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Pay it forward, Californians

Despite looming budget cuts, this is a wealthy state. And we should choose to invest in its future.

November 19, 2011

California's budget is almost never adopted by the legal deadline, but it was this year — in part because of a new simple-majority-vote requirement that left quarrelsome Republicans out of the discussion, and in part because daydreaming Democrats relied on a vaporous wish that the economy was going to improve and that the state would recoup $3.7 billion more in tax revenues than now seems likely. The shortfall is expected to trigger $2 billion in spending cuts, and Californians who think that's a good thing — that the cuts will impose needed fiscal discipline, or will force the state to make more responsible decisions, or will punish lazy freeloaders or greedy state workers — should wake up and smell the future.

But first, a quick look back. The state has a long history, born of extended booms and quickly forgotten busts, of inadequate fiscal discipline. Supposedly excess money in any boom year is quickly proclaimed permanent and is turned into ongoing commitments. A recent succession of modest boom years led to higher pension demands by retiring workers and lower vehicle license fees for drivers. Yet today's state workers, in a very non-union-solidarity-like display, seem content to swallow a growing portion of future budgets even if it means layoffs for the next generation of workers and lower-quality services for the next generation of residents. It's as if California had become a feast to be consumed rather than an achievement to be sustained for the next generation.

But state workers are not the sole cause of California's problems or its need to trigger further spending cuts. Under pressure from the great and lingering recession, residents have turned an appreciation of public employees into an ambivalence and finally an angry resentment. Many Californians can be heard asserting that the public sector is overstocked with employees, when in fact the state already has the nation's second-lowest ratio of state workers to residents. Then is the employment glut in schools and local government? No. California has the nation's fourth-lowest ratio of all non-federal public workers — state, city, county, schools, special districts — to residents. The cuts will pare the public payroll further, leaving fewer people to maintain the roads and parks, keep the peace, administer justice, teach the next generation.

Meanwhile, drivers, whose annual fees long paid for local government services, seem unable to make a connection between the decline in what their governments can provide and the ephemeral benefits of their supposedly cost-free commutes. It's as if we could stop paying our dues but still demand full membership in society.

From its inception during the Depression to the post-World War II era, when the vehicle license fee reached 2% of a car's value, the car tax helped pay for local government. After 1948, the rate never increased. Local governments had a reliable stream of revenue. More to the point, motorists had a predictable and manageable annual tax burden. Real estate values tend to rise each year, which made property taxes hard to predict until voters cut and capped them in 1978; but the value of all but a very few cars decline, making annual license fees lower each year until trade-in. The car tax was a great way to fund local government.

But in the late 1990s, California drivers began to convince themselves that their annual payments were an unfair burden, and they were slashed. Now the budget is so strapped that car tax revenue must be limited to public safety.

It's not merely in Sacramento but in city and county halls and in the voting booth that Californians continue to demand that they get more but pay less. Every other state makes paying back its bond obligations its top budget priority, but for California, bonds come second after education — and yet the triggers are set to cut a week out of the K-12 school year and $200 million from a public higher education system that was once the world's envy. Cuts in the education and development of the next generation of Californians lay the foundation for a duller, poorer and less accomplished state in the near future.

As for those supposed lazy freeloaders — in actuality the poor, the sick, the disabled, the elderly — when did we let go of our conviction, once a bedrock of California values, that caring for people in need was a moral obligation?

California is a wealthy state, with enough money and brains to create a future of opportunity and achievement for the next generation. As we face these new triggered cuts and even deeper cuts in the coming year, Californians must now show whether we still have sufficient regard for each other and for our successors to invest a little more today for an abundant, and sustainable, future.

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