With the special election taking place tomorrow, I wanted to pen my last pre-election commentary on the issue of Proposition 1A. On this website we have featured a score of guest commentaries on the issue of 1A, most of them highly critical of the measure, but a few supportive of it.
I wanted to share with you my observations on 1A, in some detail, and make it very clear why I am voting against it at my polling place tomorrow, and why I strongly encourage you to do the same.
IF 1A PASSES, CALIFORNIANS ARE HIT WITH $20 BILLION IN TAXES THAT THEY OTHERWISE WOULD NOT HAVE TO PAY
There are basically two consequences of the passage of 1A. One is that a weak spending limit is adopted, which we discuss in detail below. The other huge consequence is California taxpayers will be hit with over $16 billion in higher sales taxes, higher income taxes, higher car taxes, and a reduction in the tax credit for dependents which would cost families $200 per child. According to the Howard Jarvis Taxpayers Association, Prop. 1A’s passage will cost a typical California family more than $1,100 a year!
Currently Californians are among the highest taxed citizens in the entire country, and increasing our tax burden is horrific public policy. Californians are being asked to pay higher taxes to accommodate years of overspending (state spending has increased over 40% in the last four years alone!).
It is important that voters understand how these tax increases would take place. The reality is that in February, when the largest tax increase in our state’s history was passed, that same legislation also enacted all of the increased taxes that I list above, however in that tax increase bill, it states that these taxes only go into effect if 1A passes.
THE SPENDING LIMIT IN 1A IS FLAWED, AND DOESN’T PREVENT POLITICIANS FROM INCREASING SPENDING ABOVE THE SUPPOSED LIMIT
California desperately needs to rein in out-of-control spending. Ideally, this should be done by the elected representatives of the people, but of course as we know from the massive increases in state government, especially in this decade, they are doing a dismal job. The pursuit of a real spending limit, passed by the people, and that can only be lifted by a vote of the people, is therefore an important goal. Unfortunately, the very weak spending limits in Proposition 1A certainly don’t achieve this goal.
In a couple of paragraphs, I will attempt to articulate, in non policy-jargon, why the spending limits in 1A are very weak.
The first “fatal flaw” of this so-called limit is the explicit gubernatorial power to increase spending above the nominal limit for a given fiscal year (reducing transfers into the “rainy day fund”) simply by executive order. Second, this spending limit can be adjusted by a two-thirds vote of the legislature, because the language of the initiative rises allowable spending when taxes are raised. I would argue that this will increase pressure to raise taxes, and right now, I don’t think any Californian can feel confident, for good reason, that the two-thirds threshold to raise taxes isn’t attainable (as we just watched the legislature pass, and the Governor sign the largest tax increase in state history).
To realistically “test” whether a spending limit is real, you have to ask yourself a simple question, “If two-thirds of the legislature and the Governor wanted to spend more many than allowed under the limit, could they do so?”
And as for the provision of the measure that says that growth in spending is limited to an adjustment for inflation and population growth, Zycher observed to me that the inflation and population growth parameters will need to be estimated, yielding political pressures to bias the estimates—and thus spending—upward. This will be particularly problematic for the projections of population growth.
This becomes significant because, as I said, the “test” of this language is whether it can limit spending increases despite strong efforts by a Governor and legislature to ratchet up spending.
In short – the very modest impact of this so-called spending limit (so modest that the state’s largest public employee unions are largely silent or are supporting it when, if it were a real spending cap, the unions would spend every dollar in their PACs, and then some, to try and stop it) is so easily avoided determined politicians that I would vote against it even if there were no tax increases attached, for fear that the public would be mislead into thinking that with its passage, 1A would have actually limited state spending. But, of course, there are over $16 billion in new taxes (above and beyond the $14 billion passed in February) coming down on California taxpayers.
It is an absolute tragedy that Republican "resolve" to bring real spending reform to California government was sacrificed on the altar of accommodation to the very public employee unions who have used their perverse influence to virtually bankrupt our state. And it is an even bigger tragedy that a Republican Governor and a handful of Republican legislators worked with Sacramento liberals to pass massive tax increases – and to make it worse, they also signed off on a title and summary for 1A that misleads uniformed voters as to the true nature of the tax increases.
VOTE NO ON PROPOSITION 1A TOMORROW – IT’S AN EASY CALL.
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