The Elephant in the Room 

California's fiscal mess continues to worsen thanks to the anti-tax, anti-government policies of the GOP.

Page 5 of 5

"Without major reforms to either California's tax base structure or to the state's fiscal constitution, we should expect repeated budget crises over the coming decades," wrote Gamage in a 2008 collection of academic articles about Prop 13. "If current trends continue, these budget crises are likely to become increasingly severe. Californians may end up looking back on their current budget troubles with nostalgia."

Asked recently about this appraisal, made just at the outset of the Great Recession, Gamage said, "I stand by this," but "I wouldn't have predicted in 2008 that this downturn would have lasted so long. Because this recession is lasting atypically long, there's ways in which it's significantly worse than I would have predicted."

Gamage painted a gloomy but realistic picture, one that doesn't line up with assumptions being made in Sacramento today. "All the trends that indicate future downturns will be increasingly severe are continuing apace."


When asked recently at a business symposium whether California is "fundamentally flawed," and "if we have the tools to fundamentally fix California's fiscal system," Governor Brown retreated in the same fashion that has failed progressives for decades now, saying in the post-Prop 13 neoliberal style, "I get very wary when we talk about fundamental and fundamentalism." Brown offered instead praise of incremental change, concluding: "We don't change the body politic in a fundamental way."

But based on the current bleak economic situation, it's clear that California's fiscal constitution doesn't work for those who need it most. It is fundamentally broken for the poor and middle class who have been saddled with a greater burden of funding an increasingly emaciated government.

In the 33 years since Prop 13, dozens of similar propositions have been drafted and sponsored by various right-wing lobbies to further cut taxes and shrink local and state government through changes to the fiscal constitution. Many more ballot measures, sponsored by everyone from teachers' unions to environmental groups, have sought to create special taxes and impose complex funding mandates and formulas upon Sacramento, thereby skirting fundamental reforms, and causing increasingly worse gridlock.

It's obvious that Californians are fed up, but most of the "reforms" have only made things worse. Just last year, voters approved Proposition 26, which rewrote sections of the tax code to make it harder for the state and local governments to raise regressive fees by requiring that they need the same two-thirds vote as taxes under Prop 13. Voters are clearly unhappy with these fees, but the measure promises to make it only more difficult to run the state.

On the other hand, last year also saw victory for Prop 25. Prevailing over an opposition funded by big oil, tobacco, and real estate companies, and coordinated by the anti-tax Howard Jarvis Taxpayers Association, Prop 25 dismantled a small part of the Prop 13 bulwark: the requirement that budgets be approved by a two-thirds vote of the legislature.

But it's not much of an advance, as the budget battle this year has proven. Prop 13 still allows a tiny minority of Republican state legislators to hold up the process and eliminate entire budget alternatives if they involve tax increases, or even tax extensions, which any realistic budget must do in times of massive deficits.

Attacks against some of the biggest corporate tax loopholes also have been advanced. Brown and the legislature recently closed the sales tax loophole for online retailers like Amazon.com (they were able to do it because it didn't require any votes from the Republican minority). Some legislators also have brought forward proposals for an oil severance tax. There are even discussions in some circles of attacking Prop 13's biggest loophole head-on with a "split roll" that would allow commercial holdings to be assessed and taxed at different intervals and rates than residential property.

But to advance and win these reforms will take something California hasn't seen since the days of Ronald Reagan: progressive backbone and leadership within the Democratic Party to fight and win on a fundamental level.

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