed.
The argument that the budget still has to get signed by the governor who has line item veto power didn't seem to matter much last year when Davis penciled out a paltry million or two, even though he was aware of the extent of the state debt. Yes, it would be more difficult to get Arnold to sign off on a budget that raises taxes, but who is to say there will never be another time when one party controls the majority of the legislature and the governor's office. Just look at the past 5 years when Davis was in office and the Dems had 55%+ majorities in both houses of the legislature.
In the last 5 years, revenues increased by 25%, but spending increased by 42%. I think the fear of this disparity in the income and spending will be a driving factor on whether or not to pass prop. 56. I'm voting against it.

Posted by: Meatss at February 23, 2004 10:36 PM | PERMALINK

nash: You're probably thinking of Prop 1A which passed in 1998. Or maybe Prop 47 which passed in 2002.

47 was strictly a higher-ed funding plan for facilities; 55 includes K-12.

The important thing, though, is I've not known a statewide bond act for education to fail, at least not in my short lifetime. Californians have proven repeatedly that they like increasing spending on schools, and I expect 55 to pass as well.

Posted by: eugene at February 23, 2004 10:40 PM | PERMALINK

I think Meatss' numbers can be a bit misleading - "the last 5 years" includes 1999, 2000, and 2001, when CA ran surpluses. So it made sense that spending would rise (much of it was making up for cuts in the early '90s). The questions is what happened to spending in 2002 and 2003, and were those decisions made with awareness of the full depth of the state's fiscal crisis?

Posted by: eugene at February 23, 2004 10:42 PM | PERMALINK

No offense, but when are you guys out in CA going to get to work on the proposition that ends your lunatic proposition system?

Posted by: Thersites at February 23, 2004 10:55 PM | PERMALINK

Also of note is that California's population is growing, so viewing spending increases as straight percentages instead of per capita increases is disingenuous at best.

Posted by: John Y. at February 23, 2004 10:57 PM | PERMALINK

But with a state of 30 million +, population has only increased from between 10% and 15% in the last 5 years. Less than the increase in spending by 2/3rds. A poster child of the spending increases was the new 5 year contract given to the corrections officers amounting to a 37% pay raise over 5 years, a pension amounting to 90% of final salary after 30 years, and a spending increase in the first year of over $500 million dollars.

Posted by: Meatss at February 23, 2004 11:08 PM | PERMALINK

Arnold got elected making bold promises to straighten out the finances. I don't rememeber him mentioning a loan to do it. Vote down prop 57 hold arnold and the dems accountable to their stated actions.

Even with prop57 the CA comptroller(WHATEVER) stated the budget will be $7billion in deficit in 2005-6 so you can see the numbers game begining already.

Posted by: RC at February 23, 2004 11:16 PM | PERMALINK

Failed? On a matter of fiduciary judgement? That's not the Don Knotts-like Calpundit that I know who's doing the talking.

Attention, California Voters: When in doubt, peruse the pro & con endorsements of a measure, and cast your vote against the individuals and groups you despise more than the other.

And Barney-- in the event 57 passes, which banking houses stand to profit the most from California's largesse? And how much money do said banking houses (and their shareholders) contribute to GOP coffers?

(Truth be told, I'm flying under false colors. How is the value of money ascertained, anyway)?

Posted by: Sovereign Eye at February 23, 2004 11:41 PM | PERMALINK

If Prop 55 doesn't pass, I think it may be a good idea to have a voter initiative to require a 2/3 vote to cut spending. As it stands now it seems easier to cut spending (by majority rule) than it is to raise taxes (by 2/3 vote).

This seems to tilt the playing field in favor of the slash and burn Rethugs. I don't like super-majorities for budgeting purposes either, but if you're going to require a super majority on the revenue side, you might as well require it on the spending side as well.

And we could have such nice TV ads for the initative -- some nice woman talking about how mean people want to cut spending for kids, grandma, police, teachers, firefighters, etc.... I bet it could pass.

Posted by: decon at February 24, 2004 12:16 AM | PERMALINK

Actually, I'm talking about Prop 56 above.

Posted by: decon at February 24, 2004 12:17 AM | PERMALINK

Reasons to vote for Prop. 57:

Charles Schwab is the biggest single purchaser of CA bonds, but certain of their funds can't buy any more CA bonds 'cos of CA's near-junk statis. To make the bonds more acceptable, CA is having to have the bonds guaranteed by outside banks (making /em even more expensive to taxpayers). Prop. 57 would help CA's bond rating.

As appealing as it is to drop a bomb in Arhnold's lap by voting down 57, the damage to CA future bond rating is too great.

A similar argument holds for Prop. 56. As the bond rating agencies are of the opinion that CA is structurally inclined to poor governance, a reform to make budgets easier to pass should improve CA's bond rating.

Posted by: Tom at February 24, 2004 12:25 AM | PERMALINK

Sovereign Eye >"...How is the value of money ascertained, anyway..."

in back rooms and during power lunches

someday sanity will prevail & the Laws of Biology, Chemistry & Physics will determine the "value of money"

don`t be holdin your breath tho

"Eventually, the truth will emerge. And when it does, this house of cards, built of deceit, will fall." - Robert C. Byrd

Posted by: daCascadian at February 24, 2004 12:36 AM | PERMALINK

Steve Lopez of the L.A. Times argues that it might be better to let Prop 57 fail and force the Governor and the Legislature to restore the top income tax brackets instead, the way Reagan and Wilson did, instead of relying upon the sales tax to repay the bonds.

Lopez quotes State Treasurer Phil Angelides:

"What's happening here," he says, "is that taxes we used to have under Wilson and Reagan and Clinton at federal and state levels have been washed away, and that's part of the reason we have today's problems."

Posted by: bad Jim at February 24, 2004 12:43 AM | PERMALINK

I want 57 to fail, so that we have a hard hitting state discussion on whether we want taxes or services. And a discussion of tax rates. I imagine the result of an enlightened electorate would be higher taxes at the upper income levels. There's plenty of money, maybe even too much money out there; it's just not distributed correctly.

Posted by: RWC at February 24, 2004 12:58 AM | PERMALINK

My take: sure, go ahead and vote for it. On the other hand, if you hate bonds, vote against it. In any case, it's pretty straightforward and hardly requires any deep analysis.

Au contraire. Prop. 55 has a couple of "interesting" features, see the second link below. The fact that those who support it say it won't raise taxes are a sign that they're living in a fantasy world.

No on Proposition 55: One bond too many

...this measure would dig us deeper into a financial hole. At $12,300,000,000, Proposition 55 rivals the largest bond in the history of any American state...

As for Prop. 56, let's look at where the money is coming from. The opposition funding is from Big Business. The support funding is from Big Socialism.

I'll take Big Business, thanks. No on 56.

On the other hand, if you want to be on the same side as Jackie Goldberg, go ahead:

Unbeknown to them, a group of Assembly Democrats' private gab session about the state budget impasse -- including the political implications of accepting a Republican-driven spending plan without tax hikes -- was broadcast across the Capitol on Monday...

The lawmakers also discussed how the budget impasse would affect a planned ballot initiative that some Democrats are pressing. The initiative would ask voters to reduce the required threshold to approve a budget to 55 percent of the Legislature instead of the current two-thirds requirement. At least one legislator said that a longer delay would help the case for lowering the threshold.

"Since this is going to be a crisis, the crisis could be this year. No one's running, and maybe you end up better off than you would have, and maybe you don't. But what you do is you show people that you can't get to this without a 55 percent vote," said Assemblywoman Jackie Goldberg, D-Los Angeles...

Posted by: The Lonewacko Blog at February 24, 2004 01:08 AM | PERMALINK

Hi, neighbor: I'm voting against 57 and 58 and I'm doing it to send a message. Normally, I am a backer of bonds: if more school, earthquake, infrastructure etc. bonds had managed to make it past the so-called tax activists (personified by the Howard Jarvis orgaization) in this state over the years, the state would be in far less dire financial straits than it is. The same activists who shoved through the pernicious Prop. 13, which leaves massive untapped wealth in this state locked up, are the ones who doomed most bonds over the past dozen years to certain defeat by creating supermajority hurdles in other crappy initiatives.
So why would I vote against the mother of all bond measures, especially when it would (potentially, barring Moody's and the courts) end the fiscal crisis, sort of-maybe-kind of-not really, for the time being?
Well, when our very own (worthless) state rep John Campbell has said that he will vote for the first time EVER for a bond issue when he votes for 57, that tells me that there's a monumental political element to this initiative that can't be ignored. The archconservatives in this state see the bond as the medicine they need to take to get the balanced budget written into law, which will afford them all sorts of opportunities to wreck the state's critically necessary social programs because we KNOW they'll never vote for a tax hike, which is what the state desperately needds.
So I am extraordinarily cynical about the bond measure. Beyond that, I want Schwarzenegger to suffer as much political damage as possible beginning right now. He has broken every single vapid, empty promise he made and failed to back up any of the assertions he made in the little coup d'etat his millionaire buddies and he put together to take the state house. And, as you pointed out, the bond really isn't a bit different from the cockamamie plan Gray Davis and the state legis put together in the first place to paper over the budget problems and which Schwarzenegger scorned in his campaign.
So the hell with him and his bond.
And good point up above about the Times poll.

Posted by: secularhuman at February 24, 2004 01:15 AM | PERMALINK

Lonewacko, alas, is still living up to his name. The 2/3 margin will make it just as difficult to LOWER taxes whenever a majority of the voters decide they want to do that. And since it allows both sides to veto each other, it simply means one straight year of screaming and delays over each year's budget, after which both sides end up having to compromise at the last second on a final budget which pretty much reflects their original majority/minority strength ratio anyway.

But then, who the hell really believes in democracy anyway? Apparently not the California voters, whose slogan in favoring the 2/3 vote (as with their approval of term limits) is "Stop me before I vote again!" Interesting to see that Lonewacko actually manages to have still less rational reasons for opposing a simple majority budget vote.

Posted by: Bruce Moomaw at February 24, 2004 01:24 AM | PERMALINK

No offense, but when are you guys out in CA going to get to work on the proposition that ends your lunatic proposition system?

Thersites: No offense taken from here. The initiative system STINKS. The only good thing about it, as I have pointed it to many people, is that it always makes going to the polls in this state meaningful: there is ALWAYS some awful crap on the ballot that must be defeated: I can think of the Defense of Marriage variation a few years ago as the most recent example of populist swill that made it into law. In the '80s there was an initiative to quarantine AIDS sufferers, a la Japanese internment camps.
And for the poster above who arrived post Prop. 13: the instantaneous effect of Prop. 13 was the end of publicly financed summer school that summer and every summer since. Prop. 13 put the grease to the education skid in this state. Fiscal conservatives would love to see the public school system collapse entirely. The initiative system stinks.

Posted by: secularhuman at February 24, 2004 01:28 AM | PERMALINK

"No offense, but when are you guys out in CA going to get to work on the proposition that ends your lunatic proposition system?"

Hear, hear. California has now become the world's leading poster boy for the idiocy of direct democracy as opposed to representative democracy (as pointed out earlier by an endless parade of political theorists, as well as by common sense). You'll recall that Teddy Roosevelt got shot during his 1912 run for president on the Bull Moose ticket; it's a shame that his running mate Hiram Johnson didn't get shot instead. The one and only area in which public referendums should be allowed is in setting election and campaign rules for elected representatives.

Will this ever happen? Of course not. Even after the voters finally finish passing the combination of initiatives that flatly requires the state to permanently spend more than it takes in in taxes, the voters will NEVER blame themselves for the resultant ruins. It will all be the fault of Those Evil Politicians.

Posted by: Bruce Moomaw at February 24, 2004 01:36 AM | PERMALINK

"Lonewacko, alas, is still living up to his name."

Good one!

"The 2/3 margin will make it just as difficult to LOWER taxes whenever a majority of the voters decide they want to do that."

By "the voters," you mean the members of the CA legislature, the majority of whom are far-left if not socialists. Due to the CA GOP running losers and due to the CA voters being delusional, the CA legislature will be majority left/socialist for the foreseeable future. Those promised tax cuts will never come, only greater taxing and even greater spending.

All you need to do is follow the money to figure out how to vote on 56. The teacher's unions and the SEIU have put over $9 million into trying to get 56 passed. Now, why would they do that? Because they want to continue to suck the public teat dry and when that runs out borrow milk from someone else.

No on 56.

Posted by: The Lonewacko Blog at February 24, 2004 01:51 AM | PERMALINK

True... but some sort of initiative system is necessary, for all the potential harm it can do. Up here in WA, we've had a couple wacko initiatives that passed even, but somehow the state government just ignored them. Heh.

Too tired to cite specific examples right now, but a initiative system does provide some needed counterbalance against "professional politicians". There may be use for it against such matters as gerrymandering...

However, your point is taken. Direct control by the people would just lead to short sighted "more money for us" problems that would probably caused the entire system to fail, eventually.

Posted by: Sandals at February 24, 2004 01:52 AM | PERMALINK

Re: Fiscal disaster

Christian Science Monitor says:

"The state will run out of money unless it finds a way to produce $14 billion to pay short-term notes due June 16"

Posted by: Manish at February 24, 2004 01:56 AM | PERMALINK

"The Democratic Party in California has come out in full support of a package of austerity ballot measures championed by the Republican administration of Governor Arnold Schwarzenegger. Propositions 57 and 58, which will be voted on by Californians on March 2, are designed to place the burden of the state’s fiscal crisis squarely on the backs of working people. In supporting these propositions, the Democratic Party has underscored its repudiation of even the most mild reformist policies and its embrace of a policy of brutal attacks on health care, education, housing and other social services.

"[...]

"In backing the ballot measures, the Democrats are responding, along with the Republicans, to the demands of big business in California. This constitutes an important lesson and a warning of what is to come at the national level. Should the Democratic candidate win in November and replace Bush in the White House, that will not substantially alter the basic thrust of government policy, whether abroad or at home. A Democratic administration in Washington will seek, like the Democratic Party in California, to join with the Republicans in making the working class pay for the crisis of American capitalism."

California Democrats back austerity ballot measures
By Andrea Peters, 24 February 2004

Posted by: Andreas at February 24, 2004 02:08 AM | PERMALINK

Lonewacko: "Those promised tax cuts will never come, only greater taxing and even greater spending."

Presumably the taxing will be on the People of California, while the government benefits all go to Aliens in Flying Saucers? What Lonewacko really objects to, of course, is the poor, abused, cruelly overworked rich being taxed at higher levels for the benefit of the rest of us lazy parasites. Sob.

As for "the CA legislature being far-left socialists" because "the CA voters are delusional": may I ask why LW is telling those delusional voters to vote No on 56 instead of simply telling them to vote for more conservative representatives? He apparently believes in remarkably selective forms of delusion (possibly on the basis of personal experience). And may I suggest that the California GOP keeps "running losers" because it's as far right as LW wants it to be?

What we really SHOULD require supermajorities for is running deficits or paying for our current spending levels with bond measures -- such as the one that both Arnie and the leading state Democrats are now peddling. The temptation on the part of both legislators and voters to shuffle the financial burden of current spending off onto future generations or legislators -- in the hope that they themselves will be retired or dead before the bill comes due -- is very strong, as the federal government is also busily demonstrating now. That temptation needs to be countered by a supermajority requirement. But in the case of the people passing present-day taxes to pay for the programs they want in the present day, there is no such temptation, and no sane reason not to allow such taxation and spending levels to be set by a simple majority vote.

Posted by: Bruce Moomaw at February 24, 2004 03:10 AM | PERMALINK

I can't see as Proposition 58 is a good idea. While borrowing for an operating deficit is generally a bad idea, why would we tie the hands of our legislators in doing the job we voted for them to do.

Posted by: Boelf at February 24, 2004 05:38 AM | PERMALINK
But it's not clear to me what happens if this measure fails. (Actually, Prop 57 is just a safety measure, since the legislature already approved bonds last year to cover this debt. However, those bonds are being challenged in court. So what I really mean here is that it's not clear what happens if Prop 57 fails and the court overturns the existing bonds.)

Well, first, the existing bonds only cover $10.2 billion, IIRC, not the extra $4+ billion Arnold added with the VLF rollback.

Plus 57 and 58 are linked, and if one fails the other doesn't go into effect.

Posted by: cmdicely at February 24, 2004 07:30 AM | PERMALINK
Proposition 58 allegedly requires the legislature to pass a balanced budget and prevents them from ever again issuing bonds to cover an operating deficit. I have my doubts that it actually has any teeth, but I suppose it's worth a try. I'll vote Yes on this one.

I'd vote for 58 if it didn't have a spending cap with a stupid basis (admittedly, its a fairly soft cap, but its the wrong basis, and once its passed, it'll be like Prop 13 and never get fixed, so I have to vote against it). Rather than being based on the size of the state economy, its based on population and inflation. Presuming real economic growth is the long term trend -- which it better be -- its a way of writing the Republican preference for shrinking the public sector of the economy into the Constitution.

Posted by: cmdicely at February 24, 2004 07:34 AM | PERMALINK

The level of political cowardice in California is truly astounding. As others have mentioned, until elected officials reform Prop 13 we are going to face situations like this in perpetuity.

I'm voting against the debt financing bond measure because I refuse to allow my government to avoid addressing the real issues at the core of this crisis.

I urge everyone in California to do the same and let your Governor and representatives in the legislature know why.

Posted by: PeterB at February 24, 2004 07:39 AM | PERMALINK

Tom says:

Charles Schwab is the biggest single purchaser of CA bonds, but certain of their funds can't buy any more CA bonds 'cos of CA's near-junk statis. To make the bonds more acceptable, CA is having to have the bonds guaranteed by outside banks (making /em even more expensive to taxpayers). Prop. 57 would help CA's bond rating.

As appealing as it is to drop a bomb in Arhnold's lap by voting down 57, the damage to CA future bond rating is too great.

I can't agree. CA's bond rating is poor because our finances are screwed up. We need to fix the problem. Fifty-seven is a political bandaid, not a fix.

PeterB:

I'm voting against the debt financing bond measure because I refuse to allow my government to avoid addressing the real issues at the core of this crisis.

Hear, hear!

Posted by: Bakelite Lung at February 24, 2004 07:58 AM | PERMALINK

Oops, I did the tags wrong. In my post above, the second paragraph was also quoting "Tom."

Posted by: Bakelite Lung at February 24, 2004 07:59 AM | PERMALINK


VOTE NO ON 57 AND 58
AND SAY NO TO SCHWARTZENEGGER AND THE COWARDLY DEMOCRATS!

Posted by: GD at February 24, 2004 08:01 AM | PERMALINK

Carnac predicts

58 will pass but not 57

Posted by: ann at February 24, 2004 08:12 AM | PERMALINK

Here is an exit poll question I like to see asked:

Do you know what a bond is?

Perhaps the pollster could wrap that querry up in a multiple choice question.

I'd love to see the results.

A good belly laugh is one of life's purest pleasures.


Posted by: -pea- at February 24, 2004 08:29 AM | PERMALINK

to jim shearer, 3rd post:

the bonds being litigated have been authorized but not sold. the lawsuit will likely succeed as it appears that the legislature in last session plainly violated the constitution.

the interesting question is what happens if 57 fails. i haven't heard much discussion recently about going to a split property roll, where commercial and industrial property is revalued every 3 or 5 years (residential property would still be revalued for tax purposes only on sale), but that is clearly one of the better ideas around.

based on the comments here, i'm moving more and more to voting No on 57, so we can get an initiative for a better property tax system on the next ballot.

Francis

Posted by: fdl at February 24, 2004 08:39 AM | PERMALINK

I've already voted "no" on 57. Much of the "runaway spending" decried during the recall election was tax breaks...and Ah-nold boosted the deficit by hearly a third on day one of his administration with his VLF tax break for Hummer purchasers, then wants to finance it on credit.

Now Californians will have to hold the Groppenator's feet to the fire for reasonable tax increases.

Posted by: Chris Leithiser at February 24, 2004 08:40 AM | PERMALINK


No way will I be voting for 56. I love gridlock, in all its forms. Washington's biggest problem right now is that there's no gridlock -- the Bush / DeLay fiscal circle....,er, backscratching. And I say this as a proud, tireless Republican. Objectively, the budgeting process was far better between 1995-2001 than now, because both sides of the government were happy to see the other fail, fewer dollars got spent.

Posted by: Andrew at February 24, 2004 08:42 AM | PERMALINK

I'm voting no on 57 because I see no reason the inevitable combination of cuts and tax increases will be easier to make a year or two hence. 57 looks like a gamble that state revenues will rebound for exogenous reasons (overall economic health), yeah, maybe, but enough to account for the additional interest payments?

I find it touching that Lonewacko has such faith that Big Business is looking after him. Who knew that the CEO of a multibillion dollar corporation had time to post brain-dead comments on a blog—even a very good blog.

Posted by: Andrew Lazarus at February 24, 2004 08:51 AM | PERMALINK

In answer to what is a bond, most Californians would say:

"a very good baseball player"

Posted by: ann at February 24, 2004 09:00 AM | PERMALINK

How much of this runaway spending was emergency funding of long-term contracts to help dampen the artificial energy crisis? And what's happened with that lawsuit now that Arnold's in charge?

One number I found was $45 bln.

http://www.energyusernews.com/CDA/ArticleInformation/features/BNP__Features__Item/0,2584,92802,00.html

The whole "the state hasn't been responsible line" is hooey. Arnold's buddies pulled the plug and made us sign away our lives to get it plugged back in. This has not been a case of runaway spending. It's been a case of extortion--and now the extortionists are blaming us for trying to save our state.

BTW, how fun would it have been if 58 was in effect when the energy companies were holding a gun to our heads--we wouldn't have had the authority to do so. Wouldn't we be in much better shape now with another year of blackouts? Hamstringing spending is wrong.

Maybe 58 doesn't work that way, I'm not sure, but hamstringing state spending is just asking for trouble.

Posted by: Stoffel at February 24, 2004 09:08 AM | PERMALINK

"The level of political cowardice in California is truly astounding. As others have mentioned, until elected officials reform Prop 13 we are going to face situations like this in perpetuity."

Before prop 13 the property taxes were going up every year and were approximately 3% of market value. A friend had a $250,000 home in Orange County and his taxes were about $7500/year. That was 1977. If Prop 13 were to be reversed, there would be a real estate collapse in California. The Dems know this and are pushing a "split roll", in which only commercial property would be reassessed. That would still produce a real estate collapse, not to mention a small business crisis that would make the workers comp crisis look mild.

Prop 56 could pass and if it did, Arnold would be hard pressed to veto all of the 80 billion in additional spending that the legislature couldn't pass last year because of the 2/3 rule. He probably would but the next Democratic governor would be unlikely to veto all of it.

We had a spending cap for about 10 years here until it was overturned by another misleading proposition like 56. It was called the Gann Initiative and was authored by one of the prop 13 authors. It capped spending increases at the % increase in population plus the CPI increase. Had it still been in force (it was defeated about 10 years ago, just before the spending binge-surprise, surprise), California would have run a surplus the past 5 years.

The real problem is gerrymandering. All the legislature's seats are safe. The Republicans are just as guilty in this disenfranchisement of voters as the Dems. The ONLY accountablity is the 2/3 rule. If it goes, watch the Las Vegas and Nevada population explosion accelerate. I have a number of friends who have moved there the past 5 years. All to escape California taxes. A couple were retired but several have small businesses that they run out of their home and can move. They also sold California homes and bought equivalent houses in Nevada for 1/3 of what the CA house sold for.

I am active in local government and the alleged prop 13 effect on local gove't is baloney. The average California resident moves every 5 years and buys a house that's reassessed at market value. I'm going to remodel my house and it will be reassessed. The tax and spend boys and girls will tell you anything to get hold of your money.

Posted by: Mike K at February 24, 2004 09:09 AM | PERMALINK

Kevin: the point at which you figured out that you hadn't figured out what was what on each of the propositions was the point at which you should have decided not to post.

Or, you could have just thrown the subject open for comments and saved your own analysis until you had an analysis!

Posted by: No on (almost) all propositions at February 24, 2004 09:10 AM | PERMALINK


--------------------------------------------------------------------------------

MICHAEL HILTZIK GOLDEN STATE
This Solution Would Be Taxing for Only 1% of Californians
Michael Hiltzik

February 23, 2004

California's business and political leaders are never at a loss for new ways to soak the poor and the middle class.

Is there a budget crisis? Let's cut back on state health programs and public assistance, jack up camping fees at the state parks, cut back enrollment at the colleges and universities while raising tuition and toss another quarter-percent onto the sales tax. Oh, and let's borrow $15 billion to cover last year's budget deficit, so we can continue to soak the same people for another decade.

Isn't it time to soak the rich?

"Soak" perhaps isn't the mot juste. The proposal most frequently heard in Sacramento is to restore the 10% and 11% tax brackets that were dropped from the state tax code in 1995, when 9.3% was set as the top rate. The change would produce $2 billion to $3 billion a year in additional revenue, which plainly would do much to cut into the state's apparently permanent annual deficit of $7 billion.

(This is not the only proposal out there. Professors John Bachar of Cal State Long Beach and Paul O'Lague of UCLA have proposed a temporary surcharge of up to 7% on the wealthy, which they say would raise more than $13 billion a year. That would place the state budget on a gratifyingly firm footing, though at the risk of scaring some potentates into seeing socialists under their beds.)

Restoring the top brackets would cost the wealthiest 1% of all state residents — those reporting family incomes of $560,000 or more — an average of $9,700 a year, according to a study by the nonpartisan California Budget Project. As my colleague Steve Lopez has argued, since members of this group pull down an average annual income of $1.6 million, it's hard to imagine that any of them will have to pawn a yacht or remortgage the house in order to make his or her new nut.

That's especially true in light of the effect of the recent federal tax cuts. Thanks to President Bush, the same top 1% of California residents will enjoy a total of about $12.75 billion in tax savings in 2003. (The figure comes from Citizens for Tax Justice, a Washington tax reform organization.) That works out to nearly $68,000 each in federal tax savings — more than enough to cover their higher state tax.

The idea of raising the tax rate on people in the top brackets is certainly not new. Nor is it, by definition, a Democratic policy, or a liberal one, or a wasteful one. The last California governor to raise the top rate to 11% was the Republican Pete Wilson, who took the action in 1991 to help close a $14-billion hole in his $40-billion budget, but whose advisory portfolio with the Schwarzenegger administration evidently doesn't include issues of fiscal responsibility. Before Wilson, the previous governor to raise the top rates was Ronald Reagan — also, I believe, a conservative Republican.

None of this has kept the California anti-tax lobby from libeling the proposal as a "job-killer." One of the more imaginative screeds came from the California Taxpayers Assn., or Cal-Tax, a front for big business. Cal-Tax argued that because 80% of the state's businesses meet their state obligations via the personal income tax rather than the corporate tax, a raise would hurt "small, profitable businesses." The state should "foster and encourage" these sainted enterprises, the group said in one of its anti-tax fliers, not "hammer these businesses with new taxes" and drive them to "some other state." (The handout also suggested that baseball star Alex Rodriguez had moved from the Seattle Mariners to the Texas Rangers rather than California because Texas had no income tax. Presumably the organization will issue an updated version, now that A-Rod has abandoned tax-free Texas for tax-heavy New York.)

Cal-Tax wants people to believe that a rise in the top rates thus would spell doom for a lot of little entrepreneurial mom-and-pop operations. The truth is, of course, that any small business hit with the new top rate would be a sole proprietorship racking up profit of more than $580,000 a year, which doesn't sound like a business on the edge of extinction.

Anti-tax activists have long complained that California's income tax is overly "progressive," meaning that the rate curve rises sharply with each higher bracket. Restoring the 10% and 11% brackets will naturally make it even more progressive.

But the appropriate level of progressivity, like the appropriate tax rate, is always subject to debate. During the Kennedy administration, the top federal tax rate was 91%, applying to incomes of $200,000 a year or more; JFK nevertheless feared that voters would consider a tax cut fiscally irresponsible.

Moreover, the personal income tax doesn't tell the whole story. Taking into consideration their share of sales and property taxes, California's wealthiest residents pay a smaller percentage of their total income in taxes (once the federal deduction for state taxes is factored in) than taxpayers in any other bracket. Those who earned $567,000 or more in 2000 paid a net 7.2% of their income in state and local taxes; those who earned less than $18,000 paid 11.3%.

One way that tax opponents justify this disparity is by arguing that the rich burden public services less than the poor. This is true only if you define public services narrowly — public schools, public assistance, Medi-Cal, etc.

But isn't that too narrow? The wealthy occupy a disproportionate ratio of our coastal property, forcing other Californians to seek recreation by cramming themselves into the scant remaining public beachfront. Their typically larger vehicles cause proportionately more air pollution, their gardens and golf courses consume more water, their personal concerns preoccupy more of the governor's attention span. (Are these stereotypes? Certainly, but no more egregious than those the establishment uses to demonize the poor and immigrants as being mostly welfare cheats and Medi-Cal frauds.)

Meanwhile, the wealthy enjoy a disproportionate share of tax breaks, legal and otherwise. Take the issue of abusive tax shelters. It should go without saying that these are not investments normally marketed to welfare recipients, yet they never get mentioned in the boilerplate of political speeches devoted to ferreting out "waste, fraud and abuse." They probably cost the state government lots more than any Medi-Cal scam, however. State tax authorities estimate that fraudulent tax shelters cost the state as much as $1 billion a year; other estimates go as high as $1.3 billion.

Then there's the mortgage interest deduction, which currently applies to interest on mortgages up to $1 million, and on first and second homes. Elizabeth Hill, the state legislative analyst, calculates that reducing the mortgage ceiling to $600,000 and limiting the deduction to primary residences would generate more than $1.1 billion in revenue over the next two budget years — obviously without producing widespread hardship, even in this state's febrile housing market.

Those in favor of asking more from our top earners argue that there's no other way to continue making the kind of public investments that built this state over the last half-century. "People are forgetting that public investments are at the center of private successes," State Treasurer Phil Angelides, who has been plumping for the increase, told me last week.

Angelides dismisses the "job-killer" talk by noting that any sensible businessman would prefer having a balanced fiscal structure in Sacramento over the disingenuous pandering that prevails today, with politicians falling all over one another to reassure voters that there's no need to actually pay full price for all the state programs they insist on.

He also ridicules the notion that the 10% and 11% rates are inconsistent with economic growth. "You can't tell me that the existence of these rates from 1973 on killed our economy," he says. "They didn't stop the state's growth — Silicon Valley flourished in that era, and the state's growth outpaced the nation."

One feature of state government then was that it was stingy with debt and unafraid to levy sufficient taxes to fund current expenses. The logic of that policy has been buried by anti-tax P.R.

Typical of today's loony approach to the state budget is how Gov. Arnold Schwarzenegger's TV commercial for his $15-billion budget bond (that's the ad that shows the Republican governor and Steve Westly, the Democratic state controller, cooing at each other like a pre-breakup J. Lo and Ben) carefully skates over an ugly little fact: Even if the bond passes, the state will still face a $7-billion deficit by mid-2005.

Schwarzenegger's assertion that the state would suffer "Armageddon" if the bond measure fails is cynical in the extreme, because it assumes that California has only two fiscal choices: borrow up to its neck, or fall into the sea. Ruling any other solution out of order is an old political ploy, but why should 99% of the state's taxpayers go along?


Posted by: dan at February 24, 2004 09:11 AM | PERMALINK

Mike: How does that work?

You say that rolling back prop 13 even on business property would be a disaster for business. [somehow, I think that there would be a lot of NEW businesses out there that would prosper because they wouldn't have to start off handicapped by a much higher prop tax rate than older businesses face]

Yet, at the same time, you maintain that prop 13 really doesn't have much impact on local government.

Hmmm, a disastrous increase in tax payments if prop 13 is changed, but no impact on local gov if prop 13 stays.

But, I'll go with your criticism of gerrymandering. The REAL problem is not gerrymandering per se, but the fact that the courts have accepted that protecting incumbents and increasing party power is a legitimate basis for redistricting decisions. I maintain that both goals tend to diminish voter rights.


I'm joining those who seconded PeterB for this comment:
"I'm voting against the debt financing bond measure because I refuse to allow my government to avoid addressing the real issues [prop 13] at the core of this crisis."

Posted by: No on (almost) all propositions at February 24, 2004 09:20 AM | PERMALINK

I'm beginning to think that a "no" on the big bond measures to throw sand on our budget wildfire and a "yes" on the simple majority prop would be the way I'm going.
I'm voting for the school bond.

But one thing I read above that I liked was the gerrymandering initiative. Where do I go to sign up to get something like that on the ballot next year? that is an issue I can get into. Gerrymandering, along with it's fellow head on the political corruption hydra, Big Money, is destroying our country. oh, that and janet jackson's boob.

Posted by: garth at February 24, 2004 09:26 AM | PERMALINK

I am active in local government and the alleged prop 13 effect on local gove't is baloney.

Well, Mike, as one who is active in civic affairs you ought to know that the issue is not with residential property, but with commercial property. The fact is commercial property rarely changes hands and is undertaxed -- to the determiment of residential property owners and, yes, local governments.

Benefitting corporate property owners was not the goal of Prop 13. Ironically, and as you indrectly point out, they have been its most prominent beneficiary.

Posted by: PeterB at February 24, 2004 09:28 AM | PERMALINK

Armageddon?

Roll back the auto tax to where it stood before the good times hit. +$4 billion/yr

Roll back the upper-bracket tax to where it stood before the good times hit. +$2-3 billion/yr

Push hard for the money stolen by the energy crooks.
+$1-4 billion? one time (my guesstimate)

Lean on the federal government to actually fund the No Child Left Behind requirement or engage in civil disobedience--at a time when you have some leverage on Bush--and refuse to enact the requirement without funding. +$1-2 billion (my guesstimate)

That's over half the $15 billion and nothing close to Armageddon yet.

A $15 billion bond is a high price for taxpayers to pay for Arnie to come into the next gov (or Senate?) election saying: "When California faced the worst fiscal crisis ever seen on American soil, I solved it AND kept my promise to actually reduce taxes."

Posted by: No on (almost) all propositions at February 24, 2004 09:31 AM | PERMALINK

"If the GOP really believe that the Democrats will ride roughshod over them (and the governor) and engage in a mad spree of tax and spend, then they should be delightedly looking forward to majorities after the electorate expresses its will."

I would agree if districts here were not so gerrymandered. Part of this law is to give a strong voice to the minority.

While I can accept the budget getting passed at 55%, I am fine with the super majority for raising taxes. So I think I will be voting no on this measure. Totally agree with Kevin about the "cheap" throw ins to make this one more attractive.

55 is standard stuff and will be a yes vote from me.

58 is tricky, I am leaning against it right now.

57 is as Kevin said, It is ot likely to be the end of CA as we know it if it does not pass. But I haven;t decided how to vote on it yet.

Posted by: Ryan at February 24, 2004 09:32 AM | PERMALINK

Kevin, when you get around to doing your analyses of the propositions, consider this:

Rigid formulas are bad ideas with effects that only grow worse over time. See Prop 13, for example.

Rigid formulas based on population growth plus inflation are especially bad ideas because: they ignore demographic impacts on spending needs; the published inflation rates are for goods and services, while the overwhelming majority of state spending is for services; they ignore actual changes in citizen income.


Anyway, put me down for yes on the school bond (#55), yes on the dropping the budget vote from 67% down to 55% (#56), and a big no on the bond (#57) and the "balanced budget act" (#58).

Posted by: No on (almost) all propositions at February 24, 2004 09:42 AM | PERMALINK

There are some very good analyses of the state's fiscal situation above. IMO the biggest "job killer" in this state is its inadequately trained work force, which is to say kids graduating without the skills needed for the 21st Century. That makes Prop 55 a no-brainer as a first step. Those of us who went to public school here in the 50's and 60's would be appalled at the conditions in most urban schools. They are really more like developing countries. The infrastructure really does need upgrading.

As for 57, none of the first round of bonds has been sold. The state has been using short-term notes to get by. A bunch come due in June, more thereafter. Rates for another round will be sky-high, if the financing is even available. At that point cuts begi, because the state simply will not have money to pay its bills and make transfer payments. All the easy stuff has been done. The big money is in education, health care and prisons. So expect drastic cuts in next year's enrollment at state colleges and universities. An immediate shortening of the K-12 school year to save a month's worth of salary. An early release for "nonviolent" offenders. Cuts in welfare, health care for the poor. Closing state parks or hiking fees. Etc.

I would really like to stick it to Schwarzenegger and those incredibly short-sighted and selfish Republicans who are abrogating their responsibility to the next generation, but I know that they are not the ones that will be hurt. They have the money and the nice houses and the state-paid health care. The people who get hurt are always the most vulnerable--the poor, kids, small-business vendors. It is always that way. But think about the prospect of lots more people on the streets because of closed off educational opportunity, loss of welfare, early release, and no jobs. They won't be in Brentwood or Blackhawk, but they may be in your community.

Posted by: Mimikatz at February 24, 2004 09:57 AM | PERMALINK

Personally, I think that "Props" are a testament to the late science fiction writer Robert Heinlein. In one work or another he characterized Democracy as a system of government where the masses vote themselves circus' and peanuts until the whole thing goes crashing down.

Prop 13 was an inspiring display of voter anger, but the net result has been that the state must rely on an eratic revenue stream. It also has created significant tax disparity among residents. Worst of all, it also set a precendent where any business or tiny splinter group of yahoos could impact state budget and policy.

Virtually 2/3 to 3/4 of California's budget is now off the table, mandated by voter passed initiatives. This means that Arnold, and our horde of Gerrymandered blowhards, haggle over a tiny slice.

So, as a matter of principle, I generally vote "No" on Props. Most are either ill conceived debt or, like the current prop 58, BS gimmicks. We already are constitutionally required to have a balanced budget. 58 is just a gimmick to make 57 palatable to Arnold's own base.

Arnold really, really, really wants 57 (remember, he originally wanted $30 billion for 30 years). It is the only chance he possibly has for squeaking by with some dishonest debt, kicking the crap out of the state's poorest and most needy, and only indirect taxation (raising fees, cutting services, etc) mostly on the lower and middle class.

The threat of draconian cuts is just that, a threat. Even with the bond, the only way we can avoid taxes on the uber-wealthy is to make some harsh cuts as it is. The LAO's latest figures show that, as it stands, the Gov's budget is most likely billions short. There simply isn't enough money in spending under the state government's control to close the bondless amount.

Arnold's main threat against the democratically controlled legislature is taking his issues directly "to the people". But, slashing every single service and subsidy to keep Arnold in the same tax bracket as everyone in my office is just not something that will fly outside of a few corners of Orange County.

So, I'm voting no on 57 and 58, and yes on 56. A fair number of my more conservative friends are planning on doing the same. Their thinking is that they have a Republican (albiet one they don't fully trust) as Gov. Turn the Dems loose, and they will try to tax their way out of the mess, opening the door for a real resurgence of the Republican party in CA. My thinking, even gerrymandered representative government has got to be better than rule by a committee of 40 million, most of whom get their info from 30 second soundbites...

Posted by: Fitz at February 24, 2004 10:01 AM | PERMALINK

Somebody above made the statement that 57 is needed to improve the CA bond rating. Bull, you don't improve your credit rating by increasing your debt burden.

You need to get rid of the 2/3's majority requirement for raising taxes. That will improve the state's credit rating.

Posted by: Ron Carr at February 24, 2004 10:19 AM | PERMALINK

Bless you, Fitz, most especially for reminding everyone that California, like almost all states, already has a constitutionally requirement for balanced budgets.

Posted by: No on (almost) all propositions at February 24, 2004 10:21 AM | PERMALINK

I typed 'atrioswest.blogspot.com' in, and I got here.

"IMO the biggest "job killer" in this state is its inadequately trained work force, which is to say kids graduating without the skills needed for the 21st Century. That makes Prop 55 a no-brainer as a first step. Those of us who went to public school here in the 50's and 60's would be appalled at the conditions in most urban schools. They are really more like developing countries."

That's because most of the students are actually from developing countries. Most of the non-English speakers who enter school after K do not become fluent in English.

A common sense solution would be to attempt to reduce the flow of illegal aliens. That's where most of this new school bond will go, since 1/4 of it is for the LAUSD.

Posted by: The Lonewacko Blog at February 24, 2004 10:25 AM | PERMALINK

The guys above have said it better than I have. Pass some decent propositions to get rid of gerrymandering, and require a supermajority for any measure to pay for current spending with borrowing rather than taxes -- period.

Prop 13 passed because it was a frantic attempt by the voters to stick a cork in the mushrooming of their property taxes -- and they did so because property taxes are always a partially inaccurate representation of a person's actual net worth, and they were especially such in 1978. My mother -- who is somewhere to the left of Kim Il Sung -- took one look at her 1978 property tax asessment, gasped, and voted for Prop 13 as a matter of sheer survival. The thing to do with property taxes is to replace them, almost entirely, with income taxes -- period.

Pass Prop. 56 -- and then, if a majority of the voters don't like the economic actions of the current Democratic legislature, let them vote for Republicans. In short, make government halfway rational -- by removing the public's temptation to vote directly for measures, and for combinations of measures, that promise them that they can have their cake and eat it too.

Example of the extent to which direct democracy allows the voters to pass idiotic laws and idiotic combinations of laws: yesterday's LA Times poll shows Prop 56 losing by 7% on the grounds that it will lead to too much state spending -- but at the same time, a large majority of voters still support the Democrats who are voting for all that state spending! Make the voters make up their minds, dammit.

Posted by: Bruce Moomaw at February 24, 2004 10:33 AM | PERMALINK

I get so tired of the anecdotal evidence brigade that insists "my friend moved his business to Nevada to escape high taxes" when his friend is RETIRED and sold his house at a windfall. I like to call them "dine-and-dash Republicans," after the post-meal sprint of our youth that avoided the reality of paying the check. The fact is that they moved to Nevada because they are cheap bastards that don't want to pay their fair share and want to take advantage of the buffets.
I also want to meet
1.) the Canadian that really came here to pay for a medical service that wasn't elective surgery,
2.) the retirees that really were losing their homes before Prop 13, and
3.) the Vietnam Vet that got spit on.

Posted by: Jim 7 at February 24, 2004 10:43 AM | PERMALINK

"Prop 13 passed because it was a frantic attempt by the voters to stick a cork in the mushrooming of their property taxes -- and they did so because property taxes are always a partially inaccurate representation of a person's actual net worth, and they were especially such in 1978."

Jerry Brown, on California Connected's 4-governor discussion, said his biggest regret was not lighting a fire under the legislature to hurry through a property tax relief bill. He'd introduced the bill 18 months before Prop. 13, and 18 months later the legislature were still dicking around with it.

" My mother -- who is somewhere to the left of Kim Il Sung -- took one look at her 1978 property tax asessment, gasped, and voted for Prop 13 as a matter of sheer survival. The thing to do with property taxes is to replace them, almost entirely, with income taxes -- period. "

Nope, can't agree with that, 'cos a property tax is a wealth related tax, which is a good thing, if you have a rebate system for those on low enough incomes, as would have happened had Jerry Brown had his way.

But Prop. 13 is a pain in the ass currently. Property is undertaxed in CA relative to other states, and the inequities of when you're assessed create a disincentive to buy/sell property - if I move within CA, I'm tempted to rent out my place and rent a place to live, just because my property tax bill will double if I sell my old place and buy a new place.

Also, today McClintock was on KQED's forum and spouting that CA had the highest tax burden in the nation, when it's 29th, IIRC, in the ratio of GSP to state spending. What a maroon.

Posted by: Tom at February 24, 2004 10:50 AM | PERMALINK

Oh, and above, I forgot to mention why I'd oppose zeroing out property taxes:

1. An income tax is state-level, property taxes are local-level. Zeroing out property taxes places the fate of local governments too much in the hands of state-level officials; it's too easy for the governor to shaft the cities and counties to save his own hide, as the car-tax debacle showed us.

2. Diversification of state revenues. Revenues from property taxes are less volatile with the state of the economy than income taxes.

Posted by: Tom at February 24, 2004 10:54 AM | PERMALINK

Jim 7 saya:
"I also want to meet
1.) the Canadian that really came here to pay for a medical service that wasn't elective surgery,
2.) the retirees that really were losing their homes before Prop 13, and
3.) the Vietnam Vet that got spit on."

You'll find them the same place you will find the journalist who, when Boobhold explained that the gang rape episodes he related to the girlie magazine was just a bunch of B.S. intended to promote bodybuilding, bothered to ask why Boobhold thought it was a good idea to attract people who associated bodybuilding with gangbangs.

Meanwhile, back in the land of Proposition Free Lunch, Prop C on San Diego ballots will ask voters if we should increase the transient occupancy tax so that people who don't live in San Diego can pay to improve police and fire services for people who do live here.

I'm voting no on that one, too.

Posted by: No on (almost) all propositions at February 24, 2004 11:07 AM | PERMALINK

Logically:

If proposition 57 is a good idea, then proposition 58 is a bad idea. If 58 is a good idea, then 57 is a bad idea.

Posted by: McDruid at February 24, 2004 11:52 AM | PERMALINK

And for those who don't like 56, note that 58 allows a simple majority of the legislature to set the budget in times of a "fiscal emergency."

Posted by: McDruid at February 24, 2004 12:15 PM | PERMALINK

Here is a document by some guy who works for a firm that only issues state debt (so hes kinda biased) and I got it from weintraub who is also kinda conservative. Still, if its true, if a new budget isn't passed by June and if prop 57 fails and the $10 billion isn't upheld by the courts then state spending is automatically limited by an agreement we entered into to fund the $10 billion in short term debt that 57 was supposed to pay for.

http://www.sacbee.com/static/weblogs/insider/archives/Cash%20Flow%20Borrowings%201-13-04.pdf

Posted by: samiam at February 24, 2004 12:25 PM | PERMALINK

I'm voting against the $15 billion bond, not because I don't think we need the bridge loan. We do. But if this bond fails, they'll just dust off the old Davis bond and you'll see Arnold in the awkward position of using an authority that he criticized during the recall.

If the bond passes, it will make Arnold's hand stronger. He'll pretend it was a referendum on his leadership and use the threat of further initiatives as a club to beat the legislature with.

Posted by: Dan at February 24, 2004 12:29 PM | PERMALINK
That's because most of the students are actually from developing countries.

This is entirely false.

Most of the non-English speakers who enter school after K do not become fluent in English.

This appears false from my personal experience, which may have some selection bias. Still, I'd like to see some evidence.

Posted by: cmdicely at February 24, 2004 01:15 PM | PERMALINK

Good blog. Thanks for the help people.

Posted by: noclasswarrior at February 24, 2004 01:29 PM | PERMALINK

Schwartzeneggerliar was NOT legally elected to CA office. NO ONE knows what the results of the Recall election were.

Seventeen counties voted on illegal, uncertified software that the manufacturer (Diebold) installed without notifying the state or the counties. Three counties, including the largest Dem counties, had special software loads that weren't even Federally certified.

The Recall was BOGUS. When people say that Schwartzeneggerliar was elected by landslide, they are lying, even if they don't know it. Gray Davis should still be Governor; the Recall election should be VOID.

Posted by: Paul at February 24, 2004 02:14 PM | PERMALINK

"Meanwhile, back in the land of Proposition Free Lunch, Prop C on San Diego ballots will ask voters if we should increase the transient occupancy tax so that people who don't live in San Diego can pay to improve police and fire services for people who do live here."

I haven't decided on that one yet but I love the line about Free Lunch. Golding should rot in hell for her desperate efforts to assauge San Deigo's inferiority complex about being a "major city"

Posted by: Ryan at February 24, 2004 02:22 PM | PERMALINK

"Schwartzeneggerliar was NOT legally elected to CA office."

Interesting...the Sec of State disagrees.

"NO ONE knows what the results of the Recall election were."

Sure we do.....in addition to certified results we have exit poll data which matches up.

"Seventeen counties voted on illegal, uncertified software that the manufacturer (Diebold) installed without notifying the state or the counties. Three counties, including the largest Dem counties, had special software loads that weren't even Federally certified. "

"The Recall was BOGUS. When people say that Schwartzeneggerliar was elected by landslide, they are lying, even if they don't know it."

How can someone unknowingly lie?

"Gray Davis should still be Governor; the Recall election should be VOID.
"

According to your info in bizarro world, Gray Davis was not legally elected either. When one goes by results then questions legitimacy, forgive me if I question that person's sincerity.


Posted by: Ryan at February 24, 2004 02:28 PM | PERMALINK

Full disclosure: I manage municipal bond portfolios for a living. Whether this makes me an expert or just another self-interested party with an axe to grind is not for me to say. I do not, however, profit from bond issuance per se: I have no direct financial stake in the bonds that would be issued under Proposition 57 (except as a citizen).

A yes vote on Proposition 57 is very important, although it is not clear that "fiscal chaos" would result from its failure. Prop 57 solves the immediate cash flow problem and buys time for debate, without solving the long term revenue/expense problem. If 57 fails and the fallback bond issue fails in the courts, the State will have to scramble to pay debt that comes due in June. The simple truth is that the bond issue will almost certainly be less damaging to the State's finances and credibility than the alternative emergency measures would be.

One poster wants to vote down 57 to force a debate on taxes versus service cuts. This is laudable, but we will have such a debate in any case. That debate is what Prop 57 buys time for. Without the bond issue, we have an emergency, which will cut any debate short and probably create new costs of its own.

Contrary to another comment, there are no bonds outstanding that would be ruled invalid by the court -- all must be paid. The bonds that might be ruled invalid are yet to be issued, and would not be issued if the court ruled against them.

Posted by: max entropy at February 24, 2004 02:36 PM | PERMALINK

"You say that rolling back prop 13 even on business property would be a disaster for business. [somehow, I think that there would be a lot of NEW businesses out there that would prosper because they wouldn't have to start off handicapped by a much higher prop tax rate than older businesses face]"

You're assuming that most businesses own their own building and would pay the tax. The vast majority of California jobs (I can't remember the number but it's high) are in small business who are renters. Building owners are already dealing with pretty high vacancy rates. I work part time in a building that is 50% empty. We are about to move to a larger space because of a big increase in business. If prop 13 went to split roll our building was not here in 1978 so it is not "grandfathered". It may have been sold in the past 5 years, probably was. I don't know what the impact would be but it wouldn't be good. Most of the pre-1978 buildings are factories that are closing or public utilities that are already insolvent from the Davis energy meltdown. It would be chaos.


"Yet, at the same time, you maintain that prop 13 really doesn't have much impact on local government."

No because they get mostly residential property tax and sales tax revenues. The state screwed everything up in 91 by taking most of the property tax money away and replacing it with general fund payments plus sales tax. That has led to the unholy scramble for "big box" stores. They don't depend on it and it has been climbing anyway.

"Hmmm, a disastrous increase in tax payments if prop 13 is changed, but no impact on local gov if prop 13 stays."

Businesses would be impacted by rental chaos if the building owners had to adapt to a big increase in property taxes.

"But, I'll go with your criticism of gerrymandering. The REAL problem is not gerrymandering per se, but the fact that the courts have accepted that protecting incumbents and increasing party power is a legitimate basis for redistricting decisions."

They have tried to stay out of it except on civil rights grounds like "one man one vote". When an initiative tried to turn it over to a panel of retired judges, Willie Brown got an other duplitious initiative campaign to fool the public into voting it down. Sort of like the 56 campaign.

" I maintain that both goals tend to diminish voter rights"

We should go to districts that are topologically structured to have minimal perimeters with equal numbers of voters.

Hope that helps.

Posted by: Mike K at February 24, 2004 03:33 PM | PERMALINK

Businesses would be impacted by rental chaos if the building owners had to adapt to a big increase in property taxes.

So don't make the adapt to a big change in property taxes. Phase it in. Over ten years, say. The first year, the if the assessed value is over the Prop 13 maximum basis value, the tax basis is the Prop 13 basis + 10% of the difference. Next year, same thing + 20% of the difference, instead. Etc.

Actually, I'd prefer phasing into full value basis for all property, with some kind of system of personal exemptions or some other system to prevent people from being driven out of their homes.

Posted by: cmdicely at February 24, 2004 04:25 PM | PERMALINK

Prop. 13 was a terrible idea that only passed because of voter anger over legislative foot-dragging. But the idea that doing something about Prop. 13 would automatically mean going right back to where we were before is idiotic. Why can't we come up with a property tax that doesn't squeeze old people out of their homes while at the same time does introduce some fairness and equity into the system for people who are trying to get into the housing market? Where is it written that a rollback of Prop. 13 means doing nothing about the problems it tried (badly) to solve? (I mean, where is it written except in the neofascist screeds of the Howard Jarvis clones)?

Posted by: Temperance at February 24, 2004 04:32 PM | PERMALINK

"Jerry Brown, on California Connected's 4-governor discussion, said his biggest regret was not lighting a fire under the legislature to hurry through a property tax relief bill. He'd introduced the bill 18 months before Prop. 13, and 18 months later the legislature were still dicking around with it."

NOW he tells us!

"We should go to districts that are topologically structured to have minimal perimeters with equal numbers of voters."

This is close to my own idea, which is simply to require that any two districts within a state must have a border consisting of either a single line of latitude or a single line of longitude. This is a nice, simple, easily understandable formula that by itself would eliminate about 99% of gerrymandering.


Posted by: Bruce Moomaw at February 24, 2004 10:15 PM | PERMALINK

Where I live (SF Bay Area), even no-frills 50-year old shacks on small lots with less than 1500 sqft living space (often just 2 BR) in average locations start at around $500K. More decent dwellings go for 7-800K+. Condos from around $300K. (No offense please anybody if you own something in that region.)

Many people who bought recently (after '98-'99) not on big stock proceeds but on employment income are stretched to the limit, and often enough depend critically on two incomes. I imagine that any tinkering with property taxes or mortgage interest deduction would push quite a few of them over the edge. Also what about the people who bought an OK house some decades ago in a location that is considered desirable today, worked hard to pay it off, and now live on fixed retirement income? Their house could easily be valued at around a million or up. It's not just the rich owning expensive houses here. If you don't intend to sell, it's just paper wealth.

A change in property taxes would surely be figured quickly into house prices, but that does not help the first wave of people who have to sell out. It's only massive selling that will drive prices down.

I don't see a good solution. Prop 13 has been critically figured into everybody's calculation. Perhaps a progressive or exemption-based scheme is possible.

It's hard to predict what would happen if expectations of scrapping prop 13 or mortgage interest deduction set in. A tax change may have a small direct impact, but may create way more damage by creating the expectation of more to come.

I'm not a homeowner, but I'm far from watching things smugly, as this is something that will fundamentally affect the whole state and everybody depending on it as a consumer market.

Posted by: cm at February 24, 2004 11:11 PM | PERMALINK

Some good interviews re: Bond Measures on Larry Mantle's show on KPCC....

http://www.scpr.org/programs/airtalk/

Posted by: jillian at February 25, 2004 10:18 AM | PERMALINK

Yeah, housing is like that in the LA areas I've looked at lately too. And all these fancy apartments are coming up and rents going crazy I think in part because people can't buy.

Full Prop 13 rollback is a non-starter, but there are holes a willing legislature could close, somehow. I don't own, and I know nothing about property taxes, but California income taxes and sales taxes seem *very* high to me.

If that's all to compensate for extra low prop. tax, let's just write an initiative tying rollback of parts of Prop 13 to a rollback of some of the sales, income, or car taxes. :)

If, as I suspect, it's also largely because the voters will approve all sorts of horrible initiatives as long as they're spun right - excessive bonds and spending restrictions and bureaucracies for watchdogging everything, nothing short of smarter voters or massive reforms to the direct democracy system will help. I will miss direct democracy though, it sure is exciting.

Whatever it is, we need to wrap it in a proposition and spin it well, and keep trying slight variations on it until it passes.

I'm gonna start by voting against the school bond, for the blank check proposition (although I think they will raise taxes and I think they're wrong), probably for the Arnold bond (the idea of screwing with the government and refusing to validate the Terminator is tempting, I think the reality would suck suck suck), and I'm gonna do more research on the balanced budget thing after what I've read here, but I lean towards it's-useless-but-yes.

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Posted by: Can I Call You Daddy at February 27, 2004 08:13 PM | PERMALINK

I live in Irvine, unfortunately I rent. I see so many problems right now. People are pissed about Prop 13, because it hamstrings spending. And of course, artificially keeping property taxes low contribute to the highly inflated housing market we have here. But then raising property taxes will cause a housing crash, which will screw a huge number of people very badly at the same time.

I've got a solution for all of this. I'm trying to get the hell out of here. For the guy asking what business is moving to Nevada, I'm not an anecdote. Although I'm an employee, not an employer, I'm fed up with taxes, housing costs, our ludicrous government, and the general attitude of people I've come across. Voters here are stupid. Initiatives that ask for more money and more services *always* pass. Yet when the time comes to pay for them, they don't want higher taxes, except on "the rich". I don't know what "rich" is, but an income of about $40K puts you in the 9.3% tax bracket. And that coupled with the high sales taxes here, coupled with regulation costs, coupled with housing costs (artificially inflated by Prop 13) simply means I cannot afford to live here. I want to be in a place that we can afford for my wife to stay home with kids (when we have them), and that will never be possible here.

My votes today:

No on Prop 55: If they can't make do with the BILLIONS AND BILLIONS they already get every year, why don't we write a proposition for accountability rather than just throwing more money?

No on Prop 56: I don't care about withholding their income, or reducing the budget process to 55% majority, but the LAST thing this state needs is to increase more and more taxes. It's a bloated, inefficient wasteland, and again, let's get some accountability and efficiency and we can give the same services for less of a burden.

No on Prop 57: Starve the beast. If CA comes crashing down, all the better. We need something really bad to happen to wake people up. Of course, I'm trying to leave, so maybe I'm jaded.

No on Prop 58: A balanced budget amendment won't help CA. Stupid voters will always prefer a "temporary" tax increase to fix a budget shortfall. And as we all know, legislators will always find "temporary" solutions (see Prop 57) to fix permanent problems (overspending).

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