Iwas recently hospitalized with a life-threatening illness that it took doctors several days to accurately diagnose. Until they fully understood the problem -- which turned out to be an antibiotic-resistant staph infection -- they couldn't prescribe the medication that would cure me.
The experience got me thinking about California.
Our state's protracted budget crisis sometimes seems unsolvable. But part of the problem may be that those who are trying to solve it don't fully understand its cause.
I represented the Silicon Valley for 38 years in the Legislature, and I chaired the Assembly Budget Committee for 15 of those years. As a result, I have some insights into our current crisis that may be useful.
The immediate problem, of course, is a $26-billion shortfall, which we must now plug if California is to pay its bills. But before we can fix things, we have to understand how we got to this point.
A good place to start is with the slew of revenue reductions that have hit the state since 1978, when Californians passed Proposition 13. The initiative dramatically reduced most property taxes and resulted in a 57% reduction in property tax revenue during its first year, and its effects continue.
Another revenue drop came in 1982, when voters passed an initiative abolishing the state inheritance tax. Before that, California had taken in nearly $1 billion a year in estate taxes.
And there are vehicle license fees. Starting in 1998, the fees were reduced incrementally until Gov. Gray Davis raised them to close a budget gap in 2003. When Arnold Schwarzenegger came into office later that year, he immediately reversed the hike -- at a cost to state coffers of about $4 billion each year since then.
Add to that the collapse of the dot.com bubble in 2004 -- which resulted in a drop of several billion dollars in state revenues from capital gains taxes -- and the current global economic downturn and you start to see how state revenues have suffered.
Next, consider a series of structural complications that hamper the Legislature's ability to come up with solutions. First among them -- again -- is Proposition 13, which requires a two-thirds vote of both legislative houses to raise taxes. This has meant that a small minority can keep the majority from enacting tax hikes that would help balance the budget.
