The seeds of California’s current crisis were planted more than 30 years ago, when voters overwhelmingly passed Proposition 13, a ballot measure that placed the state’s budget in a straitjacket. Property tax rates were capped, and homeowners were shielded from increases in their tax assessments even as the value of their homes rose.
The result was a tax system that is both inequitable and unstable. It’s inequitable because older homeowners often pay far less property tax than their younger neighbors. It’s unstable because limits on property taxation have forced California to rely more heavily than other states on income taxes, which fall steeply during recessions.
Even more important, however, Proposition 13 made it extremely hard to raise taxes, even in emergencies: no state tax rate may be increased without a two-thirds majority in both houses of the State Legislature. And this provision has interacted disastrously with state political trends.
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That’s a nice analysis of the REVENUE part of the equation, but it doesn’t explain why California’s SPENDING has increased at TWICE the rate it should have over the last 10 years based on inflation and population growth. Why Dr. Krugman tries to perform an analysis of CA’s income statement without a discussion of costs (re: spending) – that is, reducing them – speaks volumes regarding his own agenda. [/quote]
I also have noticed a very strong revulsion to the 2/3rds requirment to raise taxes in the media lately. I tend to this is because Democrats control about 60% of the state government and dont like the fact that they actually have to listen to the Republicans on things like raising taxes to fund pet projects. (Republicans wouldnt be any better based on the last 8 years than the democrats, it is just the democrats control this state.)
My favorite is when they complain about how a tiny minority can holdout on passing legeslation. You know, the one third of people in the legeslater that doesnt have the same letter behind their name as the majority. It sounds so much better than saying that they may actually have to negotiate with the minority party.
