Hey Legislature: Listen To Harold Meyerson

Harold Meyerson had a nice piece last week similar in tone and scope to my piece on Jarvisism - arguing that Prop. 13 really was the original sin that sent the state on an almost continuous downward spiral, as much a reflection of the Age of Reagan as the financial deregulation that presaged a crisis at the federal level.

By passing Howard Jarvis' malign initiative, California voters reduced the Golden State to baser metal. Under Republican Gov. Earl Warren and Democratic Gov. Pat Brown, California epitomized the postwar American dream. Its public schools, from kindergarten through Berkeley and UCLA, were the nation's finest; its roads and aqueducts the most efficient at moving cars and water – the state's lifeblood – to their destinations. All this was funded by some of the nation's highest taxes, which fell in good measure on the state's flourishing banks and corporations.

Amid the inflation of the late 1970s, however, the California model began to crumple. As incomes and property values rose, Sacramento's tax revenue soared – but the parsimonious Democratic governor, Jerry Brown, neither spent those funds nor rebated them. With the state sitting on a $5 billion surplus, frustrated Californians grumped to the polls and passed Proposition 13, which rolled back and limited property taxes – effectively destroying the funding base of local governments and school districts, which thereafter depended largely on Sacramento for their revenue. Ranked fifth among the states in per-pupil spending during the 1950s and '60s, California sank to Mississippi-like levels – the mid-40s in rank – by the 1990s.

Meyerson puts together all the malign elements of Prop. 13 - the defunding of local government, where people gain their impressions of government as a whole (so defunding it serves conservative frames of government as useless); the 2/3 majority requirement for raising a tax, giving over the state to a conservative veto; the regressive nature of the tax structure that became an outgrowth of that super-majority, since the only taxes allowed by the Yacht Party affect the poor disproportionately, leading to the lower class spending a higher percentage of their incomes on taxes than the upper class; the tax-cutting troglodytes emboldened by their ability to hijack. He closes by explaining how Washington should not ignores the dysfunction of the nation's largest state.

Because California is so much larger than any other state, and its unemployment rate is among the nation's highest, the collapse of its capacity to spend will counteract some of the effect of the federal stimulus and retard the nation's recovery – much as its aerospace slump retarded the recovery of the mid-1990s. The Obama administration ignores California's plight at its own – and the nation's – peril.

The nation's banks are stuck with so much bad paper from California mortgages gone awry that a huge contraction in state spending would make their assets even more toxic. In the short term, the only way to avoid a further downturn may be a federal loan to the state.

A more permanent, homegrown solution to California's woes (and it may take a state constitutional convention to get it) would require the state to eliminate the two-thirds threshold for enacting taxes, to repeal Proposition 13's freeze on the value of commercial properties (some of which are still assessed at their 1978 levels) and to end the process of ballot-box budgeting through the initiative process, which is now more dominated by monied interests than the Legislature ever was.

Harold Meyerson showed the way forward, to such a degree that the SacBee editorial board called today for a fresh look at Prop. 13. The news peg may be San Francisco County Assessor Phillip Ting's activism in support of a split-roll solution, assessing commercial property taxes at similar levels. But the intellectual underpinnings are all in Meyerson's piece, which out to be memorized by progressive activists.

People generally respond to leadership. Legislature, take note.