News

Opinion: Spending limit would lock in recession, prove poison pill for taxes

As various tax proposals line up for the November ballot, one measure has been introduced that could overturn other tax measures on the ballot and would limit the likelihood of future state and local tax measures from ever going to the ballot.  It would also lock in state spending to current recessionary levels – forever.

The measure is presented to voters as a “spending limit,” but it has been advertised falsely by the Jarvis group and right-winger Joel Fox, as restoring the old Gann spending limit.  Thankfully – and surprisingly  – it does not do that.  That limit was overturned in 1990 by a broad coalition including Jarvis’ ally in this new venture, the California Taxpayers’ Association, because the limit ran counter to economic growth in the state.  It might be considered a hopeful sign that even the most anti-government right-wingers have finally accepted that the current spending limit formula makes sense – allow the public sector to improve as the economy improves.

However, they have instead found a different route to lock down government.  The spending limit proposal re-benches state spending to the level in 2010-11, and only allows growth starting from that level.  Thus, the “normal” level of state spending would be the level found in the depths of the recession.  General fund revenues were about $85 billion in 2010-11, compared with $103 billion in 2007-08, a nearly 20 percent decline.  So if spending can only grow from its lowest historical base, the spending cuts of the last two years would be locked in forever: permanent recession for our schools, colleges, and roads, little economic recovery for the public sector.   

The proposal gets worse.  First, it overturns the Legislature’s authority to authorize local taxes by majority vote.  Those local taxes, of course, have to be ratified by voters, usually by 2/3, but the simple authority to vote on local taxes has been granted by the Legislature by majority for years.  Many sales taxes for transportation, public safety and other local taxes and fees have been authorized to go to the ballot in many cities and counties. When Gov. Brown was stymied by the 2/3 vote requirement for sending taxes to the ballot this past year, Sen. President Pro Tem Darrell Steinberg introduced a bill which would authorize local votes on various taxes as an alternative.  In response comes this constitutional amendment that would make it harder to allow citizens to exercise their democratic right to vote on taxes, and would take effect retroactively to this year.  

It is also written to overturn other tax measures on the same 2012 ballot, if it gets more votes, so that even if, say, Gov. Brown’s tax proposal wins by a majority, it would be thrown out.  Since the few statewide taxes that have passed have won by only the slimmest of majorities, this measure would be likely to throw out any successful tax measure, if it can muster a campaign to pass it.  

It is written so broadly and so badly, it could well be considered a poison pill for any tax measure which is ever passed by the voters.  It baldly states that any measure which raises taxes on any taxpayer requires 2/3 vote of each house of the Legislature, including “any and every possible type of modification to state law” which would raise taxes on any taxpayer.  
That phrase does not exclude initiatives passed by the people and if read literally, means that even if people vote to raise taxes it would have to be ratified by 2/3 vote of the Legislature. Given the strenuous defense of the sanctity of the initiative process by these folks, this must be a drafting mistake.  But it is difficult to read the hard-line language inserted into their measure in any other way, which requires that this measure in every way is controlling over any constitutional measure in conflict (including those affecting initiatives).  Since they have already once re-submitted major, not minor, drafting changes to their first version, hopefully the drafting errors will overwhelm this ill-conceived measure before it starts.  

This proposal also restricts tax initiatives in another more direct and intentional way:  it does not allow the voters to exempt any new spending paid for by taxes from the limit.  Even if voters approve a tax measure for roads, education, public safety or anything else, the revenue could not be spent if the state is at its limit – which of course it would be, given the recession-set spending level. So tax measures going to the ballot would most likely have to be a constitutional amendment – an additional hurdle on taxes and surely a bizarre way to run fiscal policy in a large state.    

We would expect all these excessive attempts to lock down government, prevent people from voting, and worse from the Jarvis group, whose self-appointed task has gone well beyond protecting homeowners and instead has become defending corporate loopholes, oil companies, and the ultra-rich from taxation.  But for the California Taxpayers’ Association to join in this effort is, to be polite, a disturbing departure.  

Cal-Tax was once a respectable if conservative organization with whom many of us on the progressive side of California politics have worked successfully — particularly on changing the state spending limit but also on reasonable tax proposals over the years (such as funding infrastructure or conforming to federal tax law).  Now, it has joined with the worst of the right-wing ideologues in trying to make California government more dysfunctional than it already is and less capable of responding to the needs of its citizens.    

Hopefully, this article is a waste of cyberspace since this measure may be a ploy and the money to qualify may not be there.   And it’s likely that the title and summary presented by an objective look at this measure by the Legislative Analyst, the Attorney General, and the Department of Finance will be so ugly as to sink its chances of passage.  But we have seen a lot of bad measures make it to the ballot, so no matter how damaging this measure will be, or how bizarre it is as governance, it ain’t dead until it fails to get the signatures – or the votes if it gets that far.


Support for Capitol Weekly is Provided by: