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California Dreamin' II: Nightmare in Paradise


Los Angeles -- They always thought it would be an earthquake along the San Andreas Fault that would break up California. But it may turn out that it was Proposition 13, the 1978 tax revolt initiative that cut and capped property taxes for the people who got here first.

Last month, for the seventh year in a row, the state missed its deadline for producing a budget in a struggle over who should go broke first, California's local governments or the state itself.

The frustrations and internal strains hereabouts are so great that the State Assembly voted earlier this month to break up the state into three new ones -- a big-bang political explosion.

That, however, is less likely than a big crack making San Francisco and Los Angeles into islands and Sacramento into a beach resort. Three Californias would require a few more approvals, including permission from the federal government, but it does indicate how mad Californians are at each other.

That's only fair, because whatever is going on -- no one is sure of all the intended and unintended consequences of Prop 13 -- Californians did this for and to themselves. Only two things are as certain here as sunshine and earthquakes:

* Tax limits have made it impossible to run a first-class state, as standards in education, law enforcement and a range of services have gone from close to the best in the country to close to the worst.

* County, city and town government, traditionally financed by property taxes, is more or less a thing of the past in California. Prop 13 has ended such democratic notions and frills as town-hall meetings and local control of schools.

Now, almost all public money is in the form of sales and income taxes collected by the state and spent by the state. The tax revolt, led initially here by Howard Jarvis and Paul Gann, has reduced the size and function of government, a goal of American conservatives, but it has centralized government in the European manner. For all practical purposes, all decisions are now made in Sacramento -- with counties or cities getting just 1 percent of statewide sales taxes ranging from 7.25 to 8.5 percent.

This year's budget fight (or collapse) was over Gov. Pete Wilson's proposal to take back $2.6 billion in sales-tax revenues collected by the state for distribution to localities. That would represent the end of post-Prop 13 state efforts to compensate counties and municipalities for lost property taxes. Only the 1 percent would be available to finance local decision-making -- and most of that is tied up in state-mandated programs.

The governor wanted the money back to pay for an initiative, approved by voters in 1988, mandating that 40 percent of state revenues be used for schools, from kindergarten to the community-college level. (That initiative was promoted by organized teachers, who took over most local school boards as other citizens lost interest when school funding was taken over by Sacramento. The effect, not surprisingly, has been that whatever money there is tends to be channeled into teacher salaries.)

So what is a town to do? Many are out hustling and subsidizing Wal-Marts and automobile dealers and other big volume commercial outlets. Forget "no growth" and environmentalism; counties and towns will do most anything to increase their 1 percent sales tax.

Governor Wilson's budget calls for extending a "temporary" sales tax surcharge of 1/2 percent, with the revenues going to counties -- giving them time, he says, to put their own sales taxes on the November ballot.

It is a gimmick, one that will not work in many places because under Prop 13, special tax increases must be approved by two-thirds of voters. "Super-majority" is the term of art, and they are very hard to get. In the past two elections, more than 60 percent of Los Angeles voters have approved tax increases for more police -- but those initiatives lost for want of a super-majority.

The Golden State is now governed by gimmicks such as library admission fees -- where there are still libraries.

It gets worse each year. Old people are holding onto big homes to keep their taxes at Prop 13 rates based on assessments retroactive to 1975. The roads have potholes now. Prisoners are being released as jails close down, and criminal charges are being dropped against others because of the costs of prosecution.

The schools get worse -- California now spends half per-pupil what New York does -- and it is difficult to finish state universities in four years because there are no longer enough courses offered.

Part of the problem for students trying to finish is that either the courses or the colleges won't be there long enough -- or maybe it will be the state itself that is gone.

Richard Reeves is a syndicated columnist.

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