For the Left, the cost of spending is never too great. As Harold Meyerson’s recent Washington Post column “How the Golden State Got Tarnished” shows, the price often includes factual accuracy. Only by overlooking the fiscal and political facts can he advance his argument that California is hostage to a minority’s opposition to the tax increases necessary to “move [it] toward a more sustainable economic future.”
Meyerson attributes California’s current deficit problems to the 1978 passage of the tax limitation amendment Proposition 13. He argues this initiative allows a willful minority of conservative ideologues to prevent the tax increases the fiscal situation, and the majority of Californians, demand.
Asserting “we must understand the state’s road to insolvency,” Meyerson incredibly fails to make any mention of the state’s spending! Since deficits are composed of two parts — revenues and outlays — it is logical to expect both to be examined. That would be the route if the truth, rather than a conclusion, were being sought. Failing to even once reference spending is not akin to telling half the story; in California’s case it is not telling any of it.
Looking at state revenues and expenditures in the years following 1978, when Proposition 13 passed overwhelmingly with 70% of Californians voting and 65% supporting it, we see a very different story from the one Meyerson tells.
In its 1978/79 budget, California spent $16.1 billion from its General Fund. In its 2007/8 budget, the year before the current deficit debacle, California spent $103 billion from the General Fund. That is a 640% increase over the period. And even this view of spending is conservative because the General Fund excludes several other sources of the state’s spending, such as federal funds, special funds, and bond funds.
Looking at the same period, California revenue increased 680% — rising from $15.1 billion to $102.6 billion. Meyerson’s argument that Proposition 13 “reduced revenue” is patently false. Not only has revenue increased — it has increased in a greater percentage than spending — but still cannot keep pace.
Of course, maybe California’s performance is not out-of-line, even if out-of-step with its own fiscal needs. It is worthwhile to compare its revenue and expenditure growth with some external yardsticks. Let’s take two: federal performance and GDP growth.
Over the comparable period, 1979 through 2008, federal outlays increased from $504 billion to $2,978 billion, while federal revenues increased from $463 billion to $2,524 billion. Those translate into a spending increase of 590% and revenue increase of 550%. Over the same time, GDP increased from $2.5 trillion to $14.2 trillion, a 570% increase.
California’s fiscal growth — both expenditures and revenues — outpaced the federal government’s and the economy’s. By any measure, California has spent itself into its current circumstances. Because of that, Meyerson’s solution that the problem would be solved by increased taxes is equally wrong.
There is also a fundamental political problem with Meyerson’s argument that taxes could be raised. He states “raising taxes now requires a two-thirds vote of the legislature…” The clear implication is that a minority is dictating fiscal policy to a large majority and that the state should “eliminate the two-thirds threshold for enacting taxes [and] …end the process of ballot-box budgeting through the initiative process…”
Amazingly, Meyerson fails to mention that six referenda on solutions to the California fiscal mess were voted on just weeks ago (May 19). California voted down five with at least 63% of voters opposing. (The only one that did pass, with 74 percent support, prohibited state lawmakers from raising their salaries if the state budget was not balanced.) The most significant of these failures was Proposition 1A. While establishing a state budget stabilization fund, it also extended three tax increases — a sales tax, a vehicle license fee, and a personal income tax increase. Sixty-six percent of voters rejected it. The referenda again disprove Meyerson’s theorizing.
Both fiscally and politically, Meyerson and the Left’s arguments are simply unsupported theory that crumples in collision with reality.
A lack of taxes? These have grown proportionally more than California’s spending, more than federal revenues, and the national economy. Still they could not keep up with the head start California’s spending had.
Needed taxes stopped by an obdurate minority? The recent voter rejection was overwhelming and bipartisan.
Meyerson’s real problem lies not with taxes, but with facts. And California’s fiscal problem is with its own spending. A fact its voters recognize all too well, even if the Left refuses to.