Looks like right now, the state is well and truly screwed:
The state of California — its deficits ballooning, its lawmakers intransigent and its governor apparently bereft of allies or influence — appears headed off the fiscal rails.
Since the fall, when lawmakers began trying to attack the gaps in the $143 billion budget that their earlier plan had not addressed, the state has fallen into deeper financial straits, with more bad news coming daily from Sacramento. The state, nearly out of cash, has laid off scores of workers and put hundreds more on unpaid furloughs. It has stopped paying counties and issuing income tax refunds and halted thousands of infrastructure projects.
Twenty-thousand layoff notices will go out on Tuesday morning, Matt David, the communications director for Gov. Arnold Schwarzenegger, said Monday night. “In the absence of a budget we need to realize this savings and the process takes six months,” Mr. David said.
I haven’t followed the internal politics of California closely, so I really have only a passing knowledge (translation- I only know what I know from national news sources), but I am aware there is some law that was passed that makes it nearly impossible to raise taxes and that the Republican minority seems to run the show. If that is an inaccurate perception, or if you have more to offer, fill us in in the comments.
At any rate, with the suspension of infrastructure projects and the pinkslipping of tens of thousands of employees, they are costing themselves even more money in the long run:
Even stranger math: The Senate Transportation Committee held a hearing not that long ago where Caltrans director Will Kempton explained that 276 infrastructure projects are going to be suspended tomorrow to save $3.7 billion dollars and prevent the state from defaulting on its loans. But as John Myers of KQED Capitol Notes explained, even stopping the projects costs money:
Kempton: will cost $199 million to shut projects down, $192 million to restart them.
Thus, not only is California a mirror of the cycle that is playing out nationwide- people are losing their jobs or worried about losing their jobs, as such they are spending less money in attempts to save, causing more businesses to not make money and they lay off employees, meaning there are more people with less money and worried about their future, etc., but it also seems to be falling into the cycle that we see played out all the time in poorer communities. In rural areas of WV it is not uncommon for people with inadequate resources to stay mired in poverty forever, whether it be because they do not have the money for transportation, education, or even to purchase the appropriate attire for work, they borrow money from pay day lenders at astronomical lending rates and get deeper in deeper in debt without making any steps forward, and they slowly spiral downwards. This plays out across the spectrum in poor areas here- people are too poor to purchase health insurance, thus have inadequate health care, thus they ignore smaller health issues until they become larger more expensive health issues. Long story short, there is a reason they call it the cycle of poverty.
At any rate, the comparison may not be perfect, but I am not sure how California will fight its way out of this mess. In recent weeks there have been stories about court orders requiring prisons to release convicts because the state has allegedly been unable to provide adequate care, and this is brought on in part by the massive prison population and the never-ending budget crisis. According to the Center for American Progress, California was slated to get 60 billion from the stimulus bill (and I do not know what version of the bill that map is based on), and you can see how the stimulus bill is really just going to be a temporary stopgap to avoid total disaster. A point for Krugman, if you will.
If you have more info, fill us in. It is worth noting that on top of all of this (in fact, perhaps a leading cause), is that California is ground zero in the current housing crisis.
El Cid
Why are they worrying? With no budget, maybe they’ll have to shut down the government.
Once California shuts down the government, human freedom will vastly increase, the entrepreneurial spirit will explode into action, and flowers and handgun ownership will spread from Northern to Southern California.
It’ll be paradise, no?
Billy K (D-TX)
True, but California has had trouble balancing their budget for years. There is something intrinsically wrong with their finances. I don’t know what it could be, but considering they are the 8th largest economy in the world, one would think they should have some money in a mattress somewhere.
wilfred
Spoken like a red, John, bravo. Btw, they also call it capitalism.
Hard times makes for real politics, not this repulsive factionalism that we call politics. The 1930’s was a great period of personal and political awakening in the US – let’s hope we see Americans start to ask real questions again.
robertdsc
The state Constitution requires a 2/3rds majority to pass a budget. Unfortunately, the minority are Republicans who worship at the altar of Grover Norquist. No new taxes is the order of the day. Every day. Forever.
My state is screwed six ways to Sunday.
Michael D.
@Billy K (D-TX):
Worth noting that the US, as a whole, is the largest economy in the world. Now, where’s that mattress again?
Ed Marshall
It’s not their finances, well, sort of it is. It’s a constitution that requires a 2/3 majority to raise taxes or pass budgets coupled with a referendum system where voters pass spending measures that have to be obeyed at the expence of whatever else. I don’t know what the mechanism is for calling a constitutional convention there but they need to get started about five years ago.
4tehlulz
>>there is some law that was passed that makes it nearly impossible to raise taxes
Prop 13
This combined with a habit of mandating spending with ballot initiatives has left California completely fucked.
Mr. Poppinfresh
@Billy K (D-TX):
Part of the problem is that California uses a uniquely aggressive Proposition system, whereby any stupid fucking idea in the world can be put forward and voted on. A surprising number of them go something like, "Do you want to see the Government of California plant a money tree? Free money for everyone!" People being stupid, they (unsurprisingly) vote yes on a lot of these things, and since the Republicans cock-block tax increases no matter what the fiscal situation is, you end up with upward budgetary pressure on a stagnant fisc.
Ed Marshall
Oh, 2/3 majority to call for constitutional convention…
Well, you guys are fucked unless you can figure out a way to toss three republicans out somewhere and get 2/3’s of the damn state.
The Moar You Know
Lifelong California resident here weighing in:
The law was Proposition 13, you are precisely right as to who is running the show, and the problem is systemic and has been in place since 1978.
A string of Republican governors in debt to the California prison guards union (the largest union in the state of California, and the single largest consumer of state funds – we spend more on our prison system than our entire educational system, UC, CSU, community colleges and K-12 education combined) and a Democratic Assembly and Senate in the pocket of developers, the California Teacher’s Union, and every other special interest group out there has voted raises for everyone and tax hikes for nobody for the last twenty years.
What could go wrong?
Next stop: we’re going to declare insolvency. It could take three months or possibly as long as twelve, but mark my words – California is going under. Not if but simply when.
Mr. Poppinfresh
@Ed Marshall:
Fortunately, California also has a uniquely aggressive recall system. Watch for targeted recalls on vulnerable Republicans (if there are any- Orange County sucks) in the near future.
EconWatcher
California also has an incredibly well-funded and aggressive prison guards’ union, which effectively controls sentencing policy in the state. (If you can think of anything more messed up than that, I’d love to hear it.) So they’re wasting vast amounts locking up nonviolent felons for life under the "three strikes" law, as well as incarcerating marijuana possessors, etc.
Great place to visit. Wouldn’t want to live or raise my daughter there.
Karen S.
The cycle of poverty you describe, John, is what I have seen here as a lifelong Chicago area resident. The more uncharitable among us — often blinkered, middle class suburbanites — have particularly nasty things to say about the character of Chicago’s poorer, mostly black and Hispanic, residents. Because our elected officials have for too long lacked the will or the courage of whatever convictions they may have, the cycle has been allowed to become a seemingly permanent feature of these communities. Maybe now a much wider cycle of poverty is taking hold over a broader swath of our population. And maybe then, something substantive will be done to break it. A girl can dream, can’t she?
vishnu schizt
Grover Norquist is reading this news and in the words of Weezer, wrestling with Jimmy, pinning him soon, I’m sure he’ll wrestle later again today.
Viva la revolucion! Well soon live in Republican paradise, no taxes, no government, just a stupid, ignorant and armed population, barefoot and pregnant women, church bells a ringing and police asking for your papers.
My advice: Stock your pantry and store water. Read about Germany circa 1918……
The Moar You Know
@Mr. Poppinfresh: This = truth.
2/3 also required for any new taxes. And those GOP seats aren’t going anywhere; California, as anyone who has lived here a long time can tell you, shouldn’t be one state; you’ve really got five (Southern California coastal, Inland/Desert Empire, Central Valley, Bay Area, Northern California rural) with vastly different politics and governmental needs.
Robin G.
Perhaps the California GOP is banking on the Second Coming?
ThymeZoneThePlumber
This is what you get when the citizens have drawn the bath and wrestled government into the bathtub and held its head under water for a time. Californians have voted for three decades against each others’ interests. They want services and refuse to let the government raise revenue. Oops!
Nothing that can’t be cured with some more tax cuts.
Maybe Californians now are going to question the wisdom of electing not one, but two movie stars to the governorship?
Let’s go for three. Is Jon Voigt available?
alvah halle
…..Ah, Kalifornia.
Over a generations worth of time in the "progressive" petrie dish.
So much to show for it.
Lived and payed massive taxes for thirty years.
I pulled up stakes toward the end of last year.
All comments prior to mine say 1/1,000 th of the problems sliding a once pretty good state into the Pacific.
I truly believe that california is the absolute template of the shitstorm to come for the rest of the republic in like or similar forms.
Pitchfork time.
Brian J
That was both hysterical and sad. It’s also why, if memory serves me correctly, that I defended Gray Davis when he was governor, not because he was such a great guy (he wasn’t) but because he was in a situation that nobody seemed they could get out of. This includes the Governator, who promised to increase spending, cut taxes, and make the budget problems go away.
Kris
@Billy K (D-TX):
Yes, the problem with CA is that we cannot raise property taxes. When cities such as Stockton have foreclosure rates above 50% how is the city supposed to survive? They turn to the state to give them loans and then the city can’t pay it back and the state isn’t collecting enough taxes itself.
It’s a vicious cycle and it has been a problem for decades but because we have had a couple of booms (at which point the state should have addressed this problem when they weren’t in as deep of a hole) the problem was allowed to grow and grow and now we have a financial disaster.
chriskillian
I’m another (mostly) lifelong Californian here, and this topic has me steamed enough to de-lurk long enough to comment.
The only way California can fix its finances is to amend the state constitution and completely redistrict the state. Right now, it isn’t just that the Republican minority has safe districts and no reason to compromise; everyone has safe districts and no reason to compromise. Couple that with the 2/3rds majority requirement to pass a budget and you get a state with a systemic partisan gridlock problem. We desperately need to eliminate the proposition system as well: experience has shown again and again that, no matter how poorly reasoned or intentioned, a ballot measure can pass if enough money is thrown at it.
To sum up: a system that allows voters to pass disastrous fiscal propositions like Prop. 13–as well as disastrous social propositions like Prop. h8–a ridiculous 2/3rds majority requirement that encourages the tyranny of the minority, and a gerrymandered patchwork of districts that guarantees hyperpartisanism are all now working together to bankrupt the state.
Recalling the people we elected won’t make any difference. The districts they came from will just send back another of the same, and the Governator isn’t the problem. He’s not perfect, but I like him and he’s at odds with his party often enough to convince me he’s sane.
Brian J
The biggest problem with all of the projects being cut or delayed is that they are probably worthwhile projects, not building a fountain somewhere where it would be less than useless. In other words, these seem to both pump money into the economy for the long term, and now, not only are they going to cost more, they aren’t going to come about at the right time.
As for a solution to all of this, is there any way to un-gerrymand the districts so that, even if the Democrats lost power for some cycles, they’d have a better chance at eliminating the nutcases from red districts by replacing them with fellow Democrats, or at least with conservatives who are sane?
liberal
@Billy K (D-TX):
It’s pretty obvious what it is. It’s Proposition 13.
You can’t give away money to landowners for doing nothing for decades and not expect to pay a price.
TheFountainHead
Yeah. A Constitutional re-write is about the only thing that can fix California at this point, and this coming from someone who grew up there and loves the state. But it’s fucked.
Zifnab
I don’t understand how California has even made it this far. You’d think the Dems would be running repeals on Prop 13 every election for the last 30 years. :-p Even Texas isn’t that crazy.
4tehlulz
>>California is going under. Not if but simply when.
And the mother of all economic meltdowns begins.
Mr. Poppinfresh
@chriskillian:
I was literally just about to make the same point, but felt it was a bit too obvious given the recent revelations about New York’s state government. At this point, what state isn’t gerrymandered to hell and back?
Still, chriskillian is right, this is largely a result of Democrats and Republicans who are both in districts that reward intransigence and stupidity. San Fransisco vs. Orange County… not a match any sane person wants to be caught between.
Honestly I don’t know why anyone lives in that shithole state anymore.
liberal
@wilfred: @Mr. Poppinfresh:
Well, one good thing to come out of it is the lesson that "direct democracy" is a really stupid idea.
thomas
I’ll take the stoopid crap my Illinois politicians do any day over the nonsense of rule by proposition.
I have five words for that caused this problem: Ronald Rayguns and Harold Jarvis.
Reverend Dennis
@Zifnab:
In most of our state’s gerrymandered districts a candidate must run all the way to the right or to the left. That leaves the middle as a no man’s land. The impartial redistricting called for in Prop. 11 may change that or it may not: California is a layer of Blue over a core of rich, Red-state wingnuttery.
liberal
@Zifnab:
Unfortunately, the Dems are largely in the pocket of landowners, just like the Republicans.
If you look at the fraction of state and local revenue coming from property taxes over the last few decades in the US, it’s in decline.
ThymeZoneThePlumber
@TheFountainHead:
Well, almost. Government reforms will enable long term stability.
Short term, California needs federal money, immediate relief. If the state had a real governor, they’d be working right now to get it.
Emma Anne
Colorado is in a very similar bind. All tax increases must be approved by voters. Worse, the amount of money the state can collect is capped, so in good times we don’t get to collect more. Even worse, there is a ratchet effect, so during bad times, the amount to be collected ratchets down.
We have had some relief for the past few years because a proposition passed that temporarily removed the ratchet. But that is about to go away.
Finally, we also have the initiative process here, so guaranteed amounts go to public schools, roads, etc. That means anything not guaranteed or mandated is about to be zeroed out – e.g. higher education. The FF’s were wise to worry about direct democracy. It’s teh stupid.
The stimulus package may help. We’ll see.
wilfred
The problems are systemic, whether due to the Proposition system, gerrymandering, or what have you. In any case, systemic and not situational.
The same could be said of American government at a national level, no? Crisis is the breeding ground of opportunity. How about some non-linear thinking for a change? It certainly won’t come from Sacramento or Washington.
alamacTHC
It was Howard Jarvis’s Prop 13 that effed California:
http://en.wikipedia.org/wiki/California_Proposition_13_(1978)
I remember when it occurred. There were predictions then that precisely this situation could happen. It took longer than most of us expected at the time, but the economic tsunami is finally here…
Comrade Dread
Another California resident, and I wouldn’t have a problem with the current ‘solution’ if it didn’t involve hitting the poor and the middle class with sales and gas tax increases at a time that they can least afford them.
Anyone know what the law will be if California does go bankrupt? Are we going to have Federal bankruptcy judges come in and restructure the state budget and debt? Because that might actually be a better long term solution, at least until the legislature and governor screw up the system again.
Teak111
Well, looks like they need one friggin GOP vote to close the budget gap and pass the thing but that ain’t gonna happen. So as a result, 20,000 state employees (my wife prehaps one of them) get canned, 270+ state projects stop, and Grover Norquist has wood all day.
From the SD UT
But for residents it is impossible to know /understand what the budgets issues are and who is to blame, the dems and spending or the GOP and their no new tax pledge. Overall, it is a failure of CA leadership. Its also clearly the tyranny of the minority.
They told Arnold the state was ungovernable when he has elected, now he’s learning how true that is.
The Moar You Know
@Zifnab: You must know better; that would be political suicide. If there’s a way to get a negative percentage of the vote, this would be it.
sparky
@wilfred: i’d say they were both, but until now they were covered by a layer of fake free cash. now the tide has gone out, but i don’t see the kind of event you are talking about happening yet. wall street and main street are still waiting for the next boom to start up. until the psychology changes there will be no change. until that time the US will be held in the grip of zombie conservatism that still thinks (pretends?) it’s the 1950s.
ex a: GOP refusing to approve deal unless they get open primary (e.g., opportunity to screw the Ds). if this is their idea of politics maybe it is better to let the state go to hell and rebuild rather than make this situation even worse.
Comrade Dread
Especially given how fast property values were rising in the early part of this decade.
Can you imagine just how great that would look having a bunch of blue haired grandmas on fixed incomes on TV showing their property tax bills going from $750/year jumping to $4000-8000/year?
If you’re going to ‘restructure’ Prop 13, there has to be a better way of doing it than just going back to a status quo where lower and middle income people who can afford a house get eventually priced out of it because of property tax increases.
They could probably get a reform passed restructuring commercial property tax or property tax on non-residential housing.
KDP
As a Californian, I’d like to chime in a bit on Prop. 13. What many people don’t realize is that the tax increase limits were structured for application to both business and residential property. Property value is only reassessed by the county when a property is sold. This has had a disproportionate impact on residential homeowners as business owners find ways to structure the ownership of their property, so that even when the business is sold, the transfer of real estate may not register as a sale.
For a residential property, if I inherit the property or you add me to the deed in some way, then when you turn the property over to me, I am not liable for a new assessment that will result in higher property taxes. Most homes are not transferred in this way though; most homes are sold outright, so over the past 30 years there has been a steady increase in property taxes for homeowners, particularly during the recent boom when many homeowners took advantage of over-inflated home values to sell out at a substantial profit. If you paid $100k in 1980 and could sell for $700k in 2007, you could retire in comfort, and many Californians did exactly that. Of course, many Californians also borrowed heavily against that presumed equity, which has helped to fuel our foreclosure crisis.
Through the use of partnerships, holding companies and other legitimate methods for avoiding tax liability, corporate property owners have not seen the regular change of recorded ownership that has resulted in an increasing tax burden for residential property owners. When the mobile home park on which I pay rent changed ownership in 2007 after 35 years in the same family, the property value was reassessed for the new owners and their property tax burden went from $80k/yr to $450k/yr. Luckily for the park residents, who are liable for the increased taxes through their space rent, the new property assessment occurred summer 2008 as property values were already plummeting, or it is likely that the assessed value would have been higher. The most significant part of the increase in the assessed value was not the facilities and infrastructure, but the land itself. That level of increase to property tax income for the counties and municipalities is rare though, because, as noted earlier, commercial property does not change hands as often as residential properties and so its assessed value has not been adjusted over time.
In addition, as housing values have plummeted, there has been an ongoing reduction in property tax revenue as residential and commercial property owners whose most recent property assessments occurred within the past 8 years have requested reassessment based on the reduced property values. Prop. 13 had laudable goals in its attempt to minimize the tax burden on long-time property owners; however, it has had unintended consequences which, as noted by other commenters, has been a major factor in California’s ongoing budget woes.
Graeme
I live in SF, and I welcome this ‘crisis.’ I did live in CO, years ago, and I was all for the direct democracy of ballot initiatives until I watched Denver vote in a Comcast monopoly right before the dot bomb. It was then that I realized the only thing worse than a bunch of lawmakers who didn’t read what they were voting on is a bunch of citizens who didn’t read what they were voting on.
The city of SF is facing a huge budget crisis, too.
I think CA is the canary in the coal mine, but I’m all for it. Priorities need to be re-thought. Both the left and the right in CA seem to me to be promising a free lunch, and it’s working out just as you’d expect.
On the bright side, I’m currently taking classes at CCSF. For residents it’s only $20/credit hour. My books cost just about what it’s costing me to take classes, and they’re offering me all kinds of help on the assumption that I can’t afford the $147.
So… I guess it’s possible that the ‘cycle of poverty’ stuff you’re talking about could apply, but I’d have to see it to believe it. Hell, SF employers are pretty much required to provide health care for their employees. I’ve eaten at a couple restaurants (including the charming tranny showplace Asia SF) that include a surcharge to finance the insurance. There are a lot of lefty pie-in-the-sky giveaways here. That’s all well and good in flush times, but right now there’s going to have to be a re-thinking of the priorities.
That said, I’ve lived in Chicago, Denver, KC, and Louisville, and I love it most here in SF. As annoying as some of my neighbors are, I’m not leaving. This city is like a birthday cake in a funhouse mirror. Great weather, great access to so many fun and beautiful things, etc.
ChrisNBama
Can we nationalize California, fire the legislature and Governor, liquidate California’s assets, and start from scratch? :-P
OriGuy
The real problem with Prop 13 is that it affected both residential and commercial property. Property gets reassessed when it turns over, but commercial property, the real cash cow for most communities, doesn’t turn over very fast.
Graeme
Oh yeah… Before I started waxing rhapsodic about SF living, I’d meant to say they should start all the budget cuts in the districts of Dave Cox and Abel Maldonado.
They probably can’t do that, but it seems like that would be the best way to play some hardball.
Bill H
It doesn’t take 2/3 to pass a budget, unless the budget has tax increases in it; the 2/3 requirement is for tax increases. The Democratic majority thought they had found a way around that and passed a budget that had "fee increases" in it with a simple majority. Republicans were screaming bloody murder and the Governator vetoed it. The veto was quite proper, as it would have not passed a constitutional challenge.
The gerrymandering is so severe (not unique to this state) that general elections are irrelevant. Primaries, in which about 10% of voters participate, are the actual contests. That 10% are the activists, so the extremists win the primaries and are essentially unchallenged in the general. Thus you have a legislature that is much more polarized than is the population as a whole.
Then you have "propositions" which are so heavily funded by special interests that the only thing not used in advocating them is the truth. Propositions are mostly funded by bonds, and the advertising always includes statements about how the passage of the proposition "won’t raise your taxes one penny." ((Bonds, apparently, don’t have to be repaid, and they don’t accrue any interest.) The project itself is funded by a bond, but the ancilliary costs are always, oops, discovered after the proposition passes and are often more costly than the proposition itself.
Add the mentality of Californians who don’t want anything that they have to pay for, and who believe it when they are told that funding something by means of a bond issue means you don’t have to pay for it, and you have financial chaos.
And in the City of San Diego you have politicians telling the Unions that it’s a good deal that "We’ll double your pensions if you’ll agree not to demand a pay raise now." That winds up with an operating budget that limps along for another few years without having to go to the taxpayers for a tax increase, and then explodes into a $1.7 Billion unfunded pension fund liability and the Feds examining our finances. Not a problem for the politicians who did it, as they are no longer in office, which was their plan all along.
jcricket
Many states are heading to where California is now. WA state has one of the most regressive
The "tax revolt" lead by St. Ronnie in the late 70s/early 80s created a situation where it’s nearly impossible to raise taxes. Coupled with the initiative/proposition process (not just in CA, WA and OR have this issue) and you have all these unfunded mandates, or tax cuts without "consequences", etc.
Let’s also not be blaming the CA democrats (of the moment) for this current mess. They did offer a serious compromise. Something like $5 billion in spending cuts – many of those programs I’m sure are "near and dear" to their constituents hearts. It’s Republicans that are unwilling to compromise. The only solution is to basically cut $10 billion from the budget, no matter what the consequences.
I do agree that we should get rid of as much gerrymandering as we can. In this case if Republicans faced any credible challengers at all, they wouldn’t be running so far right (most Republicans in CA are to the right of their constituents, owing to the gerrymandering and primary challenges from the club for growth types).
At any rate, the solution to most of these problems is simple. It should be much harder to get an initiative on the ballot. I think it should be easier to raise taxes. And frankly, underneath it all, a return to more progressive taxation with higher exemptions for lower-income people would help too. Fundamentally, the era of low taxes has to be over, or we’re all California.
Comrade Dread
Probably because the people who feel tax increases the most are the ones that can least afford it. While the ones that can afford it can also afford to buy a legislator or two to make sure it doesn’t impact them as much.
jcricket
This sounds exactly like what happened with banks :-)
Voodoo economics, I tell you. I blame Republicans, Norquist, etc. for pushing forward such obvious bullshit that the debate has been poisoned for 30 years. But Democrats share in the blame, for failing to articulate the positive case for taxation and for not calling Republicans on their crap.
All those horrible European countries, with their higher rates of taxation, have such horrible outcomes like universal pre-K/day care, paid for family leave, mass transit that works, pensions that aren’t bankrupt, universal healthcare, etc. Sure, they face problems too – but I think on the balance, they’ve got the taxation equation closer to correct than we do.
liberal
@KDP:
It’s been understood by economists since as far back as Ricardo (hundreds of years ago) that the portion of the property tax falling on land (not on improvements) cannot be passed on to tenants. Of course, land’s total rental value can increase due to increased demand, but if more goes to the taxman, then less goes to the landowner.
Of course. With the now-notable exception of land bubbles bursting, land tends to appreciate in time. Capital improvements (like all capital) wears out and depreciates.
Handing out money to landowners by not taxing land as heavily as is practicable is a grave injustice, regardless of how long they’ve owned the property.
jcricket
That’s why I support progressive taxation. Especially given the fact that the top 5% and 1% are earning an ever greater share of income, while everyone else has stagnant wages.
I think things like property taxes are ok, but sales taxes are highly regressive. Payroll tax is even regressive,owing to the fact that rich people’s "wages" (both salary and stock sales) aren’t taxed at the same rate (SS wage cap, capital gains rate being so low). Progressive taxation, with much higher top rates (not the old 90% rates, but how about 40% above $250k and 50% above $1m).
Given the situation we’re in, I think Obama’s "cut taxes for 95%, raise taxes for 5%" is a good way to get people over the hump about raising taxes.
Bill H
@Graeme
Great weather? In San fucking Francisco? What are you, a duck?
Evinfuilt
I remember the Colorado initiative, it made so many people excited, they could stop all tax increases forever and ever. I’ve never understood why states push so many difficult questions out to the people where they vote with their wallet and the day. Everyday voters can’t be expected to make long term decisions (just like those financial geniuses that screwed up wall street, to make a buck today.)
I think its a human trait to look for short term gains, with long term losses.
Zifnab
@Comrade Dread: Doesn’t California have a god-damn income tax? I never understood property taxes. They seemed an archaic form of taxation. You’ve got an easily manipulated tax-assessor collector that goes around pricing homes at whatever value the state feels it needs to pay the bills. And you’ve got businesses that either make a killing by setting up shop on "cheap" land and running mail-order or residents getting screwed when the price of their one bedroom bungaloos skyrocket or plummet with periodic market changes.
Income taxes make sense. You get charged on what you make, and its a lot easier to price $50k than 50k acres.
Martin
True, however Prop 13 is also part of why we have the housing price bubble market that we do because there is no pressure on homeowners to sell from desirable locations. Go down to Balboa or Naples Islands and you’ll see 3-4 million dollar pieces of land with a shack on it paying at most $1000 per year in taxes because they were bought for $15K 40 years ago and stuffed in a trust for the family.
Property taxes do increase under Prop 13 but at such an anemic rate that it’s almost worthless. What they need to do is tie the increase to a long-term (say 10 years or more) moving average so that price spikes don’t kill people but that over time the taxes will continually approach the level of the neighbors. A long average will allow grandma to stay in the house for quite a while after retirement, but not forever. If the taxes are a burden, sell for the small fortune that the property must be worth to be generating those taxes, or reverse mortgage the place. It’s not like we don’t have solutions to this problem, and it’s not a problem unique to Cali.
bago
@Bill H: I love the constant drizzle in Seattle. Means Powder when I go ride. Oh, you don’t have 4 world class resorts withing 4 hours of you? BooHoo.
bootlegger
Gerrymandering is a nation problem, a national disgrace IMO. How can anyone rationally, i.e. non-politically, justify some of these multi-fingered shapes?
My solution is a national movement to amend the Federal Constitution and require that all districts have straight sides (unless a natural boundary) and no more than six sides. This bullshit has simply got to stop.
Brick Oven Bill
I have a theory that highly productive people are a benefit to the state, as they generally contribute more to the state in terms of taxes than they take from the state in terms of services.
The correlary is that non-productive people are a drain on the state, as they generally contribute less to the state in terms of taxes than they take from the state in terms of services.
Native-born California started leaving the state, on balance, per the U Haul data, starting in 2002, if my memory serves me correctly. They move to states with lower income taxes.
Cyrus
@ChrisNBama:
This would be a massively Phyrric victory. "Liquidate California’s assets" means selling off all public land and state parks and stuff. "Start from scratch," with a state, would presumably return it to the status of a territory, which, considering that territories have less representation in federal government, would disenfranchise a large blue state with a large Hispanic population, at least for a year or two.
bootlegger
@Brick Oven Bill: It is well-documented that states with no or lower "income" taxes collect the same revenues as high income tax states just through different means. The great California exodus was people cashing out their real estate and buying mansions in places like Idaho and Colorado. This trend, of course, is now over.
Graeme
@ Bill H
I moved here from Chicago, so 70 & sunny in January seems like paradise to me. I think the fact the temperature is stuck in a band between 50 and 70 degrees pretty much every day is great. Plus, there’s always something in bloom. I walk down the street in ANY season, and there’s something flowering. It’s gorgeous. I think watching the fog roll in over the cypress trees is cool, too.
It’s been raining all weekend, but that’s good because the state needs the water, and I’ll benefit from the snow in the mountains. I’ll get up there one or two days later this week.
I know all the SoCal people hate SF weather, but I like that I get to live in the ‘fridge. If I want 90 degrees in the summer, I can go to the beach, hit Marin, or go inland.
All that, plus city living. Little Star pizza is better than anything in Chicago, and I’ve eaten any pie you can think of in that city. Three great Indian places close by, the best Thai place in the city is a few blocks away, and there’s a coffee house up Divisidero that serves good local brews for $1.50 a draw after 3pm. The Fillmore is the real Rock ‘n’ Roll HOF. Everyone has played there @ some point. I love staring at the posters between acts…
Sorry. You asked… I can go on and on.
Comrade Kevin
@Zifnab:
Yes, we do.
Comrade Dread
If you’ve lived in a home for 40 or 50 years, you shouldn’t have to sell or reverse mortgage the place to pay the taxes of a state and county that often do make fiscally irresponsible decisions (not saving any money for bad economic times or investing those funds in the stock market) and handouts to public employees unions (whose pensions will probably be the next big state budget crisis which will spur even higher taxes and more cuts in services).
Get some god damned fiscal conservatives in office (real ones, not Republican wankers) who care about running the State well, not handing out money to everyone with a bloody lobbyist.
Brick Oven Bill
Income taxes in California are, I think, 12%. So a highly productive person who lives a modest lifestyle pays an additional 12% in income taxes over Nevada, where there is no income tax.
Real estate taxes in Nevada can be less than $1000, for a modest house. This economic model was sustained for over one hundred years but has recently gone belly up. Some of it, for sure, is a loss of gaming revenues.
I think more of it has to do with the recent emergence of graffiti.
bootlegger
@Brick Oven Bill: California’s top rate is 9.3%., which is high. I’m also sure there are large variations in property taxes, I pay more in Kentucky than I did in Alabama or Washington. In those states I paid more in sales tax and more for automobile registration and taxes on utilities. Every state collects its taxes BOB, its just a matter of how.
Martin
We do, and a fairly high sales tax as well.
Education was always paid for by property taxes, and education is suffering terribly because of Prop 13. We passed a 3 strikes law that puts any toker in prison for life, which is goddamn expensive. We have immigration issues that the federal govt. is fuckall useless to provide assistance with.
California is a real challenge – we are the largest agriculture state and we have massive water problems. We are the largest manufacturing state but have a history of terrible air quality that the state has had to fight the feds to improve. We bring in 85% of all trade from Asia, so we have huge infrastructure needs for all the trains and trucks that fill up Walmarts across the country, not to mention running some of the largest ports in the world and all the security and support that they require. The state leads the nation by a fucking mile at things like water and energy conservation because we don’t have those resources, but those gains come at a tax cost and the feds the last three decades not only don’t help, but they’ve been actively blocking the state efforts.
If California ceased to be, the nation would absolutely come to a halt, yet we get a fraction back from the feds that we pay to support the rest of the country. And it’s absolutely killing the state.
Martin
LOL
http://rolcats.com/
bootlegger
@Martin: California gets back 78 cents for every dollar it sends the federal government. All the damned Red States soak up the taxes paid by the Blue States.
Napoleon
With the way the "filibuster" is being deployed, and with Reid’s gutlessness, I think there is over a 50% chance you will see this same implosion on the national level as you see a majority being unable to act due to there being an effective way for a minority to block action. The second the impeachment of Clinton passed in the 90’s I concluded that our national government was completely broken, since the anti-majoritarian aspects of the government essentially were premised on a sane minority, and that clearly didn’t exist. I figured things would drift along for a time with most people not realizing that we no longer had a government that could effectively govern, but that sooner or later something would happen that would reveal it to all.
I think we have arrived at that time.
Brick Oven Bill
You can tax property, you can tax production, and you can tax consumption. The society that will emerge in the wake of this ‘consumer economy’ dogma we have been living is a society that taxes consumption and imports.
The reason is because this society will attract property, and production, and encourage thrift. This society will then prevail in the competition that is life, because it is efficient. Perhaps Texas will lead.
Martin
I propose a 22% tariff on all goods that leave the state destined for WalMart. We’ll balance the budget in mere weeks!
KDP
@liberal
That may be understood by economists, but that is not how either local ordinances regarding such pass-through or lease agreements are structured. In point of fact, our city has a Rent Control ordinance for its many mobile home parks. Not all residents fall under the ordinance, the ones who don’t are bound by leases. The lease contain clauses that allow for the pass-through of property tax increases in excess of 2% of the previous tax. The rent control ordinance specifies property taxes as an operating expense that can be used in calculating the the net income of the property. Any allowable operating expense that reduces the net operating income can be passed through as a rent increase. There is a discrepancy between the rent control ordinance (which allows property tax pass-throughs to counteract a reduction to net operating income) and the state mobile home residency law (which does not recognize property tax increases as such an expense); however, current court precedent supports the application of the municipal ordinance over the state law. In addition, neither state law nor local ordinance differentiates between the land and the improvements when referencing property taxes. In a mobile home park, you rent the land on which your home sits, not the improvements. You own your home; you rent your space. Infrastructure service improvements (water, sewer lines, electric and gas) are a part of your land rent, but the other improvements like swimming pool, clubhouse, guest parking are specified as ‘amenities’ which are a benefit of your space rent. I don’t think the theory you are referencing is applicable to the rental of land rather than the improvements on the land. So,if I rent a house and your property taxes go up, you can only charge me the improved portion. but I’m renting land, not house.
You may be correct about economic theory, but the ivory tower theories of economists are not always applicable to the real world, which operates on legal precedent and the common practices that help to define that precedent, not on theories.
Zifnab
@Brick Oven Bill:
Of course, said individual can then write the 12% income tax they paid off their federal income tax returns – making the whole thing a wash. But never you mind that. Everyone move to Nevada, hurray!
TheHatOnMyCat
Dude, you have a fucking computer with an internet connection. You cut and paste arcane details of everything from railroad gauge to circumcision FAQs. You couldn’t take ten seconds to look this up?
Again, if you are going to spoof, at least take the time to do it right and show some respect for the craft:
Schedule Y — Married/RDP filing jointly and qualifying widow(er) with dependent child
If the taxable income is
Over But not over Tax is Of amount over
$0 $13,654 $0.00 Plus 1% $0
$13,654 $32,370 $136.54 Plus 2% $13,654
$32,370 $51,088 $510.86 Plus 4% $32,370
$51,088 $70,920 $1,259.58 Plus 6% $51,088
$70,920 $89,628 $2,449.50 Plus 8% $70,920
$89,628 And over $3,946.14 Plus 9.3% $89,628
Church Lady
Tennessee, like a few other states, has no state income tax. There is the Hall income tax, but it only applies to income derived from stock dividends and bond interest. It doesn’t bring in a whole lot of revenue to the state. Instead, state and local revenues come from one of the highest sales tax rates in the country (9.25% combined state/local), fairly high property tax rates, and then a plethora of small taxes applied to a variety of things.
Our previous governor, a Republican, fought for a state income tax because he realized that, without one, we would be forever facing one budget crisis after another. The bill failed after a taxpayer revolt around the state legislature building in Nashville scared the bejesus out of our brave legislators. Interestingly enough, Marsha Blackburn was one of the leaders of the revolt. I believe she rode the coattails of this "victory" to her seat in Congress.
Our state revenue, as structured, requires good economic times to work. Given the turn in the economy, we’ll soon be facing another budget crisis, resulting in cuts everywhere. Go figure.
Llelldorin
@Zifnab:
Yes, we do—it’s the major source of state revenue. Unfortunately, income tax is nowhere near as stable as property tax; when times are good it pours in like gangbusters, but in recessions it collapses abruptly. The result is our bulimic budget process: nearly infinite resources during booms, total financial collapse in recessions.
srv
@Graeme:
Ssshhh!
Repeat after me, "Mark Twain said the coldest winter he ever saw was San Francisco in the summer!"
And in fact, we do get some strangely quirky August weather, but I’m from Austin and the weather here is sweet. When the weather maps show the US boiling red, it’s nice and cool here. When the rest of the country is freezing their asses off, it’s sunny with some rain. Which is fine, because it means I’m going skiing in the next two weeks.
Now if Little Star would just open during reasonable hours and f’ing deliver…
jonas
For 25 years Californians have pretended that you can have a public educational system, hospitals, working roads, law enforcement, firefighters, parks and beaches, and the magic money fairy would somehow pay for it instead of taxes. Reality, as they say, is a bitch.
Brick Oven Bill
Definately long hair.
Writing off state taxes, reduces the burden, inversely proportional to your federal tax rate.
So if you are an AMT person at, I think 25%, your 9.3% California tax rate is effectively (9.3%) * (1-.25) = 7%. This is why so many California businesses are leaving, contributing to the bankruptcy. I believe that Nevada was the fastest growing state, I don’t know any more though.
srv
And, FYI, California isn’t short of money. We send $40B more in federal taxes to DC than we get back, so wherever you live, we’re the ones who have been financing the your lifestyle. Which was probably created out here also.
Course those numbers won’t apply this year, as after two decades carrying the red states on our back, even we need a bailout.
The Moar You Know
@Graeme:
Olive’s
3249 Scott St
Pizza to die for. Goddamn, I miss living up there.
TenguPhule
Only if it’s a race to the bottom.
Josh Hueco
Yes, regressive taxation, kept government, shitty public services…definitely a leader. But at least we gots awr gunz.
David Hunt
No, it isn’t a wash. State Income tax is deducted from taxable income, so you only get back, at most, 35 cents on the dollar for state income taxes paid. Also, it’s an itemized deduction, so you only get an advantage from that if you itemize instead of taking the standard deduction.
That said, a state with no income tax will find a way to get money out of its citizens. I’m in Texas and friends who own property out of state have told me our property taxes make them blanch.
p.s. property taxes get the same treatment as state income taxes on federal income tax returns.
TenguPhule
Yeah, taxing food works out SO WELL for the poor compared to the rich.
Graeme
@srv – I hear you on delivery! They’re always full @ both locations whenever they are open… We tried to order for take out on Election Night, and they were OUT OF INGREDIENTS. Kaput.
@ Moar – we’ve been meaning to try Olive’s, so… We will make that more of a priority. Thx!
Usually we order from Orgasmica, because no other delivery pizza is even passable. Not only is most of the stuff we’ve had here bad, but it’s watery, too! The problem with Orgasmica is that they seem to employ only the most incompetent people they can find. They’re always losing our order or delivering the wrong pie.
While I’m on the subject, I have to hate on Zachary’s in Berkeley. Locals seem to think it’s good Chicago pizza, but that pasty nonsense would be laughed out of Gino’s, Giordano’s, or anyplace else you care to name in the Windy City. Horrible!
zzyzx
@bago: "I love the constant drizzle in Seattle. "
What winter are you experiencing?
BonnyAnne
@ bago (& zzyzx):
yeah, what is this "constant drizzle" of which you speak? after the snowpocalypse, it’s been great here in Ballard. We’ve got the windows open (airing out the place) and it’s nothing but blue overhead. I keep thinking I should start planting the strawberry barrels any day now…
where’s the winter of ’98 when you need it?
eyelessgame
The reason we don’t run against Prop 13 is that everybody knows somebody who has a grandma in Orange County or someplace like that who says their grandmother wil lbe HOMLESS OMG if she has to pay taxes on what her property is actually worth, because there’s no fucking way in the world she can afford to pay a couple thousand dollars a year for a property worth a million dollars that she owns outright, because it was always impossible for her to access that equity in any way. It’s also impossible for her to sell that million-dollar home and rent a one-bedroom house for a thousand dollars a month by using the million dollars the sale would put in her bank account. Completely impossible.
Oh, did I mention that because of prop 13, said grandmother can bequeath that property to her heirs without having it reassessed?
That poor, poor, grandma. Everyone’s so concerned about her. That’s why campaigning against prop 13 is suicide.
eyelessgame
And our constitution makes it impossible to raise any other taxes at all without a 2/3 majority.
Constitutional Convention, redistrict, and have the citizens of the state become grownups. The first two are relatively easy.
Chuck Butcher
Oregon’s proposition law makes us one of the Reich’s test tubes and the results tend to be bad when they pass. That said, some things that have gone through the proposition process are pretty darn good and probably couldn’t have happened in the legislature.
The California bullshit always seems to make its way up here, along with their "sold my house for a fortune" idjits who drive local housing prices out of sight. They also fuel messes like Bend, OR which at one time was a nice little town – then it was discovered.
In OR the stupidity has been taxes and prisons. The Prop 5 property tax limit failed in all rural counties but was passed by the urbanites, seems the stupid hicks got that one right. One result was that school funding got tossed completely into the state hopper which has the urbanites screaming about our snow ridden mountain dominated costs as we sink under the per student level the state uses versus when we took care of it and did well at it.
We have no sales tax so we depend on income taxes which get whacked in recessions, particularly since ours isn’t very progressive and depends heavily on those who get whacked first. You can count on it happening every couple years that a sales tax initiative will be run and fail, always on the justification of smoothing out the bumps and capturing the out of state visitor money. With an already regressive income tax that one makes little sense.
The really shitty right wing junk gets over 90% of its funding from out of state and one to two internal sources.
Thankfully the CO experience was useful in defeating its clone in OR, sorry you were the test tube on that one.
The Populist
Yep, life long Californian here. I hate this. Every year it seems to get worse. Neither side can find common ground :(
LL
I’m sure numerous posters here have gone over various parts of California’s budget nightmare…and if you want a full accounting, John, just go to Calitics, or to d-day’s blog.
My two cents involves Prop. 13. You can pinpoint the beginning of California’s current disaster at Prop. 13, which was nothing more or less than a piece of naked racism. California has passed laws mandating the EQUAL distribution of property taxes state-wide to all school-systems, to eliminate the most grotesque inequalities between rich and poor systems.
Orange Country republicans, led by Howard Jarvis, decided to appeal to blatantly racist feelings at the time to ram through Prop. 13, to cut the amount of money that could be distributed to, say LAUSD. In essence, these goopers didn’t want their money going to educate the black people.
Anyone who believes the canard that Prop. 13 was designed to prevent long-time californians from losing their homes because they couldn’t pay taxes on the increasing value of those homes is just blowing smoke. A single means-test form could have taken care of that problem, and I believe that was discussed in some form at the time, but the Jarvis fascists knew that would ruin the entire point of the exercise, so they pushed for the most radical bill…and rammed it through.
So now, in California, we have people paying nearly the same taxes they paid 30 years ago on their houses. Sure, taxes have gone up a little, but no more than the legal maximum 3% on increases in *assessed* value, year to year. In other words, I can buy a house for a million bucks, and pay my 1.3% rate on my assessed value of a million bucks (works out to a bit over 10K a year in property taxes)…while my neighbor, who owns a house valued at over a million bucks in the current market, is paying taxes on an assessed value of, oh, say 200K. Similar houses, same value, but I pay 10K a year in taxes, he pays 2K a year in taxes.
That’s the essence. It is, without doubt, probably the most ridiculously unfair tax law every designed. Not to mention, disasterous to California. This law has strangled california, and politicians have been trying to finesse its effects ever since, as Jarvis and his descendents laugh and laugh at how they achieved Grover Norquit’s aim: to destroy the state government. We’re now there.
Prop. 13 coupled with the 2/3 rule for tax increases in the State legislature have ruined the state..and those two things are entirely the doing of California Republicans, who, at this point, should be rounded up and dropped on an ice-floe headed toward Greenland.
It’s taken 30 years, but they’ve destroyed this state. You’d think they’d pay some price for that..but, apparently not, since Cali voters appear to be about as dumb as they come.
Include an initiative system that has hamstrung our legislators, a system that should have been junked decades ago, once it was clear that it had been hijacked by various special interests, mostly on the right–figures.
Pray for us. I figure the Flying Spaghetti Monster is more likely to help us than the State Legislature at this point.
paul in kirkland
@15:
What’s the political breakdown for these regions? I assume Bay Area is liberal but I have no idea how the rest breaks down.
Llelldorin
@paul:
Southern California coastal
Liberal, but not overly so–like a New Jersey or a Connecticut, and with deeply conservative pockets. That said, it’s vast (LA County is about 10 million, Orange 3 million more, San Diego another 3 million, Ventura 750,000, and Santa Barbara 400,000), so that mild liberal bent usually drowns out more conservative regions. Orange County used to be a beacon of conservatism, but that’s been mitigated in the last two decades by heavy naturalization of Hispanic immigrants.
Inland/Desert Empire
Central Valley
Northern California rural
Very conservative, of the "terrified of UN black helicopters" school. The central valley is slightly less conservative than the other two regions–it’s larger and is beginning to urbanize (It has the first UC outside the big two urban regions, for example). Enormously dependent upon state water projects. If you’re familiar with Eastern Oregon or Eastern Washington, you have the right idea–it’s just that the cities are much larger in California and thus make the rural regions all-but-irrelevant (much to their everlasting fury). The regions tend to have outlandish views on immigration—they’re entirely dependent upon undocumented workers for harvesting season, but also tend to scapegoat those same workers for their crime and budgetary problems.
Bay Area
Incandescently blue. The two main factions in the Bay Area are "build public works" Democrats and "fund social programs" Democrats (who are viciously, bitterly opposed here); Republicans have roughly the same political clout as the Green Party.
California is blue basically because the Bay Area tends to vote about 75% for liberal positions, the rural regions vote about 80% for conservative ones, then Southern California wallows in at about 53% blue and throws it to the liberal side.
California state politics suffers from a strange, bipartisan gerrymander after the last census–both parties agreed to draw districts that are overwhelmingly in agreement politically. (Thus, for example, you have a strange, long, thin congressional district that stretches along miles and miles of coast in the Santa Barbara area, allowing a liberal Democrat to represent the liberal coastal cities while a conservative Republican represents the rural northern part of the county.) Thus California legislators of all sorts tend to see no benefit to compromise—their districts are overwhelmingly on one side of the political divide.
Darkrose
@Graeme:
Enjoy it while you can. The entire higher education system in the state is being savaged. UC Davis has just been told we have to slash another $5 million. Among other things, that means cutting freshman enrollment for Fall 2009. Again.
Guess where those people who don’t get in are going to end up? And guess how the CSU’s and community colleges are going to deal with more students?
If you said, "hike fees to cover costs", you’d be right.
This is a statewide clusterfuck.
Mnemosyne
A big part of the problem is that, as with so many aspects of the Reaganite worldview, a lot of people have invested a lot of time and energy into the excuse and it’s taken on a life of its own. The original aim may have been to deny funding to urban schools, but now you genuinely do have a shit-ton of Californians who believe that taxes are never necessary even as they complain about potholes on their street and bad schools.
electrophoresis
Many folks have mentioned parts of the problems California faces, but none have grasped the totality of the state’s unsustainability. I lived in California more nearly 30 years, from the early 60s to the early 90s, and saw California’s degeneration and disintegration first-hand. So it’s possible I might have some insight into why CA went downhill so badly.
People have chimed in to point out this or that aspect of CA’s finances that are unsustainable. But they’re not getting it. They’re really not getting it. It’s not just CA’s financies that were an unsustainable bubble, it’s the whole CA package. CA’s society was always unsustainable, CA’s infrastructure was always unsustainable, CA’s finances were always unsustainable, CA’s way of doing business was always unsustainable, CA’s education system was always unsustainable, and CA’s justice and welfare and health systems were always unsustainable.
Let me run you through those to give you an idea of just how crazy and how unsustainable CA was as an entire concept, as a society, starting from after WWII up to around 1990, when it became clear even to dullards that CA had long since run off the rails and headed straight over the cliff into catastrophe — fiscal, social, health-care, educational, justice system blowups of monumental proportion.
First, CA’s society, its whole life was always unsustainable. What do I mean by this? I mean look at the state. It’s a freeway-driven car culture. CA was built on dirt-cheap gasoline and interstate highways starting in 1956, when Eisenhower kicked the happy motoring car culture into high gear. That worked for a while. It worked for a long while, more than 30 years. But it was always unsustainable. CA is full of suburbs 20 miles from the nearest supermarket. That was fine in the era of 35-cent-per-gallon gasoline (which I remember — in high school, I used to drive around with friends and we could always come up with enough spare change in our pockets to fill up my bud’s big old land yacht used Cadillac convertible with enough gas to cruise around town all night. At 35 cents per gallon, that ain’t hard.). But it blows apart in an era of $4-per-gallon gasoline. And if you think $4 a gallon is the peak, just wait…you ain’t seen nothin’ yet.
But that really only covers part of CA’s addiction to cheap gasoline and car culture and freeways. Jobs that require hour-long commutes are common in CA. HelL.A. sprawls out over 90 miles. It’s not unusual to have to drive 45 minutes just to get to a restaurant or a job interview in HelL.A. That’s fine back in the 1950s or 1960s or even the early 70s, but in the era of Peak Oil, that’s crazy. It just doesn’t work. Gigantic 90-mile-wide urban grids like HelL.A. simply don’t work in a Peak Oil economy, like the one we have now.
Ever driven up the Grapevine out of HelL.A.? You think an electric car will ever be able to make that climb? Any idea how much money you burn at $4 per gallon doing that? The whole Grapevine thing is completely crazy in a Peak Oil world. It was designed for, and worked in, a post-WW II 25-cent-per-gallon gasoline environment.
But car culture based on dirt cheap gasoline and $5-per-barrel oil is only part of the reason CA society is unsustainable. CA is also based around endless gushers of cheap plentiful water from the Colorado River. Ever see the giant pipes running over the San Gabriel mountains carrying all of HelL.A.’s water? Ever drive up the central valley on I-5 parallel to mile after endless mile of open acqueduct evaporting humongous amounts of water in an orgyof waste into the open air so that some of that Sierra Nevada snowpack melt will trickle down to Southern California?
CA was also based on a cool world with lots of Sierra snow pack. Global warming makes Southern California completely unsustainable. When the Colorado river dries up to a muddy trickle, Phoenix AZ won’t be only society in the American Southwest to dry up and blow away. All of HelL.A. and San Diego will also have to depopulate. Those cities are completely unsustainable in a world with global warming. On 23 June 2006, Pasadena hit a record high temperature of 119 degrees F. That’s just the start. Look for temps in the 120s soon, then in a few years, Baghdad-like temperatures in the 130s, then Death Valley temperatures in the 140s, and up and up and up. You think Southern California will remain livable under those conditions? You think when the water stops flowing from the Colorado River there won’t be massive water riots, then martial law and National Guard troops, and finally a mass exodus from CA?
And please don’t tell me about desalization plants or towing icebergs from the arctic or building a giant pipeline to suck water out of the Columbia River. I lived in CA all through the 60s and I heard each of those kooky ideas touted in turn by serious academics and engineers. Even flush with cash in the 60s, nobody could come up with a way to make those kinds of wacky ideas work — read the book Cadillac Desert and you’ll see how CA hit a wall around the late 60s. More people meant more need for water, but big projects that brought more water just brought more people, and the death spiral never ended. Global warming finally blew the whole water bubble apart in a giant crescendo of failure, but it was always unsustainable. You cannot keep cramming tens of millions of people into a parched desert without hemorrhaging money and creating an unlivable society. At some point, the population explosion has to end.
But cheap oil/car culture and endless supplies of plentiful water and a temperature climate now vanished into memory courtesy of global warming are still only part of the reason why CA was so unsustainable.
When my parents moved to CA in the early 60s, it was known as the Science State. More people moving into CA every year brought ever-rising tax revenues, which in turn allowed more universities and schools to be built, which in turn cranked out graduates who got more jobs and paid more taxes…and ever-increasing positive feedback loop. As long as more people flooded into CA, everything kept getting better for the people who were already there. This was the empty land and plentiful jobs for baby boomers bubble. Throughout the 60s and 70s and into the early 80s, there were tons of jobs and plenty of empty land (as time passed people had to move farther inland to get cheap land, but it was still there as late as the 80s if you were willing to do a 45-minute commute) and because of all the new people in CA, schools and unviersities and businesses kept seeing their revenues go up and up and up.
But around the early 80s, the positive cycle hit the wall…sort of the same way the endless water boom described in Cadillac Desert hit the wall by the mid 60s. Eventually CA ran out of cheap land even far inland. Eventually HelL.A. and Scam Diego got so crowded living there was ugly and dangerous and polluted instead of thrilling and fun and inexpensive. Eventually the baby boomer kids grew up and stopped going to college and K-12 and started using social services like medical and welfare, instead of providing jobs for college teachers and K-12 teachers. The boomers grrew up and started getting locked up in record numbers and at that point, the demographics shifted into reverse and started a vicious circle. Now, in the 80s, there weren’t enough new people moving into the state to offset with tax revenues the prisons and medical and food stamps and freeway wear-and-tear and unemployment insurance they were collecting. CA’s finances had been built since 1948 on young new people moving into the state and having families and paying in. But when the torrential flood of new people moving into CA trickled to a stop, CA’s finances became unsustainable.
All throughout the nearly 30 years I spent in CA, everyone always lamented "I hope we never become like New York," where everyone got taxed to death and life was unaffordable. Californians understood that New York had congealed into an ugly society run by regressive taxes on the bottom 80% and capital gains taxes on the superrich because New York had long since hit a wall where more people couldn’t keep flooding into Manhattan, so prices just skyrocketed out of sight. Sky-high taxes, sky-high rents, sky-high property values, sky-high prices, sky-high everything. That eventually happened to CA. As in New York around the late 50s, land stopped being cheap, jobs stoppoed being plentiful, social mobility stopped, new manufacturing was no longer coming in but moving out due to high costs, and CA degenerated. It turned from an economy driven by population growth into an economy driven by kooky unsustainable bubbles.
People have talked about this or that recent bubble. Let me tell you, I saw CA’s economy for nearly 30 years, and it was always a bubble economy. Always. CA lurched through a whole series of bubbles: first the car-culture freeway bubble, where you made money by building strip malls and shopping centers and drive-ins and drive-throuhs. Then places like HelL.A. expanded into urban grids so vast that you couldn’t make the drive-through car culture pay anymore, so the car culture freeway bubble ended around 1973, shut down by both the first Arab oil embargo, and the sheer length of the insane commutes to the job (over 90 minutes each way, in some cases, 3 hours stuck in the car per day just to get to and from work). That was unsustainable, so…time for another bubble! Next came the aerospace bubble. Then with Reagan’s kooky unworkable Star Wars defense bullshit, we got the military-tech bubble. That blew up when the USSR fell apart — but not to worry! The defense tech bubble got replaced by the dot-com bubble. Then when sock puppets and WebVan and other nutty schemes blew up, voila! The housing bubble replaced it.
Well, you can see that CA’s whole economy was crazy and unsustainable. CA lurched from one bubble to another like a drunk clinging to a series of lampposts, and it couldn’t last. In fact, when I left CA in 1990, I was amazed to see another 2 bubbles keep the whole Ponzi State going. I really expected this crash to hit back in 1991 or 1992. It’s astouding that CA lasted this long and that the series of bubbles brought it so far over the edge of the cliff, like Wile E. Coyote pedaling for decades in thin air, thinking he was getting somewhere when he was just suspended over a bottomless abyss.
Other people have talked about Prop 13 and the initiative system and I won’t go into those. That’s part of it. Yet other folks have mentioned the succession of Hollywood crackpots whose maladministration as governor ran CA over the cliff and into the dumper. First the senile ignorant kook Reagan, who sent the Nation Guard into Berkeley because some students printed the f-word in the school newspaper, then Ahhhnold bringing the sword he used in "Conan the Barbarian" to the budget meetings to show he was serious about cutting spending. I mean…really. If you read that stuff in The Onion, you’d laugh, but you’d say it wasn’t realistic. Nobody’s that dumb.
Then there’s the three strikes law, which others have mentioned. CA shifted from the Science State to the Prison State. In the early 60s, CA spent more per capita on unvierstiies than any other other state and had more PhDs per capita than anywhere else on earth. Today, CA spends more per capita on prisons than any other state and has more prison inmates and prison guards per capita than anywhere else on earth. Once again, this is totally unsustainable, because when you lock up some schmuck for 20 years because he had a brick of weed in his car that he was going to toke, you have to keep paying and paying and paying to keep that poor bozo in prison. You pay out the wazoo. And when he gets out he won’t be able to get a regular job, so you pay again, either for welfare & medical, or to lock him up in prison again. CA as an education state is a positive spiral — more education = better jobs = more taxes paid = more revenue to build more universitites, so it keeps getting better. CA as a prison state is a death spiral — more prison inmates = more prisons = more taxes needed to pay for prison guards & prison construction = less revenue for anything else = less social services and worse education = more poor people committing crimes = more prison inmates. That’s an unsustainable vicious cycle.
Just looking at it, you can see that CA is unsustainable and has been since around 1980, and not just for one reason. For a whole plethora of reasons.
But one of the main reasons, which no one has touched on, that CA is totally unsustainable is that it’s a master-slave society built on exploitation of illegal immigrant labor. The whole CA central valley, 30% of the state’s economy, depends entirely on exploited grossly underpaid illegal immigrants who pick strawberries for pennies per hour under the blazing sun. Go into any fast food joint or warehouse or slaughterhouse or metalworking small business in CA and you’ll see mostly illegals with phony green cards and bogus drivers licenses. The entire economy of CA is based on exploiting these dirt-poor illegals. I myself knew half a dozen small businessmen who made their entire living by hiring illegals for a couple of bucks per hour to outbid other people on federal contracts. CA claims it’s cracked down on this, but that’s a lie. If CA ever stopped the exploitation of illegals, the whole state economy would collapse.
Look, this isn’t racism and it’s not even about the exploitation — what I’m talking about here is sheer unsustainability. You drive to work at 7:30 in the morning and all along the roadway you see hordes of illegal immigrants just standing there, waiting for people to come along and offer them work under the table at $4 per hour to do…whatever. Gardening, picking crops, painting houses, teardowns for remodels, auto body work, you name it. You cannot run a society that way. That’s what the civil war was about. Slave economies don’t work. They’re too inefficient. And ever since the bracero programs in the 1950s, CA has been based on this kind of slave labor exploitation of illegals. It has never changed, not really. Go into any fast food joint in Southern CA and if you’re the only caucasian in the place, I guarantee you will hear nothing but Spanish spoken. That’s unsustainable.
It’s unsustainable for a whole variety of reasons, first because it creates two classes, the rich and the poor, with no social mobility between them. It’s unsustainable because the human body can’t stand more than about 20 years of the kind of backbreaking physical labor the typical illegal does, so by their mid-40s illegals wind up on medical, disabled, but their kids are now citizens. It’s unsustainable because when illegals live 10 to an apartment they never integrate into the wider culture and that hurts their chances for an education and a better life. And so on. That kind of exploitation just can’t work in the long run, any more than the slavery in the deep south ever really had any chance of being economically viable. When you run a contracting business that lowball bids all the time because all your employees are illegals who get paid pennies on the dollars, where’s your tax base? How do you make a viable society out of that kind of master-slave exploitation?
And I don’t blame the illegals because they’re coming from central Mexico, where there are literally no jobs and the farms can’t support the number of kids people have. So people in Mexico have a choice: live in grinding poverty, or walk 50 or 80 miles across the border and increase your income by a factor of 20. Which would you do?
At the same time, if Mexico were ever to shut down its border with the U.S., their society would blow apart. You’d see violent revolution. The single largest source of money into the Mexican economy today, even bigger than the oil & gas revenues from the state-run oil industry, is funds sent back into Mexico by relatives working in the American Southwest.
So CA is totally unsustainable for a whole host of reasons. The big surprise isn’t that CA finally hit the wall and blew up. I saw that coming wayyyyyyyyyyyy back in 1990, so did every other sensible person living in CA. The big surprise is that the series of CA bubbles got so big and went on so long before they finally exploded.
John Cole and others have mused that they don’t know how CA will get out of this mess. I do. I’ve know for 30 years how CA will fix its problems.
CA will get out of this mess by depopulating.
When the state empties out courtesy of global warming and $10-per-gallon gas prices and renst that take up 70% of the average paycheck and pollution that’s killing peoples’ children and water shortages that force people to wait in line for 3 hours a day for their water ration and schools that turn into war zones and univerities with sky-high tuitions no resident can afford and a prison-industrial complex that rapaciously felonizes even the slightest infraction of traffic laws so that people are getting picked up on the streets and sent to prison on bogus ginned-up "three strikes" charges to feed the bottomless hunger for cash of the prison industrial complex that needs ever more money to sustain itself…well, at that point, CA will start to empty out. Once the population of CA drops below some sane level, it will become sustainable again. Not until then.
LL
Electrophoresis has a point.
To which point I can only reply: Carpe that diem.
Until a majority of californians really face what Electrophoresis is talking about, the State will lurch from one disaster to another.
Spoken as a California native who knew the place in the golden 50s and 60s as a child, has visited continuously over the years away…now I live here, and I love it…and hate it, and mourn for what is forever gone.
Southern California is a florid example of the Tragedy of the Commons. Unfortunately, Orange County Republicans have no idea what that even means. It would help if they did. Their thoroughly deluded world-view has accellerated the ruination of California. But we’ve all helped. It’s in the damned DNA for humans to ruin anyplace good, sooner or later.