When Democracy Doesn’t Work

I live in California.   I wouldn’t live anywhere else.  Great climate, great people, wonderful cultural venues…oh did I mention?  GREAT CLIMATE!

There are a few negatives:  Too many people agree with me, so it’s crowded and expensive to live here…unless you bought your pad 50 years ago, as I did.  And then, there’s Proposition 13…passed in 1979.  It limits property taxes and fixes it so those evil tax-and-spend Democrats can’t raise taxes without a 2/3 majority in the California Legislature.

Now, Democrats hold a substantial majority of the seats in the Legislature…usually between 55 and 60%.  But California Republicans are a curmudgeonly band.  They have all taken a “no new taxes” pledge.  In fact, they had to do that to get the support of their party.

That wouldn’t be so bad if it weren’t for the California Initiative process.  California law allows the people to bypass their elected representatives and enact laws by direct referendum.  Laws voted on by referendum require only a simple majority to pass.

One more thing.  The California Constitution prohibits budget deficits.  The annual budget must, by law, be balanced or run a surplus.  Are you starting to see the problem yet?  Let’s say the Legislature tries to pass a bond issue to fund school improvements.  The bond issue, which requires funding to service the debt…interest and principal payments…must include a revenue source.  That means new taxes…or cuts somewhere else, and that is not usually feasible.  But Republicans stonewall the tax increase, so the bond bill fails.

Not to worry…a group of concerned citizens starts an initiative to float a bond to raise the money.  They get the required number of supporters, and it appears on the ballot in the next election.  And it passes!

So now the state has a new obligation, but no money to fund it.  What to do?  Well, take the money from somewhere else…maybe from the water system.  Water is a big problem in California, and we spend a LOT of money providing water to our huge cities that are mostly surrounded by oceans and deserts.  Neither one is a good source of drinking water.

So then the water system is starved for money, so another group of citizens starts an initiative to for a water bond.  And they get the required number of petition signers and that measure appears on the next ballot and passes, again with no money to fund it.

And so they borrow the money from…I think you get the picture.  It’s called “Robbing Peter to pay Paul.”  It is a form of Ponzi scheme.  We have been doing this since the passage of Proposition 13, and the results have been total disaster.  Our schools, from primary through the University of California, have been starved for funds.  The quality of our educational system has fallen from the best in the nation to very close to the worst.

How did this happen?  It seems pretty obvious to me.  Any financial obligation proposed in a proposition should include a means of fulfilling that obligation.  The two should go together, be approved together, and require the same public or legislative approval majority.  It makes no sense for a simple majority to approve an obligation and a two-thirds majority to raise the money to pay for it.  It is absolutely absurd!  There is no other word for it.

How did this come to pass?  Well, by an initiative, of course, that required only a simple majority to pass, but imposes the requirement for 2/3 majorities for tax increases.  Is it only obvious to me that a simple majority should not be able to impose such a requirement?

Now, here’s the really ironic part.  A lot of older folks like me are benefiting hugely from Proposition 13.  It limits property taxes to 1% of property value, and the assessed value is based on its 1975 value, with only small annual increases allowed.  Needless to say, my house has appreciated significantly since 1975.  Even with the recent meltdown in property values, my taxes are around 0.2% of its current market value.  Most of my neighbors have bought their houses more recently and they pay 4 or 5 times as much as I do on houses of comparable value, because when a house is sold, it is re-assessed at current market value.

No California politician dares to touch Proposition 13.  To do so would be political suicide.  Once a tax break like this is established, people will scream for the head of any politician who even talks about abolishing it…but that is what we must do if we are going to survive as a state.  The current situation is untenable, and can only result in fiscal ruin and bankruptcy…or the total collapse of the state government.

Postscript

I wrote this a few years ago when things looked particularly bleak.  Since then, the sun is peeking out of the clouds.  Political districts have been reapportioned throughout the state on a nonpartisan basis, eliminating many gerrymandered seats.  The result, because of the large and growing Democratic majority in the state is that Democrats now have sufficient votes to pass tax increases without any Republican votes.  In effect, the intransigence of the Republican Party in California has reduced it to virtual political irrelevance.

Of course, right wing pundits immediately predicted huge deficits run up by “tax and spend” Democrats, but that has not happened, and the state is on the way to a fiscal surplus!

For the moment, at least, California State Government works again.  But the economic distortion caused by Proposition 13 still persists.  Sooner or later, we have to fix it.

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