voiceofsandiego.org: James Goldsborough... California's Banana Republic

Thursday, June 11, 2009 | What's to become of us? Six years ago we recalled from office a Democratic governor who had increased taxes to finance a state budget deficit and brought in a Republican who repealed the tax increases. Today, we have just rejected the tax increases called for by that same Republican to close an even larger budget deficit.

We complain about schools, roads, health care, unemployment, traffic, prisons, drugs, criminality, lack of police, lack of fire protection, but don't want to pay for any of it. California is in the same situation as General Motors only without Washington to bail it out.

What to do? By population alone, we are a state unlike any other. At nearly 40 million people (counting the illegals) we are 80 times the size of Wyoming, but have the same number of senators, which doesn't help. We are twice the population of New York, the third largest state. We have 12 million more people than the second largest state, Texas, whose governor wants to secede from the union. We have twice as many illegal immigrants as any other state.

And we're broke.

Nations with our population (Spain, Poland, Argentina) have various ways to cope with deficits. They can print money, raise taxes or change governments. They can cut expenditures. If things go really badly, they can have coups, revolts, civil wars and foreign wars.

California can't print money. It can't raise taxes because Proposition 13, passed in 1978 (when our population was 21 million), requires a two-thirds majority of the legislature for tax increases, impossible to achieve. California tried changing governors, put a Republican in place of those spendthrift Democrats and nothing changed except that the deficit is now twice as big.

We can't have a coup, revolution or civil war because those things are reserved for independent countries.

Unlike Texas, we can't even secede because we're not stupid.

We are left, for the moment at least, with the sole option of cutting expenditures by $42 billion over two years, which would be irresponsible even if it were possible.

But maybe we are irresponsible. When you add up all the restrictions we have put on state government over the past quarter century -- Proposition 13, legislation and taxation by referendum, term limits and recalls -- it's no surprise Sacramento has ceased to function as a government.

Poor Gov. Schwarzenegger. The man who promised to change Sacramento after replacing Gray Davis is left going hat-in-hand to Washington, only to hear from the Treasury that it wouldn't be right to send taxpayer money to a state that won't raise its own taxes or to use taxpayer money to guarantee borrowing by a state whose bond rating, according to Standard and Poor, is the lowest in the country.

We are in a pitiful state. Here's what Schwarzenegger said last week:

"There is, when it comes to revenues, a free fall right now. We don't know where this is going to stop. Even while we are going to negotiate the budget in June, we don't know if that doesn't create during that time another $3 billion deficit. It's painful to know that the kinds of programs you cut are absolutely essential to people. But when you don't have the money you can't promise something to people, something you can't afford."

Here's some of what Schwarzenegger is proposing to do with his latest budget proposals: Close state parks, dismantle CalWorks and Healthy Families programs, which provide direct aid and health care to 1.5 million poor families. Eliminate CalGrants, which gives college aid to low and middle-income families; lay off teachers; cut aid to community colleges and to HIV programs.

The cuts fall mostly on the poor, but the governor has ideas for raising money as well. He wants to borrow $2 billion from cities and counties, which are broke themselves and thanks to that same Proposition 13 cannot raise taxes without a two-thirds vote. "Our revenues are back to the 1999 level," said Schwarzenegger. "So we have to dial back to what was happening in 1999."

In other words, the result of the Gray Davis recall is not to take us back to 2003 -- when Davis increased the vehicle license fee and was recalled from office so Schwarzenegger could rescind the increase --but to return us to the last century.

One has to wonder why anyone would want to be governor in a state such as this -- where Warren Buffet pays $2,500 in property taxes on his $4 million house in Laguna Beach while paying $15,000 on his Omaha house worth $500,000. But despite the absurdity and inequity of California laws, there will be a governor's election next year and there are already plenty of candidates.

Democrat Jerry Brown, who will be the favorite if Sen. Dianne Feinstein doesn't run, has had little to say about what he would do to reverse California's fiscal mess, but San Francisco Mayor Gavin Newsom wants a constitutional convention to eliminate the two-thirds vote requirement on raising taxes. Newsom is right that, 31 years after it passed, Proposition 13 has become enemy No. 1 of good government, and the idea for a convention is supported by a host of good government groups.

Voters might not be ready to eliminate the property tax provisions of Proposition 13, but they may understand the pernicious effects of the two-thirds vote requirement.

On the Republican side, Steve Poizner and Meg Whitman are dancing around the budget problem, but Tom Campbell, the smartest man in politics I know, comes at the problem sensibly. His program lays out some $13 billion in budget cuts, but they do not hit the poor and the sick as severely as Schwarzenegger's cuts. Campbell would close the remaining gap with a 32 cent per gallon tax on gasoline.

Most economists agree that a gasoline tax would go far toward solving a host of state and national budget, energy, environmental and foreign policy problems.

Tax gasoline and change the constitution: These are two sensible solutions (in addition to making budget cuts) to our fiscal mess. Are we ready to do what it takes?

James O. Goldsborough has written on foreign affairs for four decades, both from the United States and abroad, where he worked as a foreign correspondent for The New York Herald Tribune, International Herald Tribune and Newsweek magazine for 14 years, reporting from more than 40 countries. Visit his website here. Submit a letter to the editor here.

Mr. Goldsborough portrays Tom Campbell as the most attractive California gubernatorial candidate. While I've never voted for a republican for state office, I may be tempted for 2010, based on such sound policies as an increase in state gasoline taxes.

Posted by Tom Colthurst | reply to this comment
June 11, 2009 6:30 am

Prop 13 seems to be the target of the liberals. After prop 13 we had 2 conservative governors(16 years) whom kept the size of government down and we ran a surplus. Grey Davis spent it. He had the benefit of big revenue increases from the Dot Com and Real Estate explosions, he and the Democratic controlled legislature created many permanent programs thinking the good times would always continue. The 2/3 vote requirement is the only thing saving the taxpayers. The State has chased job producers out. I read a couple years ago that Warren Buffett was selling his house because our Real Estate values were artificially high. If he sold that $4 million home, the new taxes should be $40,000 plus. Prop 187 would have stopped $6-12 billion a year going to support Illegals. Grey helped one judge to block it.

Posted by lee44 | reply to this comment
June 11, 2009 7:27 am

Lee, are you serious? "After prop 13 we had 2 conservative governors(16 years) whom kept the size of government down and we ran a surplus." Deukmejian's faced a billion dollar deficit, and during his two terms, the size of the general fund doubled. In 1992, under Wilson, the state had a $10 billion deficit and ended up paying bills with IOUs because we couldn't pass a budget for a while.

Posted by Vlad | reply to this comment
June 11, 2009 10:54 am

Seems to me we're missing the revenues that increased taxes on the Port activities of Los Angeles, Oakland and San Diego could bring. Major shipping comes through them, and if those items are taxed when landed the result could make for easier times. After that, we need to break the Prison Guard's union and reduce every other union's ability to screw the works, too. Then we eliminate one third of all bureaucratic jobs in every office in California, period. We should offer counties and local practitioners tax incentives to keep state clinics functioning on some level and put every student to work in every college or other school campus as part of the tuition for education. And while we're taxing gasoline, we should tax the hell out of trash pickup and recycling, too. Make them pay!

Posted by Vic | reply to this comment
June 11, 2009 11:44 am

Proposal for everyone out there who think the 2/3rds vote requirement for tax increases should be eliminated - Being a fiscal conservative (not a Republican), from my perspective, CA's state government (not to mention the various municpalities, but I digress) is basically a union jobs scam at the expense of all state residents. So, I will gladly trade the elimination of the 2/3rds vote requirement for tax increases in return for barring public employees from collective bargaining (and the return of them all to the social security/medicare system). Any takers?

Posted by El Cajonian | reply to this comment
June 11, 2009 1:17 pm

Brilliant, balance the budget with a completely regressive tax that will hurt the lower end of the income spectrum far worse than the upper end. An upper end that benefits from the poor and working people subsidizing their lifestyle by working for less than they can afford to live on Wal-Mart wages and benefits come to mind.

Posted by John | reply to this comment
June 11, 2009 3:34 pm

Of course cuts in services disproportionately impact the poor. This is because the rich (and I am in that category) don't utilize many government services that are solely designed for the poor. Yes, I drive on the roads and have called 911 (and then paid the ambulance bill), but I have never seen the inside of an unemployment office, a welfare office, recieved college aid, etc. I am not complaining, as I am blessed (with both luck and a willingness to work hard, save, educate myself, etc.). But the fact is, cuts will likely impact the poor more then the rich.

Posted by dfreshdee | reply to this comment
June 11, 2009 7:15 pm

The real enemy of good government is term limits. In the private sector, we solve problems by hiring the best people we can find and putting them to work. When it comes to elected reps, however, we toss people based on some vague idea that all politicians are corrupt. This is incredibly stupid. Vote out the bad pols but let the effective ones stay in office. CA desperately needs better government. You don't get better by firing your best people or no reason.

Posted by Jim | reply to this comment
June 13, 2009 8:17 am

Prop 13, helps business more than the private property owner, since they move less offen. We must repeal that prop. and also get rid or 2/3 vote for bugets make it 51% that much better system.. But untll we get out of the grid of the big 5 interest groups little progess can be made.

Posted by Martha Welch | reply to this comment
June 18, 2009 1:12 pm

Where did the term "Banana Republic" come from? I believe it came about in the 1800's; as the wealthy and powerful of the United States put into place governments in some of the countries of the 'other Americas' (the many countries existing south of our current border with Mexico.) It seems that in counties in which the Spanish (and other European counties) were driven out (freed from Spanish [...] slavery) there existed a 'power void.' It appears to me that often those with larges amount of economic, cultural, and social capital (in the USA) were happy to fill these 'power voids' and were appointed to oversee those newly free from Spanish opression. I believe Mr Goldsborough draws upon how much the present condition of our current goverenment (local/state/nationa may be 'like' those which are said to have existed in the other "Banana Republics" of our past.

Posted by gregory | reply to this comment
June 22, 2009 2:13 pm

Jim, maybe we ought to have a revolt. Why not throw a big Revolutionary Socialist Party shindig with AK47's, RPG's, trucks full of scraggly infantry and lots of red banners everywhere? We could round up all the pols in office now and commit "revolutionary justice in the field" with 'em----and sell the TV rights----and appropriate all the wealth of the uber capitalists that Duke Cunningham and his ilk shill for and add their wealth to the state budget. We could force millions to work on public projects--or else---and ration out goods and services to others and lease their tools back to 'em and make money off their labor. If we do that, at the end of a few years, we'd have an orderly society ready to take it's place in the industrial world and beat all comers. Hey, it's what China did---why not do that here?

Posted by Vic | reply to this comment
June 26, 2009 11:41 am

California's Banana Republic

By James O. Goldsborough