Krugman nails the reasons for California's economic debacle [View All]

[Richardo]

http://www.nytimes.com/2009/05/25/opinion/25krugman.html?_r=1

The seeds of California’s current crisis were planted more than 30 years ago, when voters overwhelmingly passed Proposition 13, a ballot measure that placed the state’s budget in a straitjacket. Property tax rates were capped, and homeowners were shielded from increases in their tax assessments even as the value of their homes rose.

The result was a tax system that is both inequitable and unstable. It’s inequitable because older homeowners often pay far less property tax than their younger neighbors. It’s unstable because limits on property taxation have forced California to rely more heavily than other states on income taxes, which fall steeply during recessions.

Even more important, however, Proposition 13 made it extremely hard to raise taxes, even in emergencies: no state tax rate may be increased without a two-thirds majority in both houses of the State Legislature. And this provision has interacted disastrously with state political trends.

I graduated from a California university with a shiny new BA in Political Science in 1978 - the year Proposition 13 passed. Consequently, entry-level jobs in Public Administration at the city level dried up, and young Richardo was compelled to find employment in the private sector, never again to have a job that used that Poli Sci degree. I left California in 1980 for ten years, and again for good in 1993. As I tell employers, I'm not worth the amount of money they'd have to pay me to go back there.

Since 1978, the combination of the property tax ceiling, a requirment for a 2/3rds supermajority of both houses to raise taxes, and the citizen initiative have made that California's economy an ungovernable, unsustainable, internally-conflicted clusterfuck. The fact that other states are toying with the citizan initiative is absolutely unconscionable, with the end-result plainly visible.

In the face of this crisis, the GOP in California is, just as on the national level, being reduced to its base and its nonsensical, laughable core mantras of lower taxes and limited government (for business anyway - they're very much in favor of unlimited government in social issues).

While this self-immolation of the GOP is kinda fun to watch, what remains unburned is still enough to prevent rational solutions from being implemented. This is another argument for more aggressive executive and legislative initiatives from the Democrats - the leverage is in their favor, and pushing the GOP toward ideological purity will cause the moderates either to jump or reassert themselves. Either result would lessen the GOP's ability to obstruct.