The Golden State Goes Bust

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Watching California sunset

Californian just voted down a set of “revenue enhancements.” Now Governor Arnold Schwarzenegger is threatening to layoff fire, police, and teachers. This will certainly increase the already soaring unemployment and foreclosure rates. Schwarzenegger is now considering releasing nonviolent prisoners, shortening the school year, legalizing and taxing marijuana.

Most of the “measures” or propositions on this special election (May 19) were desperate attempts to bailout California from an extreme budget deficit. Only one of the measures passed. It would prohibit pay raises for legislators unless the budget is balanced.


It is often said that what happens in California will happen in the rest of the US. I hope this is not true for our economic dilemma, but if we can find away out then maybe we can lead.

In many ways California is very progressive. It leads in environmental standards. This is certainly amassing considering that California is an oil producing state. It has compelled other states and countries doing business with California to comply with these standards. If California were a country it would have the 7th largest GNP in the world!

Obama has praised California’s energy and emission policies and has promised to use them for a national model. Recently, he announced the goal of a national mileage and emission standard.

What’s truly amassing is that this is possible considering California’s weird legislative process utilizing initiatives and referendums. Initiatives are supposed to be grass root proposals and referendums are supposed to be the will of the people over bills that can’t pass the Legislature.

Both initiative and referendums were the result of populous movements in the early nineteenth century to end control of the government by the railroad lobby. Unfortunately, both have become tools for special interests.

During every election Californians are confronted with a battery of propositions. These propositions are placed on the ballot by gathering signatures. Special interests usually pay a dollar a signature. Once these are qualified for the ballot, special interest bombards the media with confusing ads.

Since these initiatives and referendums are written outside the legislative process, they are poorly written and confusing. Only the money behind them betrays their true intent.

The powerful prison guard’s union pushes draconian laws that imprison more petty criminals longer. Even progressive politicians are glad to hop on any anti-crime bandwagon. Los Vegas casino owners are always ready to fund initiatives to increase taxes on Indian gaming.

A previous initiative mandates that the California Legislature must have a 2/3rd majority to raise taxes. In 1978 Proposition 13 was passed and has severally limited property taxes.

During his transition into office, Schwarzenegger asked Warren Buffet to underwrite proposed California bonds. Buffet told him that until California repealed Prop. 13, it could not get a decent bond rating.

Anti-tax advocates demonstrate with tea bags hanging from their hats to commemorate the Boson Tea Party. But this historic event protested, “taxation without representation.”

Our economy is being bled at all levels, not by high taxes, but by high mortgage payments. These private taxes offer no representation. Few know where this money goes. It apparently disappears into “toxic assets.” It might as well fall into a black hole.

These private taxes do not pay police, fire fighters, or teachers. They do not build schools, roads or parks.

It is clear that California needs to return to a representative form of government. By the way, an initiative set term limits. As soon as legislators build a record they’re gone. The lobbyists seem to like it that way.

California’s plight could be the golden opportunity for change. California needs to get its own house in order. It needs taxation with representation to support communities. It needs to achieve affordable housing by reducing mortgage principles and rates to market value. Then maybe California will lead. California is just too big to fail.

 Photo Credit: flicker/moonjaz




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