Other people’s mistakes

It has been said that fools never learn and wise men learn from their mistakes. But geniuses should learn from other people’s mistakes.

The great state of California seems on the verge of becoming the late great state of California as it struggles to survive the current recession. Because of a few quirks in their state laws, combined with the fact that the legislature is required to produce a balanced state budget, the financial condition of the state is dire.

Some folks living outside of California who find it amusing, even righteous, to look
down upon the state and all its components (especially Hollywood and its Democrats) may be tempted to express a certain amount of glee at how the mighty seems to have fallen, apparently forgetting that it was California and specifically Hollywood that gave us the late, great Ronald Reagan.

But “left-coast” critics around the country, as they decide how to address their own fiscal crises, would do well to try to understand how that state got into this particular fix, for there is much to be learned from it by others.

Back in the day, as we love to say, California was thriving. But in 1978, “thriving” wasn’t enough for some — nor, for that matter, was their system of representative government, apparently, for beginning with the now infamous Proposition 13, they began to opt for anarchy.

California is one of the states that allows for new laws and even constitutional amendments to be accomplished through referendum — that is, a popular vote that effectively bypasses the legislature. Inquiring minds might want to know why anyone should bother with electing a government at all.

So the citizens passed a constitutional amendment, wildly promoted by anti-tax folks, limiting property taxes to 1% of the assessed value of a home and limiting assessment increases to 2% per year until the property changes hands.

By contrast, here in Waxahachie the property tax (including all local taxes) is about 2.35%. Given that just about everything is more expensive in California, the difference is striking.

Of course, here in Texas we have the homestead exemption, which includes a 10% cap on the amount an appraisal can be increased from year to year, a bit more than 2%.

Not satisfied with reducing future property tax revenues, the greedy folks who brought this about made it retroactive, sending out millions of dollars in refund checks the first year; all the homeowner had to do was ask.

Howard Jarvis, half of the Jarvis-Gann team who led the effort to put Prop 13 on the ballot, is quoted as having characterized all taxes as “felony grand theft.” Texas TEA-party folks would be proud.

Added to the existing law requiring a two-thirds vote for any tax increase anywhere in the state, and another prohibiting local agencies from setting any new tax, the collateral damage was huge.

Very soon after the amendment went into effect, the quality of life in California began to change dramatically. Public libraries began closing down to half-days, “non-essential” school personnel (like counselors) were laid off, and according to Wikipedia, citing a report from the Public Policy Institute of California, “Fire departments were gutted because of a drastic loss of funds. … Cities also cut water, gas and electricity expenses.”

According to a 2003 report in the Rand Review, “Widely regarded as one of the best systems of education in the country as recently as 30 years ago, the California public school system has since become, according to most measures, one of the worst.”

Does this sound like something we want in Texas?

One more thought:

The current web site of the Howard Jarvis Taxpayers Association boasts that Proposition 13 has "saved California taxpayers" over $528 billion. As of June 2009, Reuters reported, California’s present struggle is to overcome a $24 billion budget deficit.

You do the math.