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Thursday, May 26, 2022

Special Interests, Proposition 13 Cited as Possible Reform Areas

Special Interests, Proposition 13 Cited as Possible Reform Areas


Staff Reporters

Reform is in the air or at least the talk of it. The political circus over a possible recall of Gov. Gray Davis is likely to focus on the need for a substantive overhaul in the way the state does business. The Business Journal asked several experts in the public policy arena for their thoughts on how to fix the system.

Paul Lewis

Program Director, Governance and

Public Finance

Public Policy Institute of California

First, we should look at ways California is different than other states. Since Proposition 13, we have put a lot more emphasis on the income tax than most other states and are relatively low in our reliance on the property tax. This balancing between revenue streams has become very strained.

I know that our polls consistently tell us that folks don’t want to open up Proposition 13. But the greatest value of Prop. 13 was not necessarily that property taxes were lowered. Rather, it made property tax bills predictable, so that people weren’t being driven out of their homes by unexpected double-digit increases in property taxes. If you re-open Prop. 13, the question should be how to ensure that property tax bills remain predictable.

On the expenditure side, we again need to look at where California stands compared to other states. Despite the recent run-up, California is still behind the national average on education spending, when you look at combined spending of state and local governments. And we are way below the national average in transportation spending. But we are above average in health and welfare programs, public safety and government administration. Maybe it’s time to make some different tradeoffs.

Elizabeth Garrett

Professor of Law, University of Southern


Director USC-Caltech Center for the Study of Law and Politics

In the mid 1980s we had the federal budget crisis and the problem was entitlement spending. Every year when the Congress got ready to budget, a substantial amount of the dollars had already been committed to Social Security and entitlement programs. They were just dabbling at the margins to deal with a difficult problem.

What we have here is a similar problem. A number of initiatives have committed the state funds to various projects, things like education, infrastructure. They have discretion over only a portion of their budget to deal with a $38 billion deficit, and that makes it extremely difficult. In addition, there are a number of initiatives that have reduced the ability of the legislature to raise money for a variety of taxes, such as the supermajority voting requirement for tax increases.

I don’t think the answer is to get rid of direct democracy. Initiatives and referendums can play a very positive role in allowing people a way around special interests and other kinds of entrenched interests in the legislature. I think the answer has to be a more systematic and focused process of informing the voters of the cost of the initiatives they pass.

Another thing you can do is think about some of the requirements for direct democracy. In a world where paid circulators can qualify anything for the ballot as long as you have enough money, then maybe we need to rethink how many signatures we need to require before something can get on the ballot.

James K. Knox

Executive Director

California Common Cause

One of the major structural problems is special influence money the correspondence between the donors and beneficial policy outcomes.

Look at the budget process and if you follow the money you can usually predict who the losers and winners are going to be. The public employee unions did very well, and I don’t think it’s a coincidence they are among the largest campaign contributors to the legislative candidates for governor.

The ultimate resolution is to use public funds to pay for campaigns so that elected office holders are beholden to their taxpayers and not their campaign contributors. Public financing of elections can be a tough sell to the electorate, but it provides a wider range of entr & #233;e for potential candidates.

The only people who are viable candidates for government in California are people independently wealthy or people willing and able to raise millions of dollars from interest groups whose fate is controlled by the governor and legislature.

Werner Hirsch

Professor Emeritus, Department

of Economics

University of California, Los Angeles

Why do we have a structural deficit? That ties into Proposition 13. We had to shift into taxes to fund local government, as well as state government.

We had to rely heavily on two sources. One is income taxes and two are sales taxes. Both are highly progressive and unstable. If you have bubbles like the one we had the receipts change enormously.

If you move over to the expenditure side, this is a state that increased its population enormously. Much of the influx in the last 20 or 30 years is from countries where the people require high expenditures for health, welfare and education.

It is what I call a structural, fundamental mismatch that one must address sooner or later. It would not be terribly helpful to pile additional volatile taxes on state taxpayers. If we could have the local government provide more for itself by raising its property taxes the state need not rely on these taxes so much. It’s a very specific series of steps that would have to be taken.

Also, we have to look at how we are managing ourselves. Two or three years ago the state was arguing they had a surplus but even then the numbers were showing we had a deficit. If you look at the $38 billion deficit figure nobody can make sense out of it. The best figure is really how much we have in a shortfall in cash and that is between $10 and $15 billion. A more transparent accounting system would force the legislature to be more responsible. When you fudge the books it will be very hard to produce good results.

Mark Petracca

Associate Professor of Political Science

University of California, Irvine

People should always be wary of engaging in political reform in response to any particular political crisis.

The problem with the way in which the Legislature is operating is a function of redistricting and competitiveness in the state. Right now, the legislature has an incentive to stack districts with voters who are Republican or Democratic. That has ended up reducing competitive elections in lots of districts. That has ended up under-representing Republicans.

If you are a permanent minority why bother to participate if you can only get your hands dirty? Greater electoral competitiveness and having that reflected in the legislature would force both parties to interact with each other in a more productive fashion.

We also have to open up the primary process. We have a partially open primary (in which independents can vote for candidates of either party). We have a very small percent of the people in the state electing people to office. One of the ways to open it up is to go to same day registration (which would allow Democrats and Republicans to change their registration to independents on election day and vote for candidates in either party.)

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