ALL SMOKE & MIRRORS: Schwarzenegger missed his golden opportunity to give Californians the truth

He promised to make it work by cutting 'waste, fraud and abuse.' It was never that easy. The real solutions are obvious, though.

Michael Hiltzik: from the LA Times

 

 

Mark Wilson / Getty Images | California Gov. Arnold Schwarzenegger talks to the media in Washington. He says he will ask President Obama for flexibility in the cuts that California needs to make.

May 21, 2009  - Page One/Column One - Marx Brothers fans will recall that the political philosophy of Rufus T. Firefly in "Duck Soup" boiled down to this:

"If you think this country's bad off now, just wait 'til I get through with it."

I've often considered that to be the secret slogan of Arnold Schwarzenegger's administration. (Just substitute "this state" for "this country.") After Tuesday's election, it's no longer a secret.

Schwarzenegger had the kind of voter support in 2003 that would have allowed him to tell the voters the harsh but necessary truths about California governance and force real reforms down their throats.

Instead, he uttered the same lies about state government and proposed the same nostrums as many of his predecessors: Californians are overtaxed and underserved, the budget can be balanced by cutting waste, fraud and abuse, etc. Like everyone else who has made these claims, he never delivered on his promise.

His cut in the car tax cost the state $3.6 billion per year, making him directly responsible for pretty much all of today's $21-billion budget deficit.

He hoped he could avoid reaping the whirlwind sown by these cliches. Unfortunately, Tuesday was Harvest Day.

Let's list a few of the lies he and our other political leaders have peddled about California's government and examine how they contributed to this week's debacle at the ballot box.

The most onerous lie is that Californians are burdened by the highest state taxes in the nation. The truth, according to 2006 figures derived from the U.S. Census, is that as a percentage of all personal income, California's tax and fee schedule ranks 18th in the country.

Then there's the canard that we unfairly soak our rich. This is supposedly a no-no, because the rich might flee, taking with them their sterling job-creating potential.

The dirty little secret, according to Citizens for Tax Justice, a left-leaning nonprofit group, is that California's wealthiest residents shoulder the lightest burden of any income group in the state. The top 1% of California income-earners (average 2007 income: $2.3 million) paid 7.4% of their income in various state taxes last year, counting the federal deduction for state taxes. The highest rate was paid by the poorest residents. Those earning $20,000 or less, with average income of $12,600, forked over 10.2% of their earnings in sales, excise, property and other levies.

This year's budget deal increased the disparity, raising the effective rate on the rich to 7.8%, but that on the poor to 11.1%.

The theme of the ballot campaign was that the state's chronic budget gridlock could be solved by more gridlock and more borrowing. All lies.

By no means does the governor deserve all the blame for the budget fiasco. Democrats and Republicans alike have abandoned any claim to statesmanship in Sacramento.

And what of the business community? Big corporations, entrepreneurs and mom-and-pop stores all have a huge stake in functional state government.

Yet the state Chamber of Commerce traditionally has offered one nostrum for California's budget ills: Cut taxes. But since it also claims to support better education and improved infrastructure, its approach has simply amounted to throwing the hard challenges back into the laps of a nonfunctional political establishment.

The truth is that real solutions to the budget crisis are obvious.

One: Eliminate, or at least loosen substantially, the two-thirds legislative requirement to pass a budget or raise taxes.

This rule has allowed a small Republican minority to hold up all budget progress unless its reactionary program is incorporated in the deal. If the supermajority were pared back even to 60%, the minority lawmakers would be unable to block a budget unless they could enlist at least a few moderates in their cause. The improvement in the tone of legislating would be immediate.

Two: Remove legislative term limits. This ridiculous provision has reduced the Capitol to a nursery full of would-be legislators needing afternoon naps. Worse, it has sapped legislative leadership of its vigor.

Since mid-1995, there have been nine speakers of the Assembly. Over the previous 20 years, there were two, including Willie Brown, the original target of the term-limit movement. You want to tell me that government in Sacramento has improved since then? As long as term limits exist, we'll never have a 21st-century state government.

Three is the Big One: Revise Proposition 13. Prop 13 is often described as a tax-cutting measure, but that scarcely does justice to the damage it has caused.

By rendering the property tax useless as a revenue device, Prop 13 hit local governments especially hard. Key budgeting authority devolved from cities and counties up to Sacramento, where they have to compete with the state government for money. You want your streets paved or more teachers for your third grade? Stand in line behind the health department, or the corrections department, or Caltrans.

So city streets deteriorate and local schools get worse. Police and firefighters are laid off. All the places where the voters come into face-to-face contact with their governments crumble.

The result? Voters get more cynical, more convinced that government is expensive and useless. It's a vicious circle -- the more government is unable to do the things voters want it to do, the less faith the voters have in government and the less they're willing to spend on it. Which leaves it with less money to do the things voters want. And on and on.

Reversing the worst effects of Proposition 13 doesn't take rocket science. Commercial property should be subject to regular reassessment -- the "split roll" that, inexplicably, can't gain traction in Sacramento. Cash-strapped homeowners can be provisionally protected from the burden of higher residential assessments -- say by allowing some assessments to be deferred until the home is sold.

Plainly, local government needs to recover its authority to collect revenue directly. That would help our political leadership make the case that, considering the quality of the services and institutions state and local government provide, Californians aren't overtaxed but undertaxed -- and the wealthy are the most undertaxed of all.

If Tuesday's election proves anything, it's that California's political sacred cows all need to be herded into the abattoir and dismembered, once and for all.

Breaking the cycle that has brought us to this pass will take political courage and real statesmanship. California's voters have been trained for too long to think they can have roads, schools, universities, clean air and other amenities without paying their true cost. The task of our next generation of leaders will be to show that California is not ungovernable -- it's just been ungoverned.