News came out on Thursday that the California budget deficit is actually closer to $25 billion, twice what we are told. This follows from last year’s $42 billion shortfall, which was closed by all sorts of one-time tax increases and gimmicks. Here is our general dilemma in a nutshell.
Fact one: California has among the highest taxes in the nation, over 10% on top incomes, and about 9.5% that hits earners when they get above $47,000.
Sales taxes, depending on the county, average close to 10%. The result is that thousands (the exact number is unclear, perhaps between 2,000 and 3,500) of more affluent Californians are leaving the state each week for low- or no-tax states. Raise income taxes or sales taxes or gas taxes higher, and there will be a stampede. Note that property tax rates are not singularly that high in comparison to other states. Yet that fact is of little help since our assessments are often astronomical (given that we like to live on the coast and then, once there, ensure others cannot).
The apparent solution for now is to slap one- or two-year higher taxes on vehicle registration (sky-high), or issue fees to use state facilities, or to hike tuition at public colleges and universities (still cheap in comparison to private counterparts).
Fact two: we have among the highest compensated state employees and teachers in the United States, with singularly powerful public employee unions. (I was governed by one for 21 years: professors at the closed-shop CSU were forced to pay union dues — even if we were not in the union, and objected to the union’s efforts to end merit pay and accountability and to ensure near universal tenure).
Yet in many categories we need more state employees to attend to basic services. But we cannot since the state operates a sort of caste system in which we pay so much to the entrenched that we cannot afford to hire more numerous entry-level workers. (Part-time PhDs at the CSU system make Wal-Mart greeters seem privileged in comparison). This is regrettable, because we tend to reward the superannuated and simply write off the younger and idealistic. An entire cohort of young California credentialed teachers and college graduates in general are in limbo, stuck in low-paying part-time jobs for the foreseeable future that won’t pay the interest on their student loans.
The Refined Classes
Fact three: a particular class, largely coastal, professional, and liberal, believes utopia is nearly here, if we just impose more regulation, higher taxes on businesses, and more environmental legislation. They have not a clue how others pump oil or gas, grow food, and produce lumber, only that they like driving, like eating, and like nice houses, but are not particularly interested in the grubby Neanderthals who allow that to happen.
So in times of near depression voters insist on stringent global warming/carbon emission laws, and keep adding regulations that hamper rather than encourage wealth creation. (Note: the more regulations we impose, the more they are ignored and the more lawless we become. Here in rural California, it is now common to see instant restaurants on the roadside: no septic systems, food preparation trailers plopped down with canopies, picnic tables, and plastic chairs, without the scrutiny that struggling restaurants put up with. Ditto instant hardware stores out on rural intersections where everything from new rakes to gas rototillers are peddled: no sales taxes, no questions, just a quick sale and on to the next location).
Thank God For Someone or Something Else
Fact four: we count on two things to save us. One, California is a beautiful natural paradise. Yesterday I drove from the high Sierra amid a blanket of alpine snow to the 70s in Palo Alto in a little over four hours, across one of the most productive and beautiful agrarian landscapes in the world. In sum, we think there will always be some of you who will fall in love with the aesthetics that we had nothing to do with, and thus might, like the proverbial fly landing on sticky paper, arrive and become enticed enough to let us tax you for a while in our P.T. Barnum-like con.
Two, someone in our past did not think like us, and so we inherited an infrastructure, universities, airports, and roads that we continue to milk but not refurbish or invest in. We, the less talented and industrious, but the far more critical and sarcastic, drive along I-5, and swim in beautiful Sierra manmade lakes, with the apparent belief that we are glad some anonymous fools did this for us. But we in our sophistication would never mar the landscape in the way they did. Think about blowing up Hetch Hetchy back to its natural beauty perhaps — then providing new drinking water for 85% of San Francisco, never.
The Unmentionable Topic
Fact five: we have no idea how many illegal aliens are in the state, and are left only with the paradox of being told 2-4 million reside here, but that the state also has about half of the nation’s 11-15 million illegal alien population. Add that up.
Nor are we told the greater social service costs of many second-generation Mexican-American citizens who, both at times tragically and heroically, must grow up so often in households in which their parents are here illegally, without English, and without a high school diploma. So Californians adopt an Orwellian persona: privately they assume that our near-rock bottom standing in nationwide public school math and English scores, record inmate population, out of control gangs, and assorted Medi-Cal and social service spending have something, or even a lot to do with the ripples from illegal immigration. But we also accept that even to suggest that is career suicide, given the changing political demography of the state. We prefer anecdote to statistic; one success story trumps five buried reports on failing schools, out of control public defender costs, or bankrupt emergency rooms. We have no idea how many Californians have fake IDs, or work for cash and untaxed wages, or work while on unemployment, or use public assistance money at casinos and palm readers (we call them “psychics”) (our governor just banned the use of public assistance funds for both in anger), but I do know from bitter experience that to even wonder out loud about that will earn all sorts of hatred and invective.
So we sound utopian in our public rhetoric, but privately millions of all races and ethnic backgrounds, including millions of liberals and Hispanics, are terribly worried, and so make the necessary adjustments: they avoid public schools like many in San Jose and Fresno; they do not live in towns like Orange Cove, Mendota, Parlier, Selma (mine, which I still enjoy), Fowler, or large areas of San Jose or Los Angeles, and they are careful where they go in the evening. When we see high school students at Morgan Hill High School walk out in anger at the crime of a few students wearing the American flag on Cinco de Mayo Day, Californians know enough to politely pass over that in conversation and yet not get near that school district in fact.
So we do not have much wiggle room left, especially when we vote for more of the sources of the problem and you in the other 49 states do not like loaning us $40 million a day just for our quite generous unemployment insurance in a very high-unemployment state. There are only so many gimmicks left. Either our Governor-elect and veteran liberal Jerry Brown will have to do a Nixon to China, or the Republican House will have to let us go broke and cut off the cash. Either way, it should be an interesting ride — perhaps a panic of 1893, Great Depression, 1970s stagflation, and 1992 state meltdown all in one surreal experience.