Will California Tax Itself to Prosperity?

Austin Hill

1/9/2011 12:01:00 AM - Austin Hill

“It’s a matter of ideology trumping reality…”

That assessment came from Syndicated Columnist Tony Blankley. It was Christmas Eve morning, December 24th, and we were each guest hosting local shows at Washington, DC’s 630 WMAL talk radio.

I was in to cover for vacationing host (and former Congressman) Fred Grandy in the early morning “drive time” hours, while Blankley was filling-in for DC favorite Chris Plante during the late morning (9a-12n Eastern) show.

I had asked Blankley to join me in-studio for a segment on my program, and to talk about a place we have both known and loved, California. While I was born and raised there, Blankley, a native of the U.K., spent some of his youth and young adult years in the Golden State. And we were both marveling – in a “troubled” sort of way – at the amazing ability of California leadership to ignore its very serious problems.

As if the $6 billion budget shortfall that he presided over didn’t really exist – a deficit that is expected to expand to a whopping $24.5 billion over the next eighteen months - outgoing Governor Arnold Governor Schwarzenegger had just called the legislature in to a “special session,” but then had called a press conference to announce his “really big plan.” For a second and final time before leaving office, he was going to try and legislate a state-wide ban on plastic grocery bags. This, he explained, would help save the planet, but would also help create so-called “green jobs.”

Indeed, this was a matter of “ideology trumping reality.” And never mind that Rome is burning -California will “be green.”

But that was last month. Now, a guy who was Governor for eight of my elementary, junior high and high school years is Governor yet again. A perennial government employee, Jerry Brown is back in Sacramento, and it looks like his third term is going to be as ideological as ever.

To be fair, I must admit my tremendous respect and admiration for our “new” Governor. At age 72, Brown is (amazingly) just as articulate and energetic and erudite as he ever was. In many ways he seems like he’s more at the “top of his game” now than when I was a kid. But his energy and mental sharpness aside, Jerry Brown is a big-government liberal – and right now, California desperately needs to move in the direction of New Jersey (especially given current Governor Chris Christie’s success at cutting government spending), and not in the direction of Greece.

But ideology still trumps reality in California, even in this new, “post Arnold” era. And so it was that, less than twenty-four hours after his inauguration, Governor Jerry Brown began laying the groundwork for raising taxes in California, rather than cutting government spending.

The problem with the state budget, so the Governor reasoned, was not that politicians had spent too much or that government agencies are wasteful. No, no, Californians aren’t taxed enough – they’ve been given an “unfair” break on their property taxes via the state’s famous, 32-year-old “Proposition 13,” and if that could be undone, then the state budget would be fixed.

Proposition 13, in case you’ve forgotten, was a landmark ballot proposition that drew a record number of voters to the precincts in 1978. The law passed in a landslide, and imposed a statewide limit on the rate at which local counties and cities could levy property taxes.

I remember the fight over Proposition 13 quite well. I recall the night my father and I attended a special “informational meeting” at my elementary school, presented by my school’s Principal. “If Proposition 13 passes,” the Principal reasoned, “we won’t have enough money to afford textbooks and classroom supplies…some schools in our district might even have to close down..”

“Ma’am, with all due respect, you don’t have enough text books now,” my father replied, “and property taxes have been escalating in our county for twenty-five years. The problem is not a lack of funds, it’s a mismanagement of funds…”

My late father, whether he knew it or not, was creating a “teachable moment,” and it was an economics lesson that I never forgot. My school’s Principal, of course, was doing what government employees typically do, and arguing for higher taxes and more government spending. And she was using the same “talking points” that Governor Brown had been using at the time, as he traveled up and down the state begging for a “no” vote on Proposition 13.

Yet after the proposition’s landslide victory on June 6 of 1978, Brown changed his tune, agreed to realign California government in such a way as to comply with the property tax limitations, and thus won re-election handily in November of that year.

Today, Governor Brown oversees a state debt that is more than twice the size of California’s annual operating budget back in the late 70’s. And it seems that the “early 1978” version of Jerry Brown is about to re-emerge.