High Taxes and Slow Growth Strangle California
In 1967, five years after California became the most populous state, novelist Wallace Stegner said that California - energetic, innovative, hedonistic - was America, "only more so." Today, this state's budget crisis is like the nation's, only more so. Bob Dutton is an island of calm in the eye of the storm - which should agitate Gov. Jerry Brown.
Dutton came to California from Nebraska at age 19 in 1969 and now is the leader of Republicans in the state Senate. He contentedly says that his caucus is "almost like a Chamber of Commerce board of directors." Its members are mostly from small businesses, as he is. Because they are term-limited, they cannot make a career here, so they might as well follow their small - well, smaller - government inclinations.
They have it in their power to compel the governor to confront the public employees unions that have gained so much power over the state's budget. All they need to do, Dutton notes, "is just say no to more taxes." This is so because Brown needs two Republicans in each house of the Legislature to raise taxes (actually, to reinstate for five years some taxes and fees that will have lapsed by July 1), or to authorize a November referendum that could reinstate them.
Brown's plan for balancing the budget is to close about half of the deficit with reductions and fund shifts already approved and the rest by tax increases. Republican resistance to the taxes is explained by facts provided by Troy Senik, writing in the Manhattan Institute's City Journal:
"Californians already labor under sales-tax rates usually reserved for states without income taxes (at 8.25 percent, the nation's highest) and sharply progressive income-tax rates usually reserved for states without sales taxes (the state's top rate is 10.55 percent, and it doesn't allow you to deduct your federal taxes, as some states with income taxes do)."
Those tax levels are surely related to these demographic facts: Between 2000 and 2010, Los Angeles gained fewer people than in any decade since the 1890s, and Los Angeles and the San Francisco Bay Area have the slowest growth rates since the end of Spanish rule. For the first time since 1920, the Census did not award California even one additional congressional seat.
California's Constitution requires a balanced budget. Sort of. For more than a decade it has been "balanced" only by creative accounting - a fact that should give pause to conservatives, in Washington and elsewhere, who are eager to constitutionalize fiscal policy by putting a balanced-budget requirement in the U.S. Constitution. California's is one of the world's longest Constitutions - if a document that has been amended more than 500 times by direct democracy can be said to truly constitute a political system. It controls much of state spending. For example, about 40 percent of the budget is dedicated to education. The Legislature has limited or no control over as much as 85 percent of revenue.
Brown knew all this last year when he campaigned for governor on a principle he articulated when running for president in 1976: "A little vagueness goes a long way in this business." Brown is, however, a veteran practitioner of the rhetoric of reform. A transcript from "Meet the Press," Oct. 5, 1975:
"Mr. Will: Governor, you expressed an interesting concept of representation when you said that you wanted to be governor of the 54 percent of the people who didn't vote last year. How do you fashion a program for people who express no mandate?
"Gov. Brown: To stand up to the special pleaders who are encamped, I should say, encircling the state capitol, and to see through their particular factional claims to the broad public interest."
The most muscular pleaders are the public employees unions. In 1978, Brown conferred on government employees the right to unionize and bargain collectively. In 2010, their unions fueled the campaign that restored him to the governor's office. Thus does the liberal merry-go-round spin.
Bill Whalen of the Hoover Institution notes that California's four most influential Democrats are Brown, U.S. Sens. Dianne Feinstein and Barbara Boxer, and Rep. Nancy Pelosi, who are 73, 77, 70 and 71, respectively: "No other state's political ruling class is as gray, a terrific irony for youth-worshipping California." Dutton and other relatively anonymous Republican legislators can, by being constructively obdurate ("no"), shake the foundations of reactionary liberalism - the regulatory state that seemed so right in the septuagenarians' formative years, a half-century ago.