A generation ago, California exemplified its nickname, “The Golden State.” State spending was less than half per capita, inflation adjusted, what it is today. Its debt-service ration was less than a third. Yet Californians enjoyed one of the finest highway systems in the world and one of the finest public educations systems in the country. Water and electricity were so cheap that many communities didn’t bother to meter consumption.
Only a few decades have passed, yet California is a dramatically altered place. The tax burden is one of the heaviest in the nation. State government consumes the largest portion of personal earnings than at any time in its history and yet can no longer maintain its basic infrastructure. The once legendary California quality of life has declined precipitously and produced an historic first: more people are now moving out of California than are moving in.
One thing – and one thing only – has changed in those years: public policy. The political Left gradually gained dominance over California’s government and imposed a disastrous agenda of policy changes that are now being replicated at the federal level.
Prior to the 1970’s, California policy aimed at accommodating growth and encouraging prosperity. These priorities changed radically beginning with the “era of limits” announced by Gov. Jerry Brown. Conventional public works were branded “growth inducing” and it became state policy to discourage the construction of highways, dams, power plants and housing.
At the same time, public employee unions acquired unprecedented power to coerce public employee membership, automatically direct public employee earnings into union political coffers, and to strike against the public.
Radical environmental restrictions have devastated the agricultural, timber and manufacturing industries, culminating in Gov. Schwarzenegger’s hallmark bill to reduce carbon dioxide emissions 25 percent by 2020 – a goal that can’t be reached even if every automobile in California is junked.
Meanwhile, the state has suffered a radical centralization of revenue collection and decision-making in Sacramento, usurping local prerogatives in every field from education to transportation. This trend has destroyed local accountability and annually misspends billions of dollars of public funds as Sacramento vainly attempts to force every community into rigid formulae and mandates.
The recall of Gray Davis in 2003 offered California the last chance to avert the fiscal collapse that now appears imminent. Voters elected Arnold Schwarzenegger on a pledge to “stop the crazy deficit spending,” reduce tax and regulatory burdens, “blow up the boxes,” and “cut up the credit cards.”
Alas, he did exactly the opposite. He increased the rate of spending that had proven unsustainable under Davis, began an unprecedented borrowing binge that has tripled the state’s debt-service ratio, and has now imposed the biggest tax increase in the state’s history.
As predicted, that tax hike has made the deficit worse. The recession had reduced the state’s March sales tax collections by 19 percent. After Schwarzenegger increased the sales tax 13 percent on April 1st, April sales tax revenues plunged by 44 percent. The Laffer curve is alive and well.
What can California do? Its credit is stretched to the breaking point and increasing tax rates now produces decreasing tax revenues. Its deficit vastly exceeds resolution by conventional budget reductions. There is no line-item labeled “waste,” and the state’s deficit now vastly exceeds the truly obsolete and overlapping programs strewn throughout its budget.
The real savings are in how the state’s money is spent. California pays $43,000 each year to house a prisoner, while many states get by with half that amount. An average classroom accounts for more than $300,000 of public resources, but only a fraction actually reaches the students.
Fortunately, California has service-delivery models that once delivered a vastly higher levels of service at vastly lower costs, before it centralized, bureaucratized, unionized and radicalized them. But tragically, it lacks both the political will and the time required to restore them.
The decline and fall of the California Republic is a morality play in the form of Greek tragedy. Before dismissing California’s agony as the just price for its hubris and folly, though, heed this warning: Congress is well underway toward imposing the same policies on the rest of the nation. California is just a little further down that road.
Congressman Tom McClintock represents California’s Fourth Congressional District. His website address is http://www.mcclintock.house.gov.