No state in the Union exemplifies the failure of big government more than California. An economy that is larger than most countries has not prevented the Golden State from taking itself to near fiscal collapse. The current administration, under Governor Gavin Newsom, has decided that the main problem is a lack of new programs. The few Republicans left in the state try to make their presence known and stop tax increases; but haven't the political numbers in either chamber of the legislature (Assembly or Senate) to make any real waves. The result is a dysfunctional state government and a stagnated economy.
As a resident I have a vested interest in the outcome of any future changes. Like the debate going on at the national level the state of California is faced with a similar fork in the road – give more power to the government or shrink the size of Sacramento in favor of local regimes and the private sector.
The main argument of Democrats in California is that revenues have not kept pace with the growing demand for state services. They are particularly focused on the taxes associated with Proposition 13 from the 1970s. This movement was begun because the growing popularity of living in California was driving up property values. Those older citizens living on a fixed income found that they may have paid off their mortgage but were now facing eviction because of the constantly rising property taxes on their increasingly valuable home. Proposition 13 restricts the state from reassessing property values until the property changes hands.
Arthur Laffer has written a study on Proposition 13 to demonstrate his theory of taxation – known as the Laffer Curve. Laffer's study demonstrated that the lowered tax rates were actually spurring more real estate sales that increased revenues to the state's treasury. The lower property taxes were also encouraging more people to move to the state, which increased both income and sales tax collection. The real problem for California has been increases in new programs without the proper budgetary constraint to ensure long-term viability.
What makes California's troubles more entrenched is that the causes are structural in nature, as opposed to the mere constitution-interpretation issues discussed under the federal government. California has been operating under a very fluid political system based on the direct democracy movement begun during the Progressive Era. The referendum, initiative and recall devices – started to promote more open government – have become a way for political insiders to force the legislature to adopt new spending obligations without having to worry about the fiscal ramifications. The state constitution is where the reform must start and may require a completely new constitutional convention.
This is very intimidating. The variety of political thought in California would create a very chaotic convention. Unless a clear majority of strict constructionists were elected to be drafters, the new constitution might come out even more convoluted and cumbersome.
First thing would be to eliminate the three offending budget busters. The mere fact that the state would not be holding special elections every year would in itself save the state millions. Next would be the several hundred special commissions appointed to rule over Lord knows how many parts of Californian life. The best thing to do would be to shut all of them down. If any cause requires the state's attention, let the legislature create committees to do the work.
It would then be beneficial to restructure the legislature to reflect the national constitution. Expand the state assembly to reflect the larger population, and adjust the state Senate so that each county council could appoint a senator (perhaps in staggered elections). This would ensure that Sacramento would not use the local governments to pay for tasks not budgeted at the state level. This would also save the state millions in election costs.
Embracing federalism, the state can focus on its main priorities: higher education, business regulations, and infrastructure. The counties could be focused Imagine most of the day-to-day, public education, health, safety/security, and welfare. By dividing the responsibilities Californians get good government at a lower cost and more accountability.
Without a solid plan now, California will be in a big mess. Governor Jerry Brown attempted to solve the problem by poking around the edges of reform. What he really did was hold back his own fellow Democrats in order to stash away billions in a "cash reserve." Real effective changes need to be dramatic and it is not certain that they will ever come.
